Document:

EX-10.3

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (this “Employment Agreement”), dated as of March 1, 2006 (the
“Commencement Date”), by and between Chindex International, Inc., a Delaware corporation (the
“Company” or “Chindex”), and Lawrence Pemble (“Employee”).

WHEREAS, the Company desires that Employee enter into this Employment Agreement, and Employee
desires to enter into this Employment Agreement, on the terms and conditions set forth herein; and

	 	 	 
	NOW THEREFORE, the parties hereto agree as follows:

	 
	 	 
	Section 1.

	 	Duties; Term.
	
 
	 	 

(a) The Company agrees to employ Employee, and Employee agrees to be so employed, in the
position of Executive Vice President (EVP) and Chief Financial Officer (CFO) of the Company,
reporting to the Chief Executive Officer (CEO) of the Company. Employee agrees to perform such
duties, functions and responsibilities as are generally incident to such position, for a period
commencing on March 1, 2006 and ending on December 31, 2013, unless sooner terminated in accordance
with Section 4 hereof (the “Term”). Employee agrees to faithfully perform the lawful duties
assigned to Employee pursuant to this Employment Agreement to the best of Employee’s abilities.
Employee shall be subject to all laws, rules, regulations and policies as are from time to time
applicable to employees of the Company and, in the case of rules or policies adopted by the
Company, communicated to Employee in writing.

(b) Notwithstanding the foregoing, Employee may (i) serve on civic or charitable boards or
not-for-profit industry related organizations, (ii) engage in charitable, civic, educational,
professional, community and/or industry activities without remuneration therefor and (ii) manage
personal and family investments, so long as such activities do not interfere with performance of
Employee’s duties under the Employment Agreement. Employee also may serve on the board of
directors or advisory committee of other for-profit enterprises subject to the consent of the
Board, which shall not unreasonably be withheld; provided, however, that Employee shall not serve
on more than two such boards at the same time.

(c) Employee shall devote substantially all Employee’s working time, attention, best efforts
and ability during regular business hours exclusively to the service of the Company, its affiliates
and its subsidiaries during the term of this Agreement.

Section 2. Compensation.

(a) Annual Salary. As compensation for Employee’s services hereunder, the Company
shall pay to Employee an initial annual salary at the rate of One Hundred Ninety Five Thousand
Dollars ($195,000) per annum, payable in accordance with the Company’s standard payroll policies,
and less all applicable federal, state and local withholding taxes (the “Annual Salary”). The
Annual Salary shall be reviewed by the Company each December during the Term, and shall be subject
to such increases (but not decreases) as the Company may determine, taking into consideration the
Company’s and Employee’s performance during the preceding year as well as increases in the cost of
living and other factors.

(b) Bonus. The Company shall also pay Employee annual bonus compensation (“Bonus
Compensation”) based on the success of business operations and the pre-tax profits of the Company
and upon the performance of the Employee in accordance with the Company’s Executive Management
Incentive Program or other then-existing bonus program.

(c) Long-term Equity Incentive Compensation. In addition to stock options previously
granted pursuant to the terms of the Chindex International, Inc. 1994 Stock Option Plan or the
Chindex International, Inc. 2004 Stock Incentive Plan (the “2004 Plan”) and option agreements
thereunder (collectively, the “Option Agreements”), the Company shall also grant to Employee
unrestricted or restricted stock and/or stock options under any new plans adopted by the Company
and/or other equity incentive compensation in such form and having such terms as the Company may
determine.

Section 3. Benefits; Expense Reimbursement.

During the Term, Employee shall participate in any group life, accident, sickness and
hospitalization insurance, and any other employee benefit plans of the Company in effect during the
Term and generally available to the Company’s senior executive officers. Without limiting the
generality of the foregoing, during the Term, the Company will provide Employee at its expense with
a life insurance policy with a death benefit equal to three (3) times Employee’s Annual Salary, the
beneficiary to be named by Employee. Employee shall have the right to reimbursement, upon proper
accounting, of reasonable expenses and disbursements incurred by Employee in the course of
Employee’s duties hereunder. In addition, during each year of the Term, Employee shall be entitled
to no less than five (5) weeks of paid vacation. If Employee is requested by the Company to move to
China and agrees to do so, the Company shall thenceforth reimburse Employee for round-trip
economy-class air fare for Employee, Employee’s spouse and Employee’s dependent children from
Beijing to Employee’s home in the United States in connection with such vacation. In addition, in
each year of the Term, Employee shall be reimbursed for the tuition costs paid by Employee for
Employee’s dependent children, if any, attending primary or secondary schools, provided, however,
that such reimbursement shall not exceed ninety thousand dollars ($90,000) per year. Employee
shall be entitled to the use of a Company-owned automobile or an allowance to reimburse Employee
for Employee’s costs associated with the use of a personal automobile. Employee shall also
annually be provided an allowance of five thousand dollars ($5,000) per month in connection with
Employee’s maintenance of a remote office facility in the United States.

Employee acknowledges that some or all of these benefits may be deemed compensation to Employee and
that the Company may withhold from any benefits payable to Employee all federal, state, local
and/or other taxes and amounts as shall be required pursuant to law, rule or regulation.

Section 4. Employment Termination.

