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EXHIBIT 10.3
AMENDMENT NO. 11 TO LEASE AGREEMENT
THIS AMENDMENT NO. 11 TO LEASE AGREEMENT ("Amendment") is dated as
of
September 1, 2006, by and between ST. PAUL PROPERTIES, INC., a
Delaware
corporation ("Landlord") and ATS MEDICAL, INC., a Minnesota
corporation
("Tenant").
WITNESSETH
WHEREAS, Crow Plymouth Land Limited Partnership ("Crow"), as
landlord, and
Helix BioCore, Inc. ("Helix"), as tenant, entered into that certain
Lease
Agreement dated December 22, 1987 (the "Original Lease"), which
Original Lease
was amended by Amendment No. 1 to Lease Agreement dated January 5,
1989 (the
"First Amendment"); and
WHEREAS, Plymouth Business Center I Partnership ("Business
Center")
succeeded to Crow's interest in the Original Lease as amended by
the First
Amendment; and
WHEREAS, Business Center and Helix further amended the Original
Lease by
Amendment No. 2 to Lease Agreement dated January 12, 1989 (the
"Second
Amendment"), Amendment No. 3 to Lease dated June 14, 1989 (the
"Third
Amendment") and Amendment No. 4 to Lease Agreement dated February
10, 1992 (the
"Fourth Amendment"); and
WHEREAS, Landlord has succeeded to the interest of Business Center
in the
Original Lease as amended by the First Amendment, the Second
Amendment, the
Third Amendment and the Fourth Amendment; and
WHEREAS, on May 10, 1992, Helix changed its name to ATS Medical,
Inc.; and
WHEREAS, Landlord and Tenant further amended the Original Lease
by
Amendment No. 5 to Lease Agreement (the "Fifth Amendment"), by
Amendment No. 6
to Lease Agreement dated November 25, 1997 (the "Sixth Amendment"),
by Amendment
No. 7 to Lease Agreement dated May 10, 2000 (the "Seventh
Amendment") by
Amendment No. 8 to Lease dated December 14, 2000 (the "Eighth
Amendment"), by
Amendment No. 9 to Lease dated September 8, 2003 (the "Ninth
Amendment") and by
Amendment No. 10 to Lease dated October 1, 2004 (the "Tenth
Amendment"; the
Original Lease, as amended by the First Amendment, the Second
Amendment, the
Third Amendment, the Fourth Amendment, the Fifth Amendment, the
Sixth Amendment,
the Seventh Amendment, the Eighth Amendment, the Ninth Amendment
and the Tenth
Amendment is hereinafter, the "Lease"); and
WHEREAS, the Original Lease demised premises, as described therein
(the
"Original Premises"), which Original Premises were expanded
pursuant to the
First Amendment, which expansion space was surrendered pursuant to
the Third
Amendment, expanded again pursuant to the Fifth Amendment, the
Sixth Amendment,
the Seventh Amendment and the Eighth Amendment, reduced pursuant to
the Ninth
Amendment and expanded pursuant to the Tenant Amendment (the
Original Premises,
as so expanded and reduced are hereinafter, the "2006
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Existing Premises") such that, as of the date hereof, the 2006
Existing Premises
consist of 33,068 rentable square feet; and
WHEREAS, Landlord and Tenant wish further to amend the Lease to
once again
expand the Existing Premises and extend the term of the Lease,
NOW THEREFORE, in consideration of the premises and for good and
valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the
parties agree as follows:
1. Defined Terms. Unless the context otherwise indicates, all
capitalized
terms not otherwise defined herein shall have the meanings ascribed
to them in
the Lease.
2. Expansion of Premises; Change in Proportionate Share. Effective
as of
November 1, 2006 (the "2006 Expansion Space Commencement Date"),
the 2006
Existing Premises shall be expanded by 6,342 rentable square feet
as generally
shown on Exhibit A attached hereto and made a part hereof (the
"2006 Expansion
Space"; the 2006 Existing Premises, as so expanded shall be
referred to herein
as the "Premises") such that, as of November 1, 2006, the Premises
shall consist
of 39,410 rentable square feet. Effective as of the 2006 Expansion
Space
Commencement Date, Paragraph 4.E. of the Lease shall be amended to
increase
Tenant's "Proportionate Share" from 40.38% to 48.13% by dividing
39,410 by
81,885.
