EXHIBIT 10.1
AMENDMENT NO. 9 TO LEASE AGREEMENT
THIS AMENDMENT NO. 9 TO LEASE AGREEMENT ("Amendment") is dated as of
September 8, 2003, by and between ST. PAUL PROPERTIES, INC., a Delaware
corporation ("Landlord") and ATS MEDICAL, INC., a Minnesota corporation
("Tenant").
W I T N E S S E T H
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") and by
Amendment No. 8 to Lease dated December 14, 2000 (the "Eighth 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 and the Eighth 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 and expanded again pursuant to the Fifth Amendment, the Sixth
Amendment, the Seventh Amendment and the Eighth Amendment (the Original
Premises, as so expanded are hereinafter, the "Expanded
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Premises") such that, as of the date hereof, the Expanded Premises consist of
33,068 rentable square feet; and
WHEREAS, Landlord and Tenant wish further to amend the Lease to reduce
the 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. Reduction of Premises; Change in Proportionate Share. The Expanded
Premises shall be reduced by 6,362 rentable square feet (the Expanded Premises,
as so reduced shall be referred to herein as the "Premises") such that, as of
January 1, 2004, the Premises shall consist of 26,706 rentable square feet.
Effective as of January 1, 2004, Paragraph 4.E. of the Lease shall be amended to
decrease Tenant's "Proportionate Share" from 40.38% to 32.61% by dividing 26,706
by 81,885.
3. Extension of Term. The Term of the Lease is hereby extended for a
period of sixty three (63) months commencing January 1, 2004 (the "Extension
Commencement Date") and ending on March 31, 2009 (such period the "Extension
Term").
4. Base Rent. During the Extension Term, Tenant shall pay base rent for
the Premises in the amount of;
(a) Two Hundred Forty Thousand Three Hundred Fifty Four and
no/100ths Dollars ($240,354.00) per annum, (Twenty Thousand Twenty
Nine and 50/100ths Dollars ($20,029.50) per month) for the period
beginning on the Extension Commencement Date through and including
December 31, 2004. Provided Tenant is not in default under the Lease,
and notwithstanding the foregoing, the parties agree that Tenant shall
not be obligated to pay base rent (but shall be obligated to pay
Operating Costs) for the months of January, February and March, 2004
(the amount of such base rent is herein the "Abated Rent"). Tenant's
right to the Abated Rent may, at Landlord's option, be revoked without
notice to Tenant if at any time Tenant defaults under this Lease,
whether or not such default is cured. In such event, Tenant shall be
required to repay the Abated Rent, within ten (10) days after
Landlord's written demand therefor, it being understood and agreed
that any failure to repay as provided in this subparagraph shall
constitute an additional default under Paragraph 18(a) of this Lease;
(b) Two Hundred Forty Nine Thousand Seven Hundred One and
16/100ths Dollars ($249,701.16) per annum, (Twenty Thousand Eight
Hundred Eight and 43/100ths Dollars ($20,808.43) per month) for the
period beginning on January 1, 2005 and ending on December 31, 2006;
and
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(c) Two Hundred Sixty Three Hundred Eighty Three and 56/100ths
Dollars ($260,383.56) per annum, (Twenty One Thousand Six Hundred
Ninety Eight and 63/100ths Dollars ($21,698.63) per month) for the
period beginning on January 1, 2007 and ending on March 31, 2009,
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.
4. Termination of Lease. Tenant shall have a one-time option to
terminate this Lease effective on the 31st day of March, 2007 (the "Termination
Date") by giving written notice thereof (the "Termination Notice") to Landlord
not later than June 30, 2006; provided however, the following shall be
conditions precedent to the exercise of such option: (a) Tenant shall not be in
default under any of the terms and conditions of this Lease as of the date of
the Termination Notice or as of the Termination Date; and (ii) simultaneously
with its delivery of the Termination Notice, Tenant delivers to Landlord a
termination fee (the "Termination Fee") in the amount of $126,947.76 by wire
transfer or by cashier's check payable to Landlord's order. If Tenant satisfies
the foregoing conditions, base rent and Operating Costs shall be paid through
and apportioned as of the Termination Date and neither Landlord nor Tenant shall
have any rights, estates, liabilities or obligations accruing under the Lease
after the Termination Date, except such rights and obligations which, by the
terms of the Lease, expressly survive the expiration or termination of the
Lease. The right to terminate granted herein shall be personal to Tenant and
shall not accrue to any assignee, sublessee or successor to the interest of
Tenant under the Lease.