(a) At any time during the Term, and except as otherwise provided in Section 4(b) hereof, the
Company shall only have the right to terminate this Employment Agreement and Employee’s employment
with the Company hereunder, upon written notice to Employee, in the event Employee engages in
conduct which constitutes “Cause.” For purposes of this Employment Agreement, Cause shall mean (i)
Employee’s willful misconduct in the performance of Employee’s obligations under this Employment
Agreement or gross negligence in the performance of Employee’s obligations under this Employment
Agreement, (ii) dishonesty or misappropriation by Employee relating to the Company or any of its
funds, properties, or other assets, (iii) inexcusable repeated or prolonged absence from work by
Employee (other than as a result of, or in connection with, a disability), (iv) any unauthorized
disclosure by Employee of confidential or proprietary information of the Company which is
reasonably likely to result in material harm to the Company, (v) a conviction of Employee
(including entry of a guilty or nolo contendere plea) involving fraud, dishonesty, or moral
turpitude, or involving a violation of federal or state securities laws, or (vi) the failure by
Employee to attempt to perform faithfully Employee’s duties hereunder, or other material breach by
Employee of this Employment Agreement, and such failure or breach is not cured, to the extent cure
is possible, by Employee within thirty (30) days after written notice thereof from the Company to
Employee; provided, however, that no event or condition described in clauses (i),
(ii), (iii), (iv) and (vi) shall constitute Cause unless (x) the Company first gives Employee
written notice of its intention to terminate Employee’s employment for Cause and the grounds for
such termination no fewer than twenty (20) days prior to the date of termination; and (y) Employee
is provided the opportunity to appear before the Board, with or without legal representation at
Employee’s election to present arguments on Employee’s own behalf; provided further, however, that
notwithstanding anything to the contrary in this Agreement and subject to the other terms of this
proviso, the Company may take any and all actions, including without limitation suspension (but not
without pay), it deems appropriate with respect to Employee and Employee’s duties at the Company
pending such appearance. No act or failure to act on Employee’s part will be considered “willful”
unless done, or omitted to be done, by Employee not in good faith and without reasonable belief
that Employee’s action or omission was in the best interests of the Company. If this Employment
Agreement and Employee’s employment with the Company hereunder is terminated for Cause, or if
Employee voluntarily resigns (which Employee may do at any time) from the Company without Good
Reason during the Term, the Company shall pay Employee a lump sum amount within thirty (30) days of
such termination equal to the sum of (A) all earned but unpaid portions of the Annual Salary, (B)
any earned but unpaid Bonus Compensation for a previously completed fiscal year of the Company, (C)
reimbursement for any unreimbursed business expenses incurred by Employee prior to the date of
termination or resignation (the “Termination Date”) subject to reimbursement pursuant to Section 3,
(D) payment for any unused vacation days through the Termination Date, and (E) any other amounts or
benefits (other than severance, termination or similar pay) required to be paid or provided by law
or under any plan, program or policy of the Company ((A)-(E) collectively, the “Accrued Amounts”),
and following any such termination, Employee shall not be entitled to receive any other
compensation or benefits from the Company hereunder, including, without limitation, any portion of
the Annual Bonus for the year in which Employee is terminated.

(b) This Employment Agreement and Employee’s employment with the Company hereunder may also be
terminated by the Company without Cause, or by Employee upon the occurrence of an event
constituting Good Reason. For purposes of this Employment Agreement, “Good Reason” shall mean (i)
any reduction in Employee’s authority, functions, duties, or responsibilities; or (ii) any adverse
change in Employee’s positions, titles or reporting responsibility (such that Employee reports to a
person other than the CEO), provided, however, that the foregoing provision
shall not include a change in Employee’s positions, titles or reporting responsibility following a
Change in Control (as defined in the 2004 Plan) solely by virtue of the Company being acquired and
made part of a larger entity (as, for example, if Employee is not appointed as Executive Vice
President (EVP) and Chief Financial Officer (CFO) of the acquiring corporation, but continues to
have a substantially similar level of responsibility over the affairs of the Company following such
Change in Control); or (iii) the assignment of duties to Employee that are inconsistent with
Employee’s position and status as EVP and CFO; or (iv) a reduction in the Annual Salary or
Employee’s bonus opportunity during the Term; or (v) the failure of the Company to cure any other
material breach of this Employment Agreement; or (vi) Employee’s relocation by the Company or a
successor thereto without Employee’s written consent to a location other than Sadieville, Kentucky;
provided that in the case of (i) through (v) above, the Company has failed to cure
the event constituting Good Reason within thirty (30) days following written notice thereof from
Employee. In the event that Employee’s employment with the Company shall terminate during the Term
on account of termination by the Company without Cause, or by Employee with Good Reason, then the
Company shall pay or provide to Employee, as Employee’s sole and exclusive remedy hereunder: (A)
the Accrued Amounts, (B) a pro-rata (based on the number of days employed in the year of
termination or resignation) bonus for the fiscal year in which such termination or resignation
occurs based on the greater of (1) the average of the Bonus Compensation paid to Employee for the
two years immediately preceding such termination or resignation, and (2) thirty percent (30%) of
the Annual Salary of Employee as of the last day of the most recently completed fiscal year (a
“Pro-Rated Bonus”), (C) (1) group or individual health, sickness and hospital insurance
substantially similar to that which Employee was receiving immediately prior to the notice of
termination, which obligation to provide insurance shall continue until Employee qualifies for
Medicare, reaches age 65, dies, or notifies the Company that such benefit should cease, whichever
occurs earliest, and (2) an annuity policy in an amount which will, at the time Employee qualifies
for Medicare, provide Employee with a monthly payment that Employee can use to purchase
supplemental health insurance, which annuity policy shall result in a monthly payment in an amount
estimated to be the cost of standard supplemental insurance, but in no event to exceed five hundred
($500) per month (collectively, the “Termination Benefits”), (D) Three hundred percent (300%) of
the sum of (1) the Annual Salary to which Employee would have been entitled if Employee had
continued working for the Company for an additional twelve (12) month period following the
Termination Date and (2) the bonus paid to Employee for the Company’s fiscal year immediately prior
to the fiscal year in which the Termination Date occurs, (E) all unvested equity incentive awards,
including without limitation all unvested stock options and all unvested stock grants, granted to
Employee prior to the Termination Date, shall become immediately vested and exercisable and
Employee shall have a period of ninety (90) days following the Date of Termination (or such longer
exercise period as may be provided in the respective option grant, but in no event past the
respective expiration term of the option grant) to exercise all options granted under any of the
Company’s plans then exercisable or which become exercisable pursuant to this paragraph, and (F)
tuition reimbursements and the office maintenance allowance received by Employee in the fiscal year
immediately prior to the Termination Date, if any, shall be continued for a period of three years
to the extent that Employee continues to be eligible for such benefits as provided in Section 3,
above. The payments provided for in (A), (B) and (D) above (the “Termination Payments”) shall be
made to Employee in a lump sum payment within thirty (30) days following such termination or
resignation; provided that the payments provided for in (D) shall be contingent upon Employee’s
continued compliance with Sections 5 and 6 hereof (except that Employee shall not be deemed for
purposes of this Section 4(b) not to have been in compliance with Section 6 solely as a result of
an unintentional disclosure of confidential information) and Employee shall be obligated to repay
all such payments upon determination by the Board that Employee has failed to comply as such with
Sections 5 or 6 hereof; and provided further that the benefits continuation provided for in (C)
above shall terminate upon Employee’s becoming eligible for corresponding benefits in connection
with new employment.