3. 2006 Expansion Space Term. The term of the lease for the 2006
Expansion
Space shall commence on the 2006 Expansion Space Commencement Date
and terminate
on July 31, 2010 (the "2006 Expansion Space Term").
4. Extension of Term. The term of the Lease as to the 2006
Existing
Premises is hereby extended to July 31, 2010.
5. Base Rent. From and after the 2006 Expansion Space Commencement
Date,
Tenant shall pay base rent for the Premises in the amount of:
(a) $363,092.88 per annum ($30,257.74 per month), consisting of
$53,907.00 per annum ($4,492.25 per month) for the 2006 Expansion
Space and
$309,185.88 per annum ($25,765.49 per month) for the 2006 Existing
Premises
for the period from the Expansion Space Commencement Date through
and
including December 31, 2006;
(b) $373,775.28 per annum ($31,147.94 per month), consisting of
$53,907.00 per annum ($4,492.25 per month) for the 2006 Expansion
Space and
$319,868.28 per annum ($26,655.69 per month) for the 2006 Existing
Premises
for the period from January 1, 2007 through and including October
31, 2007;
(c) $374,853.48 per annum ($31,237.75 per month), consisting of
$54,985.20 per annum ($4,582.10 per month) for the 2006 Expansion
Space and
$319,868.28 per annum ($26,655.69 per month) for the 2006 Existing
Premises
for the period from November 1, 2007 through and including October
31,
2008;
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(d) $375,953.16 per annum ($31,329.43 per month), consisting of
$56,084.88 per annum ($4,673.74 per month) for the 2006 Expansion
Space and
$319,868.28 per annum ($26,655.69 per month) for the 2006 Existing
Premises
for the period from November 1, 2008 through and including October
31,
2009; and
(e) $377,074.80 per annum ($31,422.90 per month), consisting of
$57,206.52 per annum ($4,767.21 per month) for the 2006 Expansion
Space and
$319,868.28 per annum ($26,655.69 per month) for the 2006 Existing
Premises
for the period from November 1, 2009 through and including July 31,
2010,
all without deduction or setoff therefrom, payable at the time and
in the manner
set forth in the Lease for the payment of base rent.
5. Amendments.
(a) Paragraph 4 of the Ninth Amendment is hereby deleted in its
entirety.
(b) Paragraph 7 of the Ninth Amendment is hereby deleted in its
entirety, and Tenant acknowledges that Landlord has complied
with
Landlord's obligations thereunder.
(c) Exhibits A and B to the Ninth Amendment are hereby deleted
in
their entirety.
(d) Paragraph 6 of the Tenth Amendment is hereby deleted in its
entirety.
(e) Exhibit A to the Tenth Amendment is hereby deleted in its
entirety.
(f) Effective on the 2006 Expansion Space Commencement Date,
Exhibit A
to the Lease is deleted and Exhibit B to this Amendment
substituted
therefor.
6. Improvements. After the execution of this Amendment, at such
time as
Landlord and Tenant may mutually agree, Landlord shall cause to be
performed by
the work in the Premises described on Exhibit C attached hereto and
made a part
hereof (the "2006 Work"). The 2006 Work shall be performed at
Landlord's cost
and expense, subject to reimbursement by Tenant of $20,000 of the
cost of the
2006 Work as provided in Exhibit C.
The parties understand and agree that Tenant is in possession of
the 2006
Existing Premises on the date of this Amendment, and the parties
further
understand and agree that Tenant understands and agrees that the
2006 Work will
be performed during normal working hours and shall otherwise be
subject to the
terms and conditions set forth in Exhibit C.
7. Condition of 2006 Existing Premises. The 2006 Existing Premises
shall be
taken by Tenant, as of April 1, 2009, the first day of the
extension term as to
the 2006 Existing Premises, in its then AS-IS, WHERE-IS, WITH ALL
FAULTS
condition.
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8. Additional Agreements.
a. HVAC Units - 2006 Expansion Space. The parties agree that, on
or
before the 2006 Expansion Space Commencement Date, Landlord, at
Landlord's
sole cost and expense, shall replace all HVAC units serving the
2006
Expansion Space that Landlord, in its sole discretion, determines
need
replacement. Subsequent to the 2006 Expansion Space Commencement
Date, to
the extent Landlord, in its sole discretion, determines that any or
all of
the HVAC units serving the 2006 Expansion Space need replacement,
Landlord
shall do so, and the cost thereof shall be amortized over a twelve
year
period from the date of installation thereof, which amortization
shall be
based upon equal payments of principal and interest over said
twelve year
period, and interest shall be at the rate of nine percent (9%) per
annum.
