EXHIBIT 10.3

THIRD LEASE MODIFICATION AND EXTENSION AGREEMENT

     THIS THIRD LEASE MODIFICATION AND EXTENSION AGREEMENT (this “Agreement”) is
made and entered into as of the 26th day of January, 2005, by and between AMB
PROPERTY, L.P., a Delaware limited partnership (the “Lessor”) and MEDWAVE, INC.,
a Delaware corporation (the “Lessee”);

WITNESSETH:

     WHEREAS, Lessor; the successor in title to Round Lake LLC, and Lessee are
the parties to that certain Office/Warehouse Lease dated April 10, 1997, as
amended by that certain Lease Modification and Extension Agreement dated
March 29, 2002 and that certain Second Lease Modification and Extension
Agreement dated April 12, 2004 (collectively, the “Lease”), wherein Lessor
leased to Lessee and Lessee leased from Lessor that certain premises containing
approximately 5,964 square feet, commonly known as 4382-84 Round Lake Boulevard,
Arden Hills, Minnesota and designated as Bays 5 and 6, which premises is more
particularly depicted on the site plan attached hereto as Exhibit A (the
“Original Premises”); and

     WHEREAS, in addition to extending the term of the Lease, Lessor desires to
lease to Lessee and Lessee desires to lease from Lessor, both the Original
Premises and that certain premises adjacent to the Original Premises containing
7,073 square feet designated as Bays 7 and 8 and depicted on attached Exhibit A
(the “Expansion Area”).

     NOW, THEREFORE, in consideration of the above and the mutual promises and
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by each of the parties
hereto, the parties agree as follows:

Extension. The Term of the Lease is hereby extended for a period of three
(3) years commencing June 1, 2007 and ending on June 30, 2010 (the “Extended
Term”).

Expansion/Improvements.

•   Commencing on February 1, 2005 (the “Expansion Date”), through and including
June 30, 2010, Lessor shall lease to Lessee and Lessee shall lease from Lessor
both the Original Premises and the Expansion Area for an aggregate square
footage of 13,037, and which shall be collectively deemed the “Premises” for all
purposes under the Lease. In the event Lessor for any reason is unable to
deliver possession of the Expansion Area by February 1, 2005, Lessor shall not
be deemed in default under the Lease and the Expansion Date shall be deemed the
date that possession of the Expansion Area is delivered to Lessee. As a
condition to the achievement of the Expansion Date, prior to the Expansion Date
Lessee shall deliver to Lessor (i) copies of insurance certificates covering
both the Original Premises and the Expansion Area in accordance with the
requirements of Paragraph 16 of the Lease, provided that the insurance limits be
increased to reflect not less than $1,000,000 for injury/death to any one
person, $3,000,000 for injury/death to more than one person, and $1,000,000 for
damage to property, and (ii) an additional security deposit covering the
Expansion Area in the amount of $5,039.51 which shall be considered part of the
Security Deposit for all purposes under the Lease.

•   Lessor shall provide for the construction of a new demising wall at the west
side of the Expansion Area and separately metered utilities during the month of
February. Lessor shall guaranty that the HVAC unit(s) in the Expansion Area will
be in working order and condition for a period of one (1) year following
delivery of the Expansion Area to Lessee, specifically excepting from the, scope
of such guaranty any damage caused to the HVAC unit(s) resulting from acts or
omissions of Lessee or Lessee’s agents, employees, representatives, contractors
or invitees.

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Base Rent, Operating Expenses and Utilities.

•   Paragraph 2 of the Lease is hereby amended to provide that commencing
February 1, 2005, Lessee shall be responsible for the payment of Base Rent at
the following monthly rates and otherwise pursuant to the terms and conditions
of the Lease:

          Time Period   Monthly Base Rent  
February 1, 2005 - June 30, 2005
  $ 4,159.38  
July 1, 2005 - June 30, 2006
  $ 5,510.13  
July 1, 2006 - June 30, 2007
  $ 5,620.33  
July 1, 2007 -June 30, 2008
  $ 5,732.74  
July 1, 2008 - June 30, 2009
  $ 5,847.39  
July 1, 2009 - June 30, 2010
  $ 5,964.34  