(c) In the event that Employee becomes entitled to one or more payments (with a “payment”
including, without limitation, the vesting of an option or other non-cash benefit or property,
whether pursuant to the terms of this Employment Agreement or any other plan, arrangement or
agreement with the Company or any affiliated company) (the “Total Payments”), which are or become
subject to the tax imposed by Section 4999 of the of the Internal Revenue Code of 1986 (the “Code”)
(or any similar tax that may hereafter be imposed) (the “Excise Tax”), the Company shall pay to
Employee at the time specified below an additional amount (the “Gross-up Payment”) (which shall
include, without limitation, reimbursement for any penalties and interest that may accrue in
respect of such Excise Tax) such that the net amount retained by Employee, after reduction for any
Excise Tax (including any penalties or interest thereon) on the Total Payments and any federal,
state and local income or employment tax and Excise Tax on the Gross-up Payment provided for by
this section 4(c), but before reduction for any federal, state or local income or employment tax on
the Total Payments, shall be equal to the sum of (a) the Total Payments, and (b) an amount equal to
the product of any deductions disallowed for federal, state or local income tax purposes because of
the inclusion of the Gross-up Payment in Employee’s adjusted gross income multiplied by the highest
applicable marginal rate of federal, state or local income taxation, respectively, for the calendar
year in which the Gross-up Payment is to be made.

(d) For purposes of determining whether any of the Total Payments will be subject to the
Excise Tax and the amount of such Excise Tax pursuant to subsection (c) above,

(i) the Total Payments shall be treated as “parachute payments” within the meaning of
Section 280G(b)(2) of the Code, and all “excess parachute payments” within the meaning of
Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax, unless, and
except to the extent that, in the written opinion of independent compensation consultants or
auditors of nationally recognized standing selected by the Company and reasonably acceptable
to Employee (“Independent Auditors”), the Total Payments (in whole or in part) do not
constitute parachute payments, or such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered within the meaning of
Section 280G(b)(4) of the Code in excess of the base amount within the meaning of Section
280G(b)(3) of the Code or are otherwise not subject to the Excise Tax,

(ii) the amount of the Total Payments which shall be treated as subject to the Excise
Tax shall be equal to the lesser of (A) the total amount of the Total Payments or (B) the
amount of excess parachute payments within the meaning of Section 280G(b)(1) of the Code
(after applying clause (i) above), and

(iii) the value of any non-cash benefits or any deferred payment or benefit shall be
determined by the Company’s Independent Auditors appointed pursuant to clause (i) above in
accordance with the principles of Sections 280G(d)(3) and (4) of the Code.

(e) For purposes of determining the amount of the Gross-up Payment, Employee shall be deemed
(A) to pay federal income taxes at the highest marginal rate of federal income taxation for the
calendar year in which the Gross-up Payment is to be made; (B) to pay any applicable state and
local income taxes at the highest marginal rate of taxation for the calendar year in which the
Gross-up Payment is to be made, net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes if paid in such year (determined without
regard to limitations on deductions based upon the amount of Employee’s adjusted gross income); and
(C) to have otherwise allowable deductions for federal, state and local income tax purposes at
least equal to those disallowed because of the inclusion of the Gross-up Payment in Employee’s
adjusted gross income. In the event that the Excise Tax is subsequently determined to be less than
the amount taken into account hereunder at the time the Gross-up Payment is made, Employee shall
repay to the Company at the time that the amount of such reduction in Excise Tax is finally
determined (but, if previously paid to the taxing authorities, not prior to the time the amount of
such reduction is refunded to Employee or otherwise realized as a benefit by Employee) the portion
of the Gross-up Payment that would not have been paid if such Excise Tax had been applied in
initially calculating the Gross-up Payment, plus interest on the amount of such repayment at the
rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined
to exceed the amount taken into account hereunder at the time the Gross-up Payment is made
(including by reason of any payment the existence or amount of which cannot be determined at the
time of the Gross-up Payment), the Company shall make an additional Gross-up Payment in respect of
such excess (plus any interest and penalties payable with respect to such excess) at the time that
the amount of such excess is finally determined. The Gross-up Payment provided for above shall be
paid on the thirtieth day (or such earlier date as the Excise Tax becomes due and payable to the
taxing authorities) after it has been determined that the Total Payments (or any portion thereof)
are subject to the Excise Tax; provided, however, that if the amount of such
Gross-up Payment or portion thereof cannot be finally determined on or before such day, the Company
shall pay to Employee on such day an estimate, as determined by the Company’s Independent Auditors
appointed pursuant to clause (i) above, of the minimum amount of such payments and shall pay the
remainder of such payments (together with interest at the rate provided in Section 1274(b)(2)(B) of
the Code), as soon as the amount thereof can be determined. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been due, such excess
(amount, together with interest at the rate provided in Section 1274(b)(2)(B) of the Code), shall
be repaid by Employee to the Company within five (5) days after notice from the Holding Company of
such determination. If more than one Gross-up Payment is made, the amount of each Gross-up Payment
shall be computed so as not to duplicate any prior Gross-up Payment. The Company shall have the
right to control all proceedings with the Internal Revenue Service that may arise in connection
with the determination and assessment of any Excise Tax and, at its sole option, the Company may
pursue or forego any and all administrative appeals, proceedings, hearings and conferences with any
taxing authority in respect of such Excise Tax (including any interest or penalties thereon);
provided, however, that the Company’s control over any such proceedings shall be
limited to issues with respect to which a Gross-up Payment would be payable hereunder and Employee
shall be entitled to settle or contest any other issue raised by the Internal Revenue Service or
any other taxing authority. Employee shall cooperate with the Company in any proceedings relating
to the determination and assessment of any Excise Tax and shall not take any position or action
that would materially increase the amount of any Gross-up Payment hereunder.

(f) Except as otherwise provided in this Employment Agreement, Employee shall not be required
to mitigate the amount of any payment provided for in this Section 4 by seeking employment or
otherwise, nor shall the amount of any payment or benefit provided for in this Section 4 be reduced
by any compensation earned by Employee as the result of employment by another employer, by
retirement benefits, by offset against any amount claimed to be owed by Employee to the Company, or
otherwise.