Throughout that portion of the Term during which such amortization
occurs,
Tenant shall pay, as a part of Operating Costs, all of such
amortization,
including interest as specified above.
b. HVAC Units - 2006 Existing Premises. The parties agree that to
the
extent Landlord, in its sole discretion, determines that any or all
of the
HVAC units serving the 2006 Existing Premises need replacement at
any time
on or after April 1, 2009, Landlord shall do so, and the cost
thereof shall
be amortized over a twelve year period from the date of
installation
thereof, which amortization shall be based upon equal payments of
principal
and interest over said twelve year period, and interest shall be at
the
rate of nine percent (9%) per annum. Throughout that portion of the
Term
during which such amortization occurs, Tenant shall pay, as a part
of
Operating Costs, all of such amortization, including interest as
specified
above.
c. Renewal of Lease. Landlord hereby grants to Tenant a
one-time
option to renew the Lease as to the Premises upon the terms and
conditions
of this Paragraph 8(c) if:
(i) Tenant is not in default under this Lease, as the same may
have been renewed beyond any time to cure at the time such option
is
exercised; and
(ii) Tenant gives Landlord written notice of the exercise of
the
renewal of this Lease not later than nine months prior to the end
of
the term (as extended pursuant to this Amendment (the "2009
Renewal
Notice of Exercise"), time being of the essence. Tenant's failure
to
notify Landlord of its intent to exercise its option to renew the
Term
granted herein on or before the dates specified in this
subparagraph
(ii) for such renewal shall be deemed a waiver of Tenant's right
to
exercise its option to renew.
If Tenant elects to renew this Lease under this Paragraph 8(c)
the
following terms and conditions shall apply:
(i) The renewal term in question shall commence on August 1,
2010
continue thereafter for a period of three (3) years.
(ii) Base Rent for the Premises for the renewal term shall be
Market Rent (as defined in Paragraph 8(d) of this Amendment);
and
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(iii) All of the other terms and conditions contained in this
Lease, as it may have been amended from time to time, shall be as
set
out in the Lease, it being understood that there shall be no rights
of
renewal or extension except as provided in this Paragraph 8(c),
and,
upon the exercise of the right of renewal granted by this
Paragraph
8(c), this Paragraph 8(c) shall be of no further force or effect
and
Tenant shall have no right to further renew or extend the term at
the
expiration of the renewal term.
Within fifteen (15) business days after request thereof from
Landlord,
Tenant shall execute and deliver to Landlord those instruments
which
Landlord may request to evidence the renewal described in this
Paragraph
8(c). The rights of Tenant under this Paragraph 8(c) shall not be
severed
from the Lease or separately sold, assigned, or otherwise
transferred, and
shall expire on the expiration or earlier termination of the
Lease.
Notwithstanding the foregoing, the renewal option contemplated in
this
Paragraph 8(c) shall automatically terminate and become null and
void and
of no further force and effect upon the earlier to occur of (i)
the
expiration or termination of the Lease; (ii) the termination of
the
Tenant's right to possession of the Premises; or (iii) the failure
of
Tenant to timely or properly exercise the rights granted by this
Paragraph
8(c). The right contemplated by this Paragraph shall not survive
the
expiration or termination of this Lease, and shall not be available
to any
assignee, sublessee, or successor to Tenant's interests
hereunder.
d. Market Rent. "Market Rent' means the amount of base rent, which
may
or may not include concessions, improvements, and other matters
(exclusive
of Operating Costs) which Landlord would receive by then renting
similar
space (including similar square footage) for premises in the
project in
which the Building is located. Within 45 days after Tenant
exercised its
right to renew the Term pursuant to Paragraph 8(c), Landlord shall
give
Tenant notice of Market Rent for the renewal term (the "2009 Market
Rent
Notice"). If Tenant does not agree with Landlord's determination of
Market
Rent as set forth in the 2009 Market Rent Notice, Tenant shall so
notify
Landlord in writing within ten (10) days after Tenant's receipt of
2009
Market Rent Notice ("2009 Tenant's Notice"). Landlord and Tenant
shall, for
ten (10) days after Landlord's receipt of the 2009 Tenant's
Notice,
negotiate in good faith to come to an agreement as to Market Rent
for the
renewal term. If Landlord and Tenant are unable to agree upon
Market
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