•   Commencing February 1, 2005 and continuing through and including June 30,
2005, (i) Lessee shall be responsible for the payment of Real Estate Taxes and
Operating Expenses on both the Original Premises and Bay 1 of the Expansion Area
in accordance with the terms and conditions of the Lease, and (ii) Lessee’s
proportionate share of Real Estate Taxes and Operating Expenses under the Lease
shall equal 12.66%. Until July 1, 2005, Lessee shall continue to be responsible
for making all payments of Base Rent, Operating expenses and utilities to Lessor
for the Original Premises in accordance with the Lease.

•   Commencing July 1, 2005 and continuing through the end of the term of the
Lease, (i) Lessee shall be responsible for the payment of Real Estate Taxes and
Operating Expenses on both the Original Premises and the entire Expansion Area
in accordance with the terms and conditions of the Lease, and (ii) Lessee’s
proportionate share of Real Estate Taxes and Operating Expenses under the Lease
shall equal 17.49%.

•   Lessee shall be responsible for the payment of utilities covering the entire
Expansion Area commencing February 1, 2005.

Broker. Lessee and Lessor cash represent and warrant to the other that it has
dealt with no broker, agent or other person its connection with this transaction
other then CB Richard Ellis (the “Broker”) or that no broker, agent or other
person other than the Broker brought about this transaction, other than as may
be referenced in a separate written agreement executed by such party, and
delivered to the other party, and each party agrees to indemnify and hold the
other harmless from and against any claims by any other broker, agent or other
person other than the Broker claiming a commission or other form of compensation
by virtue of having dealt with such party with regard to this leasing
transaction. Lessor agrees to pay the leasing commission of the Broker payable
in connection with this transaction.

Estoppel/Acknowledgements of Lessee.

•   The Premises (including any improvements thereto) required to be furnished
according to the Lease have been duly delivered and accepted by Lessee.

•   Neither Lessor nor Lessee is in default under the Lease and the Lease is in
full force and effect and has not been assigned, modified, supplemented,
subleased, or amended, except as disclosed in the preambles to this Agreement.

•   The Lease and this Agreement represent the entire agreement between Lessor
and Lessee. Lessee has no option, right of first refusal, or other right to
renew, extend, lease additional space, or purchase any part of the Premises.

•   Lessee has no defenses or offsets against the enforcement of this Lease by
Lessor or other claims against Lessor.

•   There are no concessions or abatements of rent that affect any rent accruing
now or later; no rent accruing now or latter under the Lease has been paid in
advance.

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•   Lessee hereby acknowledges and agrees that Lessor has complied with and/or
Lessee waives compliance with all of Lessor’s obligations under the Lease
through the date of this Agreement.

Miscellaneous.

•   Applicable Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Minnesota.

•   Effect of Agreement. Except as expressly amended by this Agreement, all
terms and conditions of the Lease are and remain in fill force and effect, which
each of the parties hereto hereby acknowledge, agree and confirm.

•   Counterparts. This Agreement may be executed in two or more counterparts,
which, together or collectively, shall be deemed one and the same Agreement.

•   Capitalized Terms. Capitalized terms not otherwise defined herein shall have
the meaning ascribed thereto in the Lease.

     IN WITNESS WHEREOF, Lessor and Lessee have each caused this Agreement to be
executed as of the date first above written.

              In the presence of:   LESSOR:
 
                AMB PROPERTY, L.P.,     a Delaware limited partnership
 
           

  By:   AMB Property Corporation
a Delaware corporation    
 
           

  Its:   General Partner    
 
           
/s/ Elizabeth Panagaplas
  By:   /s/ Cristos F. Kombouras    
 
           
Name:
           

  Its:   VP, Regional Manager    
 
                Dated: January 31, 2005
 
           
In the presence of:
  LESSEE:      
 
                MEDWAVE, INC.,     a Delaware limited partnership
 
           
Name: /s/ Brigitte O’Malley
  By:   /s/ Timothy O’Malley    
 
           
 
           

  Its:   President and CEO    

           
 
                Dated: January 26, 2005

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