(g) This Employment Agreement and Employee’s employment with the Company hereunder shall
terminate immediately and automatically upon (i) the death or Disability (as defined below) of
Employee or (ii) the expiration of the Term. For purposes of this Employment Agreement,
“Disability” shall mean physical or mental incapacity of a nature which prevents Employee, in the
good faith judgment of the Company’s Board of Directors, from performing Employee’s duties under
this Employment Agreement for a period of 180 consecutive days or 270 days during any year with
each year under this Employment Agreement commencing on each anniversary of the date hereof. If
this Employment Agreement and Employee’s employment with the Company hereunder is terminated on
account of (i) or (ii) above, then the Company shall pay Employee, or Employee’s estate,
conservator or designated beneficiary, as the case may be, an amount equal to (A) the Accrued
Amounts, and (B) a Pro Rated Bonus, and following any such termination, neither Employee, nor
Employee’s estate, conservator or designated beneficiary, as the case may be, shall be entitled to
receive any other compensation or benefits from the Company hereunder, provided,
however, that if Employee’s employment is terminated on account of (ii) above, and the
Company has not previously offered to renew this Employment Agreement on commercially reasonable
terms as determined by the Company in good faith, then the Company shall also pay or provide to
Employee (C) group life, disability, sickness, hospitalization and accident insurance benefits
equivalent to those to which Employee would have been entitled if Employee had continued working
for the Company for an additional twelve (12) month period, and (D) the Annual Salary to the same
extent to which Employee would have been entitled if Employee had continued working for the Company
for an additional twelve (12) month period. The payments provided for in (A), (B) and (D) above
shall be made in a lump sum payment within thirty (30) days following such termination; provided
that the payments provided for in (D) shall be contingent upon Employee’s continued compliance with
Sections 5 and 6 hereof (except that Employee shall not be deemed for purposes of this Section 4(g)
not to have been in compliance with Section 6 solely as a result of an unintentional and immaterial
disclosure of confidential information) and Employee shall be obligated to repay all such payments
upon determination by the Board that Employee has failed to comply as such with Sections 5 or 6
hereof; and provided further that the benefits continuation provided for in (C) above shall
terminate upon Employee’s becoming eligible for corresponding benefits in connection with new
employment.

(h) Upon the termination of this Employment Agreement pursuant to Section 4 hereof, the
Company shall have no further obligations under this Employment Agreement; provided,
(except for amounts and benefits payable in Section 2 thru 4 above) however, that Sections
5 through 26 hereof shall survive and remain in full force and effect.

Section 5. Non-Competition.

(a) Employee hereby agrees that, during the period from the Commencement Date through the end
of the first twelve (12) months after the cessation of Employee’s employment with the Company,
Employee will not engage in “Competition” with the Company. For purposes of this Employment
Agreement, Competition by Employee shall mean Employee’s engaging in, or otherwise directly or
indirectly being employed by or acting as a consultant or lender to, or being a director, officer,
employee, principal, agent, stockholder, member, owner or partner of, or permitting Employee’s name
to be used in connection with the activities of any other business or organization anywhere in the
World which primarily engages in the business of providing health care services or selling health
care products in China (a “Competing Business”); provided, however, that,
notwithstanding the foregoing, it shall not be a violation of this Section 5(a) for Employee to (x)
become the registered or beneficial owner of up to three percent (3%) of any class of the capital
stock of a competing corporation, provided that Employee does not otherwise participate in the
business of such corporation or (y) work in a non-competitive business of a company which is
carrying on a Competing Business, the revenues of which represent less than twenty percent (20%) of
the consolidated revenues of that company, or, as a result thereof, owning compensatory equity in
that company.

(b) Employee hereby agrees that, during the period from the Commencement Date through the end
of the first twelve (12) months after the cessation of Employee’s employment with the Company,
Employee will not solicit for employment or hire, in any business enterprise or activity, any
employee of the Company who was employed by the Company during the Term; provided, the foregoing
shall not be violated by general advertising not targeted at Company employees nor by serving as a
reference upon request.

Section 6. Confidentiality; Intellectual Property.

(a) Except as otherwise provided in this Employment Agreement, at all times during and after
the Term, Employee shall keep secret and retain in strictest confidence, any and all confidential
information relating to the Company, and shall use such confidential information only in
furtherance of the performance by Employee of Employee’s duties to the Company and not for personal
benefit or the benefit of any interest adverse to the Company’s interests. For purposes of this
Employment Agreement, “confidential information” shall mean any information including without
limitation plans, specifications, models, samples, data, customer lists and customer information,
computer programs and documentation, and other technical and/or business information, in whatever
form, tangible or intangible, that can be communicated by whatever means available at such time,
that relates to the Company’s current business or future business contemplated during the Term,
products, services and development, or information received from others that the Company is
obligated to treat as confidential or proprietary (provided that such confidential
information shall not include any information that (a) has become generally available to the public
or is generally known in the relevant trade or industry other than as a result of an improper
disclosure by Employee, or (b) was available to or became known to Employee prior to the disclosure
of such information on a non-confidential basis without breach of any duty of confidentiality to
the Company), and Employee shall not disclose such confidential information to any Person other
than the Company, except with the prior written consent of the Company, as may be required by law
or court or administrative order (in which event Employee shall so notify the Company as promptly
as practicable), or in performance of Employee’s duties hereunder. Further, this Section 6(a)
shall not prevent Employee from disclosing Confidential Information in connection with any
litigation, arbitration or mediation to enforce this Employment Agreement, provided that such
disclosure is necessary for Employee to assert any claim or defense in such proceeding.

(b) Upon termination of the Term for any reason, Employee shall return to the Company all
copies, reproductions and summaries of confidential information in Employee’s possession and erase
the same from all media in Employee’s possession, and, if the Company so requests, shall certify in
writing that Employee has done so. All confidential information is and shall remain the property of
the Company (or, in the case of information that the Company receives from a third party which it
is obligated to treat as confidential, then the property of such third party); provided,
however, that Employee shall be entitled to retain copies of (i) information showing
Employee’s compensation or relating to reimbursement of expenses, (ii) information that is required
for the preparation of Employee’s personal income tax return, (iii) documents provided to Employee
in Employee’s capacity as a participant in any employee benefit plan, policy or program of the
Company and (iv) this Employment Agreement and any other agreement by and between Employee and the
Company with regard to Employee’s employment or termination thereof.

(c) All Intellectual Property (as hereinafter defined) and Technology (as hereinafter defined)
created, developed, obtained or conceived of by Employee during the Term, and all business
opportunities presented to Employee during the Term, shall be owned by and belong exclusively to
the Company, provided that they reasonably relate to any of the business of the Company on the date
of such creation, development, obtaining or conception, and Employee shall (i) promptly disclose
any such Intellectual Property, Technology or business opportunity to the Company, and (ii) execute
and deliver to the Company, without additional compensation, such instruments as the Company may
require from time to time to evidence its ownership of any such Intellectual Property, Technology
or business opportunity. For purposes of this Employment Agreement, (x) the term “Intellectual
Property” means and includes any and all trademarks, trade names, service marks, service names,
patents, copyrights, and applications therefor, and (y) the term “Technology” means and includes
any and all trade secrets, proprietary information, invention, discoveries, know-how, formulae,
processes and procedures.