5. Right of First Offer. Provided that Tenant is not then in default
under this Lease, Tenant shall have a one time right to lease premises in the
Building which are adjacent to the Premises as generally shown on Exhibit A
attached hereto and made a part hereof ("Offer Space") whenever such Offer Space
first becomes available for lease after December 31, 2004, in accordance with
the provisions of this Paragraph 5, it being understood and agreed that for the
purposes of this Paragraph 5, "available for lease" shall mean that (i) the
tenant of the Offer Space (A) as of the expiration date of the term of its
lease, has not indicated to Landlord a desire to renew its lease, whether or not
said tenant's lease contained any right of extension or renewal and (B) has no
unexercised rights of renewal or expansion as the Offer Space contained in its
lease and (ii) no other tenant of Plymouth Business Center has any rights of
first offer or expansion as to the Offer Space. In the event the Offer Space
first becomes available for lease after December 31, 2004, Landlord shall give
written notice thereof to Tenant (the "Notice From Landlord"), which Notice From
Landlord shall contain the terms upon which Landlord is prepared to lease the
Offer Space to Tenant.. Tenant shall have ten (10) days after receipt of the
Notice From Landlord within which to deliver to Landlord written notice of
Tenant's exercise of this offer (the "Notice of Exercise"), time being of the
essence; provided, that it shall be condition precedent to the effectiveness of
Tenant's delivery of a Notice of Exercise that that Tenant is not in default in
the performance of its obligations under this Lease as of the date of Tenant's
delivery of the Notice of Exercise. Except for the terms and conditions
specifically set forth in the Notice From Landlord, all terms and conditions of
Tenant's lease of the Offer Space (including the expiration date thereof) shall
be as provided in this Lease, except that (i) base rent for the Offer Space
shall be the then-current Market Rent (as defined in Paragraph 6 below); (ii)
unless otherwise specified in the Notice From Landlord, the Offer Space shall be
leased "AS IS";
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and (iii) the term of the lease of the Offer Space shall be three (3) years,
unless otherwise specified in the Notice From Landlord, in Landlord's sole
discretion (the "Offer Space Term"). The Notice of Exercise shall contain the
same essential terms as the terms set forth in the Notice From Landlord and
shall be in a form sufficient to serve as a commitment by Tenant to enter into a
lease amendment with Landlord containing such terms with respect to the Offer
Space as are identified in the Notice From Landlord. Promptly upon Tenant's
delivery of the Notice of Exercise, the parties shall cooperate in the execution
of an agreement modifying the terms hereof to include the Offer Space as part of
the Premises in accordance with the terms contemplated in such Notice From
Landlord, and otherwise in accordance with the provisions of this Paragraph 5.
If Tenant fails to deliver the Notice of Exercise within said ten (10) day time
period, Tenant shall be deemed to have waived the right of first offer granted
by this Paragraph 5 and shall have no further right to lease the Offer Space. If
Tenant waives its right to lease the Offer Space either in writing or in
accordance with the preceding sentence, Landlord shall be free to lease the
Offer Space identified in such Notice From Landlord thereafter to any party upon
any terms. Subject to Paragraph 6 below, but notwithstanding anything else to
the contrary in this Lease, Tenant shall have no right to rescind any Notice of
Exercise given as to any Offer Space. The rights of Tenant under this Paragraph
5 shall not be severed from this Lease or separately sold, assigned, or
otherwise transferred, and shall expire on the Expiration Date or earlier
termination of this Lease. Notwithstanding the foregoing, the right of first
offer contemplated by this Paragraph 5 shall automatically terminate and become
null and void and of no further force and effect upon the earliest to occur of
(i) the expiration date or earlier termination of this 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 5. 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.
