**EXHIBIT 10.3**
THIRD LEASE MODIFICATION AND EXTENSION AGREEMENT
     **THIS THIRD LEASE MODIFICATION AND EXTENSION AGREEMENT**(this “Agreement”) is made andentered into as of the 26th day of January, 2005, by and between **AMB PROPERTY, L.P.,**aDelaware 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 tothat certain Office/Warehouse Lease dated April 10, 1997, as amended by that certain LeaseModification and Extension Agreement dated March 29, 2002 and that certain Second LeaseModification and Extension Agreement dated April 12, 2004 (collectively, the “Lease”), whereinLessor leased to Lessee and Lessee leased from Lessor that certain premises containingapproximately 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 siteplan 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 andLessee desires to lease from Lessor, both the Original Premises and that certain premises adjacentto the Original Premises containing 7,073 square feet designated as Bays 7 and 8 and depicted onattached Exhibit A (the “Expansion Area”).
     NOW, THEREFORE, in consideration of the above and the mutual promises and covenants containedherein and for other good and valuable consideration, the receipt and sufficiency of which ishereby 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) yearscommencing 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 toLessee and Lessee shall lease from Lessor both the OriginalPremises and the Expansion Area for an aggregate squarefootage of 13,037, and which shall be collectively deemed the“Premises” for all purposes under the Lease. In the eventLessor for any reason is unable to deliver possession of theExpansion Area by February 1, 2005, Lessor shall not bedeemed in default under the Lease and the Expansion Dateshall be deemed the date that possession of the ExpansionArea is delivered to Lessee. As a condition to theachievement of the Expansion Date, prior to the ExpansionDate Lessee shall deliver to Lessor (i) copies of insurancecertificates covering both the Original Premises and theExpansion Area in accordance with the requirements ofParagraph 16 of the Lease, provided that the insurance limitsbe increased to reflect not less than $1,000,000 forinjury/death to any one person, $3,000,000 for injury/deathto more than one person, and $1,000,000 for damage toproperty, and (ii) an additional security deposit coveringthe Expansion Area in the amount of $5,039.51 which shall beconsidered part of the Security Deposit for all purposesunder the Lease.
•  Lessor shall provide for the construction of a new demisingwall at the west side of the Expansion Area and separatelymetered utilities during the month of February. Lessor shallguaranty that the HVAC unit(s) in the Expansion Area will bein working order and condition for a period of one (1) yearfollowing delivery of the Expansion Area to Lessee,specifically excepting from the, scope of suchguaranty any damage caused to the HVAC unit(s) resulting from acts or omissionsof Lessee or Lessee’s agents, employees, representatives, contractors orinvitees.
22

 

**Base Rent, Operating Expenses and Utilities.**
•  Paragraph 2 of the Lease is hereby amended toprovide that commencing February 1, 2005, Lesseeshall be responsible for the payment of BaseRent at the following monthly rates andotherwise pursuant to the terms and conditionsof 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 andincluding June 30, 2005, (i) Lessee shall be responsible forthe payment of Real Estate Taxes and Operating Expenses onboth the Original Premises and Bay 1 of the Expansion Area inaccordance with the terms and conditions of the Lease, and(ii) Lessee’s proportionate share of Real Estate Taxes andOperating Expenses under the Lease shall equal 12.66%. UntilJuly 1, 2005, Lessee shall continue to be responsible formaking all payments of Base Rent, Operating expenses andutilities to Lessor for the Original Premises in accordancewith the Lease.
•  Commencing July 1, 2005 and continuing through the end of theterm of the Lease, (i) Lessee shall be responsible for thepayment of Real Estate Taxes and Operating Expenses on boththe Original Premises and the entire Expansion Area inaccordance with the terms and conditions of the Lease, and(ii) Lessee’s proportionate share of Real Estate Taxes andOperating Expenses under the Lease shall equal 17.49%.
•  Lessee shall be responsible for the payment of utilitiescovering the entire Expansion Area commencing February 1,2005.
**Broker****. Lessee and Lessor cash represent and warrant to the other that it has dealtwith no broker, agent or other person its connection with this transaction other then CB RichardEllis (the “Broker”) or that no broker, agent or other person other than the Broker brought aboutthis transaction, other than as may be referenced in a separate written agreement executed by suchparty, and delivered to the other party, and each party agrees to indemnify and hold the otherharmless from and against any claims by any other broker, agent or other person other than theBroker claiming a commission or other form of compensation by virtue of having dealt with suchparty with regard to this leasing transaction. Lessor agrees to pay the leasing commission of theBroker payable in connection with this transaction.**
**Estoppel/Acknowledgements of Lessee.**
•  The Premises (including any improvements thereto)required to be furnished according to the Lease havebeen duly delivered and accepted by Lessee.
•  Neither Lessor nor Lessee is in default under the Leaseand the Lease is in full force and effect and has notbeen assigned, modified, supplemented, subleased, oramended, except as disclosed in the preambles to thisAgreement.
•  The Lease and this Agreement represent the entireagreement between Lessor and Lessee. Lessee has nooption, right of first refusal, or other right torenew, extend, lease additional space, or purchase anypart of the Premises.
•  Lessee has no defenses or offsets against theenforcement of this Lease by Lessor or other claimsagainst Lessor.
•  There are no concessions or abatements of rent thataffect any rent accruing now or later; no rent accruingnow or latter under the Lease has been paid in advance.
23

 

•  Lessee hereby acknowledges and agrees that Lessor hascomplied with and/or Lessee waives compliance with allof Lessor’s obligations under the Lease through thedate of this Agreement.
**Miscellaneous.**
•  Applicable Law. This Agreement shall be governed byand construed and enforced in accordance with the lawsof the State of Minnesota.
•  Effect of Agreement. Except as expressly amended bythis Agreement, all terms and conditions of the Leaseare and remain in fill force and effect, which each ofthe parties hereto hereby acknowledge, agree andconfirm.
•  Counterparts. This Agreement may be executed in two ormore counterparts, which, together or collectively,shall be deemed one and the same Agreement.
•  Capitalized Terms. Capitalized terms not otherwisedefined herein shall have the meaning ascribed theretoin the Lease.
     **IN WITNESS WHEREOF,**Lessor and Lessee have each caused this Agreement to be executed asof the date first above written.       In the presence of: LESSOR:         AMB PROPERTY, L.P.,  a Delaware limited partnership        By: AMB Property Corporation