Section 7. Covenants Reasonable.

The parties acknowledge that the restrictions contained in Sections 5 and 6 hereof are a
reasonable and necessary protection of the immediate interests of the Company, and any violation of
these restrictions could cause substantial injury to the Company and that the Company would not
have entered into this Employment Agreement, without receiving the additional consideration offered
by Employee in binding Employee to any of these restrictions. In the event of a breach or
threatened breach by Employee of any of these restrictions, the Company shall be entitled to apply
to any court of competent jurisdiction for an injunction restraining Employee from such breach or
threatened breach; provided however, that the right to apply for an injunction
shall not be construed as prohibiting the Company from pursuing any other available remedies for
such breach or threatened breach.

Section 8. No Third Party Beneficiary.

This Employment Agreement is not intended and shall not be construed to confer any rights or
remedies hereunder upon any Person, other than the parties hereto or their permitted assigns
(including, without limitation, Employee’s estate following Employee’s death). “Person” shall mean
an individual, corporation, partnership, limited liability company, limited liability partnership,
association, trust or other unincorporated organization or entity.

Section 9. Notices.

Unless otherwise provided herein, any notice, exercise of rights or other communication
required or permitted to be given hereunder shall be in writing and shall be given by overnight
delivery service such as Federal Express, telecopy (or like transmission) or personal delivery
against receipt, or mailed by registered or certified mail (return receipt requested), to the party
to whom it is given at such party’s address set forth below such party’s name on the signature page
or such other address as such party may hereafter specify by notice to the other party hereto. Any
notice or other communication shall be deemed to have been given as of the date so personally
delivered or transmitted by telecopy or like transmission or on the next business day when sent by
overnight delivery service.

Section 10. Representations.

The Company hereby represents and warrants that the execution and delivery of this Employment
Agreement and the performance by the Company of its obligations hereunder have been duly authorized
by all necessary corporate action of the Company.

Section 11. Amendment.

This Employment Agreement may be amended only by a written agreement signed by the parties
hereto.

Section 12. Binding Effect.

The rights and duties under this Employment Agreement are not assignable by Employee other
than as a result of Employee’s death. None of Employee’s rights under this Employment Agreement
shall be subject to any encumbrances or the claims of Employee’s creditors. This Employment
Agreement shall be binding upon and inure to the benefit of the Company and any successor
organization which shall succeed to the Company by merger or consolidation or operation of law, or
by acquisition of all or substantially all of the assets of the Company (provided that a successor
by way of acquisition of assets shall have undertaken in writing to assume the obligations of the
Company hereunder).

Section 13. Governing Law.

This Employment Agreement shall be governed by and construed in accordance with the internal
laws of the State of California applicable to contracts to be performed wholly within the state and
without regard to its conflict of laws provisions.

Section 14. Severability.

If any provision of this Employment Agreement, including those contained in Sections 5 and 6
hereof, shall for any reason be held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof shall not be affected or impaired thereby.
Moreover, if any one or more of the provisions of this Employment Agreement, including those
contained in Sections 5 and 6 hereof, shall be held to be excessively broad as to duration,
activity or subject, such provisions shall be construed by limiting and reducing them so as to be
enforceable to the maximum extent allowable by applicable law. To the extent permitted by
applicable law, each party hereto waives any provision of law that renders any provision of this
Employment Agreement invalid, illegal or unenforceable in any way.

Section 15. Execution in Counterparts.

This Employment Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original and all of which shall constitute one and the same instrument.

Section 16. Entire Agreement.

This Employment Agreement, sets forth the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, between the parties with respect to the
subject matter hereof and thereof.

Section 17. Titles and Headings.

Titles and headings to Sections herein are for purposes of reference only, and shall in no way
limit, define or otherwise affect the meaning or interpretation of any of the provisions of this
Employment Agreement.

Section 18. Conflicts of Interest.

Employee specifically covenants, warrants and represents to the Company that Employee has the
full, complete and entire right and authority to enter into this Employment Agreement, that
Employee has no agreement, duty, commitment or responsibility of any kind or nature whatsoever with
any corporation, partnership, firm, company, joint venture or other entity or other Person which
would conflict in any manner whatsoever with any of Employee’s duties, obligations or
responsibilities to the Company pursuant to this Employment Agreement, that Employee is not in
possession of any document or other tangible property of any other Person of a confidential or
proprietary nature which would conflict in any manner whatsoever with any of Employee’s duties,
obligations or responsibilities to the Company pursuant to Employee’s Employment Agreement, and
that Employee is fully ready, willing and able to perform each and all of Employee’s duties,
obligations and responsibilities to the Company pursuant to this Employment Agreement.

Section 19. Consent to Jurisdiction.

Employee hereby irrevocably submits to the jurisdiction of any New York State or Federal court
sitting in the City of New York in any action or proceeding to enforce the provisions of this
Employment Agreement, and waives the defense of inconvenient forum to the maintenance of any such
action or proceeding.

Section 20. Indemnification.

The Company has entered into an indemnification agreement with Employee (the “Indemnification
Agreement”) and shall both during and while potential liability exists, after the Term continue to
provide Employee with rights to indemnification which are no less favorable than the rights
provided to Employee under the Indemnification Agreement.

Section 21. Liability Insurance.

The Company shall cover Employee under directors and officers liability insurance both during
and, while potential liability exists, after the Term in the same amount and to the same extent as
the Company generally provides to its other senior executive officers and directors. This
provision shall in all events survive any termination of this Employment Agreement.

Section 22. No Duty to Mitigate.

Employee shall have no duty to mitigate or offset any amounts payable by the Company to
Employee hereunder.

Section 23. Release.

As a condition to the obligation of the Company to make the payments provided for in this
Employment Agreement and otherwise perform its obligations hereunder to Employee upon termination
of Employee’s employment (other than due to Employee’s death), Employee or Employee’s legal
representatives shall deliver to the Company a written release, substantially in the form attached
hereto as Exhibit A, and the time for revocation of such release shall have expired; provided,
however, that such release shall be conditioned on the receipt from the Company of a release of
Employee, provided that such release from the Company shall not be such a condition and shall be
null and void and of no force or effect in the event of any act or omission by Employee that could
constitute the basis for termination for Cause or that could be a crime of any kind.

Section 24. Stock Option Exercises.