6. 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. Landlord shall include in the Notice From Landlord its
determination of Market Rent for the Offer Space (the "Market Rent Notice"). If
Tenant does not agree with Landlord's determination of Market Rent as set forth
in the Market Rent Notice, Tenant shall so notify Landlord in writing within ten
(10) days after Tenant's receipt of the Market Rent Notice ("Tenant's Notice").
Landlord and Tenant shall, for ten (10) days after Landlord's receipt of
Tenant's Notice, negotiate in good faith to come to an agreement as to Market
Rent for the Offer Space. If Landlord and Tenant are unable to agree upon Market
Rent within said ten day period, then, notwithstanding the provisions of
Paragraph 5, Tenant shall have the right to rescind the Notice of Exercise by
written notice (the "Rescission Notice") to Landlord given not later than twenty
(20) days after the date of Tenant's Notice, it being understood and agreed that
if the Rescission Notice is not given within such time period, Tenant shall be
deemed to have waived its right to rescind the Notice of Exercise. In such case,
to the extent that the Notice of Exercise is effectively exercised, Landlord and
Tenant shall execute and deliver an amendment to this Lease which amendment
shall be executed and delivered within ten (10) days following the determination
of Market Rent. Tenant's failure to give Tenant's Notice within the time period
provided above shall be deemed an acceptance of
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Landlord's determination of Market Rent, and Tenant shall be deemed to have
agreed to lease the Offer Space pursuant to the Notice of Exercise.
7. 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 B attached hereto and made a part
hereof (the "Work"). The Work shall be performed at Landlord's cost and expense,
subject to reimbursement by Tenant as a part of the Termination Fee if Tenant
terminates the Lease pursuant to Paragraph 4 above.
The parties understand and agree that Tenant is in possession of the
Premises on the date of this Amendment, and the parties further understand and
agree that Tenant understands and agrees that the Work will be performed during
normal working hours in the Premises. Landlord agrees that it will cause its
contractors to use reasonable efforts not to interfere with Tenant's business
operations in the Premises; provided however, that Tenant agrees that Landlord
shall be not be liable to Tenant for any loss, cost, damage or injury to persons
or property or to the business of Tenant conducted in the Premises arising from
the performance of the Work by Landlord's contractors or any subcontractors.
Tenant agrees to cooperate with Landlord and its contractors in terms of the
scheduling of the Work.
8. Exhibit. Effective on January 1, 2004, Exhibit A to the Lease is
deleted and Exhibit C attached hereto substituted therefor.
9. No Default. Tenant represents and warrants that after giving effect
to the amendment contained herein, no Event of Default shall have occurred or be
continuing under the Lease and no event shall have occurred which, with the
serving of notice or the passage of time, shall mature into such an Event of
Default.
10. Reference to and Effect on the Lease.
(a) Upon the effectiveness of this Amendment, each reference
in the Lease to "this Lease", "hereunder", "hereof" or words of like
import referring to the Lease shall be a reference to the Lease as
amended hereby.
(b) Except as specifically set forth above, the Lease remains
in full force and effect and is hereby ratified and confirmed.
(c) Whenever there exists a conflict between this Amendment
and the Lease, the provisions of this Amendment shall control.
11. Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of Minnesota.
12. Headings. Section headings in this Amendment are included herein
for convenience of reference only and shall not constitute one and the same
original.
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13. Counterparts. This Amendment may be executed in counterparts, all
of which, when taken together, shall constitute one and the same original.
14. Time of Essence. Time is of the essence as to each and every
provision of this Amendment and the Lease.
IN WITNESS WHEREOF, this Amendment has been executed as of the date
first written above.
ST. PAUL PROPERTIES, INC. ATS MEDICAL, INC.
By: /s/ Michael D. Elnicky By: /s/ Michael D. Dale
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Its: Asset Manager Its: President/CEO
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EXHIBIT A
Offer Space
EXHIBIT B
Work to be Performed
EXHIBIT C
Exhibit A to Lease