Notwithstanding anything to the contrary contained in this Agreement, in the event that this
Agreement terminates for any reason, the Company shall not, unless required by law or the express
terms of the applicable plan or stock option contract relating thereto, impede or delay the
exercise of any option to purchase shares of the Company’s common stock granted to Employee
pursuant to any plan approved by the Company’s stockholders

Section 25. Section 409A.

Employee and the Company agree to cooperate to make such amendments to the terms of this
Employment Agreement as may be necessary to avoid the imposition of penalties and additional
taxes under Section 409A of the Code; provided however, that the Company agrees that any such
amendment shall provide Employee with economically equivalent payments and benefits.

Section 26. Review of Counsel.

Employee hereby acknowledges and confirms that Employee is freely entering into this
Employment Agreement and that Employee has had an opportunity to consult with an attorney of
Employee’s choice in connection with the negotiation and execution of this Employment
Agreement.

1

IN WITNESS WHEREOF, the undersigned have executed this Employment Agreement as of the date
first written above.

/s/ Lawrence Pemble

	 	 	Lawrence Pemble

	 	 	 
	499 Hinton Cemetery Road

	 	

	 
	 	 
	Sadieville, Kentucky 40370

	 
	 	 
	CHINDEX INTERNATIONAL, INC.

	 
	 	 
	By: /s/ Julius Oestreicher

	 

	Name:

Title:

	 	Julius Oestreicher

Director, Chairman of

	 	 	Compensation Committee Address: 7201
Wisconsin Avenue, 7th Floor

Bethesda, Maryland 20814

Telephone No.: (301) 215-7777

Telecopy No.: (301) 215-7719

2

EXHIBIT B

Form of Release

This Release (this “Release”) is entered into by Lawrence Pemble (“Employee”) and Chindex
International, Inc., a Delaware corporation (the “Company”), effective as of [DATE] (the
“Effective Date”).

In consideration of the promises set forth in the Employment Agreement between Employee and the
Company, dated as of March 1, 2006 (the “Employment Agreement”), Employee and the Company
agree as follows:

1. General Releases and Waivers of Claims.

(a) Employee’s Release of Company. In consideration of the payments and benefits
provided to Employee under the Employment Agreement and after consultation with counsel, Employee
and each of Employee’s respective heirs, executors, administrators, representatives, agents,
successors and assigns (collectively, the “Employee Parties”) hereby irrevocably and
unconditionally release and forever discharge the Company and its subsidiaries and affiliates and
each of their respective officers, employees, directors, shareholders and agents (“Company
Parties”) from any and all claims, actions, causes of action, rights, judgments, fees and costs
(including attorneys’ fees), obligations, damages, demands, accountings or liabilities of whatever
kind or character (collectively, “Claims”), including, without limitation, any Claims based
upon contract, tort, or under any federal, state, local or foreign law, that the Employee Parties
may have, or in the future may possess, arising out of any aspect of Employee’s employment
relationship with and service as an employee, officer, director or agent of the Company, or the
termination of such relationship or service, that occurred, existed or arose on or prior to the
date hereof; provided, however, that Employee does not release, discharge or waive
(i) any rights to payments and benefits provided under the Employment Agreement that are contingent
upon the execution by Employee of this Release, (ii) any right Employee may have to enforce this
Release or the Employment Agreement, (iii) Employee’s eligibility for indemnification in accordance
with any written indemnification agreement, the Company’s certificate of incorporation, bylaws or
other corporate governance document, or any applicable insurance policy, with respect to any
liability Employee incurred or might incur as an employee, officer or director of the Company,
including, without limitation, pursuant to Sections 20 and 21 of the Employment Agreement, or (iv)
any claims for accrued, vested benefits under any employee benefit or pension plan of the Company
Parties subject to the terms and conditions of such plan and applicable law including, without
limitation, any such claims under the Employee Retirement Income Security Act of 1974.

(b) Executive’s Specific Release of ADEA Claims. In further consideration of the
payments and benefits provided to Employee under the Employment Agreement, the Employee Parties
hereby unconditionally release and forever discharge the Company Parties from any and all Claims
that the Employee Parties may have as of the date Employee signs this Release arising under the
Federal Age Discrimination in Employment Act of 1967, as amended, and the applicable rules and
regulations promulgated thereunder (“ADEA”). By signing this Release, Employee hereby
acknowledges and confirms the following: (i) Employee was advised by the Company in connection
with Employee’s termination to consult with an attorney of Employee’s choice prior to signing this
Release and to have such attorney explain to Employee the terms of this Release, including, without
limitation, the terms relating to Employee’s release of claims arising under ADEA, and Employee has
in fact consulted with an attorney; (ii) Employee was given a period of not fewer than 21 days to
consider the terms of this Release and to consult with an attorney of Employee’s choosing with
respect thereto; and (iii) Employee knowingly and voluntarily accepts the terms of this Release.
Employee also understands that Employee has seven (7) days following the date on which Employee
signs this Release within which to revoke the release contained in this paragraph, by providing the
Company a written notice of Employee’s revocation of the release and waiver contained in this
paragraph.

(c) Company’s Release of Executive. The Company for itself and on behalf of the
Company Parties hereby irrevocably and unconditionally release and forever discharge the Employee
Parties from any and all Claims, including, without limitation, any Claims based upon contract,
tort, or under any federal, state, local or foreign law, that the Company Parties may have, or in
the future may possess, arising out of any aspect of Employee’s employment relationship with and
service as an employee, officer, director or agent of the Company, or the termination of such
relationship or service, that occurred, existed or arose on or prior to the date hereof, excepting
any Claim which would constitute or result from conduct by Employee that could constitute the basis
for termination for Cause under the Employment Agreement or could be a crime of any kind. Anything
to the contrary notwithstanding in this Release, nothing herein shall release Employee or any other
Employee Party from any Claims based on any right the Company may have to enforce this Release or
the Employment Agreement.

(d) No Assignment. The parties represent and warrant that they have not assigned any
of the Claims being released under this Release.

2. Proceedings. Neither Employee nor the Company have filed, any complaint, charge,
claim or proceeding against the other party before any local, state or federal agency, court or
other body relating to Employee’s employment or the termination thereof (each, individually, a
“Proceeding”).

3. Remedies.

(a) In the event Employee initiates or voluntarily participates in any Proceeding involving
any of the matters waived or released in this Release, or if Employee fails to abide by any of the
terms of this Release, or if Employee revokes the ADEA release contained in Paragraph 2(b) of this
Release within the seven-day period provided under Paragraph 2(b), the Company may, in addition to
any other remedies it may have, reclaim any amounts paid to Employee, and terminate any benefits or
payments that are due, pursuant to the termination provisions of the Employment Agreement, without
waiving the release granted herein. In addition, in the event that the Board of Directors of the
Company determines that Employee has failed to comply with Sections 5 and/or 6 of the Employment
Agreement (other than as a result of an unintentional and immaterial disclosure of confidential
information), the Company may, in addition to any other remedies it may have, reclaim any amounts
paid to Employee pursuant to Section 4(b)(D) or Section 4(g)(D) of the Employment Agreement,
without waiving the release granted herein. Employee acknowledges and agrees that the remedy at
law available to the Company for breach of any of Employee’s post-termination obligations under the
Employment Agreement or Employee’s obligations herein would be inadequate and that damages flowing
from such a breach may not readily be susceptible to being measured in monetary terms.
Accordingly, Employee acknowledges, consents and agrees that, in addition to any other rights or
remedies that the Company may have at law or in equity, the Company shall be entitled to seek a
temporary restraining order or a preliminary or permanent injunction, or both, without bond or
other security, restraining Employee from breaching Employee’s post-termination obligations under
the Employment Agreement or Employee’s obligations hereunder. Such injunctive relief in any court
shall be available to the Company, in lieu of, or prior to or pending determination in, any
arbitration proceeding.

(b) Employee understands that by entering into this Release Employee will be limiting the
availability of certain remedies that Employee may have against the Company and limiting also
Employee’s ability to pursue certain claims against the Company.

(c) The Company acknowledges and agrees that the remedy at law available to Employee for
breach of any of its post-termination obligations under the Employment Agreement or its obligations
hereunder would be inadequate and that damages flowing from such a breach may not readily be
susceptible to being measured in monetary terms. Accordingly, the Company acknowledges, consents
and agrees that, in addition to any other rights or remedies that Employee may have at law or in
equity, Employee shall be entitled to seek a temporary restraining order or a preliminary or
permanent injunction, or both, without bond or other security, restraining the Company from
breaching its post-termination obligations under the Employment Agreement or its obligations
hereunder. Such injunctive relief in any court shall be available to Employee, in lieu of, or
prior to or pending determination in, any arbitration proceeding.

(d) The Company understands that by entering into this Release it will be limiting the
availability of certain remedies that it may have against Employee and limiting also its ability to
pursue certain claims against Employee.

4. Severability Clause. In the event any provision or part of this Release is found
to be invalid or unenforceable, only that particular provision or part so found, and not the entire
Release, will be inoperative.

5. Nonadmission. Nothing contained in this Release will be deemed or construed as an
admission of wrongdoing or liability on the part of the Company or Employee.

6. Governing Law. All matters affecting this Release, including the validity thereof,
are to be governed by, and interpreted and construed in accordance with, the laws of the State of
[Maryland]New York applicable to contracts executed in and to be performed in that State.

7. Notices. All notices or communications hereunder shall be made in accordance with
Section 9 of the Employment Agreement:

EMPLOYEE ACKNOWLEDGES THAT EMPLOYEE HAS READ THIS RELEASE AND THAT EMPLOYEE FULLY KNOWS,
UNDERSTANDS AND APPRECIATES ITS CONTENTS, AND THAT EMPLOYEE HEREBY EXECUTES THE SAME AND MAKES THIS
RELEASE AND THE RELEASE AND AGREEMENTS PROVIDED FOR HEREIN VOLUNTARILY AND OF EMPLOYEE’S OWN FREE
WILL.

IN WITNESS WHEREOF, the parties have executed this Release as of the date first set forth above.

CHINDEX INTERNATIONAL, INC.

By: /s/ Julius Oestreicher

	 	 	By: /s/ Lawrence Pemble

	 	 	 

3EX-10.1

Exhibit 10.1

CONSENT AND AMENDMENT AGREEMENT

THIS CONSENT AND AMENDMENT AGREEMENT is made and entered into effective as of October 31, 2006
(this “Consent”) by and among CYBERONICS, INC. (the “Borrower”), MERRILL LYNCH
CAPITAL, a division of Merrill Lynch Business Financial Services Inc., individually as a Lender, as
Administrative Agent, Sole Bookrunner and Sole Lead Arranger (the “Administrative Agent”)
and the Lenders now or from time to time party to the Credit Agreement referenced below (the
“Lenders”). All capitalized terms used but not defined herein shall have the meanings
given to such terms in the Credit Agreement (as defined below).

RECITALS

A. Borrower entered into a certain Credit Agreement dated as of January 13, 2006 among
Borrower, Administrative Agent and the Lenders party thereto (as amended, supplemented, restated or
otherwise modified from time to time, the “Credit Agreement”).

B. The Credit Agreement requires the Borrower to (a) comply with applicable Laws, including
the filing of its annual report on Form 10-K, quarterly financial reports on Form 10-Q, proxy
statement and registration statements (“SEC Filings”), and (b) satisfy all applicable
listing criteria for the Principal Stock market on which the Borrower’s common stock is listed;

C. The Credit Agreement also requires the Borrower to deliver, on an ongoing basis, certain
financial information that is prepared in compliance with GAAP.

D. The Borrower has received notice that the Securities and Exchange Commission is conducting
an informal inquiry and has received a subpoena from the Office of the United States Attorney for
the Southern District of New York regarding its stock option granting practices, and the Audit
Committee of the Borrower’s Board of Directors has undertaken an independent investigation of such
options practices.

E. The Borrower obtained an extension from the Securities and Exchange Commission until July
27, 2006 to file its annual report on Form 10-K for the fiscal year ended April 28, 2006 (the
“2006 Annual Report”).

F. The Audit Committee of the Borrower’s Board of Directors is proceeding diligently with its
independent investigation, but the investigation is not yet complete, resulting in Borrower’s
inability to file its 2006 Annual Report with the Securities and Exchange Commission on or before
July 27, 2006.

G. Borrowers have informed Administrative Agent that it will not be able to file on a timely
basis its 2006 Annual Report with the Securities and Exchange Commission until on or before
December 31, 2006.

H. Further, Borrowers have also informed Administrative Agent that it will not be able to file
on a timely basis the Form 10-Q with the Securities and Exchange Commission for the period ending
July 28, 2006 until on or before December 31, 2006 (with the 2006 Annual Report, the “SEC
Reports”).

I. The Borrower has requested that the Administrative Agent and Lenders consent to the
extension of time for filing the SEC Reports and delivery of the related financial statements as
required by the Credit Agreement.

NOW, THEREFORE, in consideration of the foregoing, the sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:

(1) Subject to Section 2 below, the Borrower, Administrative Agent and Lenders hereby consent
to and agree that:

(a) Notwithstanding anything to the contrary in the Credit Agreement, including without
limitation in Sections 4.1(a), 4.1(e), 4.5 and 11.1(b), Borrower shall have until December
31, 2006 to deliver the SEC Reports to Administrative Agent and file the SEC Reports with
the Securities and Exchange Commission, and during such period such delay in filing the SEC
Reports shall not constitute an “Event of Default” pursuant to the Credit Agreement.

(b) Notwithstanding anything to the contrary contained in Section 11.1(bb) of the
Credit Agreement, Borrower’s failure to be in compliance with the Nasdaq Stock Market, Inc.
listing standards, due solely to Borrower’s failure to timely file or deliver the SEC
Reports on or prior to December 31, 2006, will not constitute an “Event of Default” pursuant
to the Credit Agreement.

(c) Notwithstanding anything to the contrary contained in Section 11.1(e) of the Credit
Agreement, Borrower shall have until December 31, 2006 to file the registration statement
required by the Registration Agreement dated September 27, 2005 between the Borrower and the
“Initial Purchaser” named therein, and such default under the Registration Agreement shall
not constitute an “Event of Default” pursuant to the Credit Agreement unless such
registration statement is not filed on or prior to December 31, 2006.

(d) Notwithstanding anything to the contrary contained in Section 4.1(b)(v) of the
Credit Agreement, the Compliance Certificates delivered by Borrower may include the
following footnote: “The Audit Committee of the Borrower’s Board of Directors is conducting
an independent internal investigation of the Borrower’s stock option grants, procedures, and
practices, including compliance with Generally Accepted Accounting Principles and all
applicable statutes, rules, and regulations. The Securities and Exchange Commission and the
Department of Justice are conducting their own investigations of the same matters. The
financial statement accompanying this certificate may change upon the conclusion of these
investigations and our analysis of the results of the investigations.” The existence of
such footnote shall not be construed as or deemed an acceptance by Administrative Agent or
Lenders of any restatement of financial statements or reports that may be required upon the
conclusion of such investigations or construed as or deemed a waiver of any Defaults or
Event of Defaults resulting from any such restatement or reports.

(e) Administrative Agent acknowledges that Borrower has received a notice of default
and demand letters from Wells Fargo Bank National Association (“Trustee”), in connection
with the Indenture dated September 27, 2005 (“Indenture”), between Borrower, as issuer and
Trustee as a result of the failure to timely file and deliver the SEC Reports (the “Alleged
Indenture Default”). Borrower disputes that such a default has occurred under the Indenture
and has filed an action for declaratory judgment. So long as there is no determination by a
court and Borrower has not otherwise acknowledged that a default has occurred under the
Indenture, Administrative Agent will not declare an Event of Default under the Credit
Agreement solely as a result of the Alleged Indenture Default.

(f) Notwithstanding anything to the contrary in the Credit Agreement, until such time
as the SEC Reports have been delivered to Administrative Agent and the notice of the Alleged
Indenture Default has been withdrawn by the Trustee or a court has determined that the
Alleged Indenture Default has not occurred under the Indenture to Administrative Agents
satisfaction, the Revolving Loan Outstandings shall not at any time exceed $7,500,000 in the
aggregate. The limitation on Revolving Loan Borrowings provided for in this paragraph shall
not in any way limit or reduce any charge, fee or other sum due to Administrative Agent or
Lenders under the Credit Agreement.

(2) The Administrative Agent’s and Lenders’ consent and agreement to each of the provisions of
Section 1 above constitutes an amendment to the Credit Agreement.

(3) In consideration for the accommodations and amendments made herein, Borrower agrees to pay
to Administrative Agent an “Amendment Fee” in the amount of Fifteen Thousand Dollars
($15,000), which fee is fully earned and non-refundable upon the effectiveness hereof. Borrower
authorizes Administrative Agent to charge the loan for the payment of such Amendment Fee

(4) The effectiveness of this Consent is conditioned upon each of Administrative Agent and
Borrower receiving one (1) counterpart hereof duly executed by the Borrower and the Administrative
Agent. This Consent shall be binding on all parties to the Credit Agreement and their successors
and assigns upon the effectiveness hereof.

(5) Borrower covenants, confirms and agrees that as security for the repayment of the
Obligations, and any extensions, renewals, replacements, restructurings, or modifications thereof,
Lenders have, and shall continue to have, a continuing first perfected lien on and security
interest in all of the Collateral (as defined in the Credit Agreement). Borrower acknowledges and
agrees that nothing herein contained in any way impairs Lenders’ rights or priority in such
security.

(6) The execution, delivery and effectiveness of this Consent shall not operate as a waiver of
any Event of Default under the Finance Documents, of any event which with the passage of time or
the giving of notice or both would constitute an Event of Default, nor does it obligate
Administrative Agent, or Lenders to agree to any further modifications of the terms of any of the
Finance Documents or constitute a waiver of any other rights or remedies of Administrative Agent or
Lenders.

(7) The parties hereto hereby acknowledge and agree that, except as specifically modified
hereby, the Credit Agreement shall remain in full force and effect in accordance with its terms.
The Credit Agreement and this Consent shall be read, taken, together and construed as one and the
same instrument.

(8) This Consent may be executed in any number of counterparts, all of which taken together
shall constitute one agreement, and any of the parties hereto may execute this Consent by signing
any such counterpart.

(9) THIS CONSENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED IN SUCH STATE, AND SHALL FURTHER BE SUBJECT TO
THE PROVISIONS OF SECTION 14 (GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS; JURY
TRIAL WAIVER) IN THE CREDIT AGREEMENT.

[SIGNATURE PAGES IMMEDIATELY FOLLOW]

1

IN WITNESS WHEREOF, the parties hereto have executed this Consent and Amendment
Agreement to be effective as provided herein.

CYBERONICS, INC., a Delaware corporation

By:     /S/     Pamela B. Westbrook      

Pamela B. Westbrook, Chief Financial Officer

	 	 	 	 	 
	MERRILL LYNCH CAPITAL, a division of Merrill
	 	 
	 
	 	 	 	 
	Lynch Business Financial Services Inc., as Lender
	 	and as Administrative Agent
	 
	 	 	 	 
	By:

	 	/S/ Paula K. Berry
	 	

	 

	 	 
	 	

	Name:

	 	Paula K. Berry
	 	

	
 
	 	 
	 	

	Title:

	 	Vice President
	 	

	 

	 	 
	 	

	 
	 	 	 	 

2

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