exv10w18







    Exhibit 10.18



 




    CLEAN
    ROOM-CONTRACT NO.: VBC-B2.B1-05.001.



 



    THIS LEASE AGREEMENT IS ENTERED INTO BY AND BETWEEN VESTA
    BAJA CALIFORNIA, S. DE R.L. DE C.V. REPRESENTED BY
    ALEJANDRO ITUARTE EGEA, IN HIS CAPACITY AS LEGAL REPRESENTATIVE
    HEREINAFTER REFERRED TO AS THE “LANDLORD”, ON THE
    OTHER HAND BLOCK MEDICAL DE MEXICO, S.A. DE C.V.
    (“TENANT”) REPRESENTED BY MR. PABLO ANGEL QUINTANA IN
    HIS CAPACITY AS LEGAL REPRESENTATIVE OF “TENANT”; AND
    l-FLOW CORPORATION, AS GUARANTOR, REPRESENTED BY MR. JAMES DAL
    PORTO — VICEPRESIDENT, IN ACCORDANCE WITH THE
    FOLLOWING STATEMENTS AND CLAUSES:



 




    STATEMENTS:



 


		
	
    I.  
	
    LANDLORD
    REPRESENTATIVE STATES




 



    A) That on February 8, 2005, under Public Instrument
    No. 71,759, Book No. 1,484 executed before Licenciado
    Heriberto Román Talavera, Notary Public No. 62 for the
    city of Distrito Federal, México, the Mexican Mercantile
    Company Vesta Baja California, Sociedad de Responsabilidad
    Limitada de Capital Variable” was incorporated, and that
    such company was duly recorded.



 



    B) That within the property, LANDLORD is the owner of the
    Industrial Building identified on Exhibit “A” as
    B2-B1 of
    7,900 square feet. The location, distribution, measurements
    and characteristics are described on Exhibit “B”
    attached hereto, (exhibits that are duly signed by the parties
    hereof). The building includes the following leasehold
    improvements that are deemed part of the building and are paid
    for in the rent of such building, as follows:



 


		
	    • 
	    Clean room class 10,000.

	 
	    • 
	    250 KVA power supply.




 



    The land upon which the building is situated and the building
    itself, are hereafter collectively referred to herein as the
    “Leased Premises”.



 



    E) That the LEASED PREMISES have water, sewage and water
    reservoir, with power and service. TENANT directly contract
    telephone lines.



 



    F) That the LEASED PREMISES are available to TENANT for the
    industrial use sought by TENANT, due to its nature and to its
    location in accordance to the Internal Rules and Regulations of
    LA MESA INDUSTRIAL PARK, included herein as Exhibit
    “C”, which duly signed form an integral part of this
    agreement.



 


		
	
    II.  
	
    TENANT’S
    REPRESENTATIVE STATES:




 



    A) That TENANT is a corporation legally incorporated in
    accordance to the applicable laws of the Republic of Mexico,
    with legal capacity to enter and bind itself by this Lease, as
    stated in Public Instrument No. 42,289 executed before Lic.
    Eduardo Illades Moreno, Public Notary No. 7, for the city
    of Tijuana, Baja California, which was duly recorded at the
    Public Registry of Property and Commerce of Tijuana, Baja
    California.



 




    CLAUSES



 




    FIRST.  LEASE
    OBJECTIVE



 



    Under the terms and conditions stated herein, LANDLORD hereby
    leases to TENANT the “Leased Premises”.



 



    LANDLORD declares that during the term of this agreement, it has
    all property rights over the LEASE PREMISES, and warrants that
    TENANT shall have the peaceful use and enjoyment of the same.




    

    1








 







    SECOND.  TERM



 



    The initial term of this Lease, shall be of 1 (one) year,
    commencing on August 15., 2005 and ending August 14,
    2006.



 



    Notwithstanding the starting date of this Lease, TENANT shall
    have right to access the LEASED PREMISES, in order to install
    accessories and equipment, at any time after previous Tenant
    leave the LEASED PREMISES and after the execution of this lease
    agreement.



 



    TENANT has the option to renew the term of this lease for 2
    (two) additional periods of 2 (two) years each, through written
    notice to LANDLORD for such purposes at least one hundred and
    twenty (120) calendar days prior to the termination of the
    initial term or any of its renewals.



 




    THIRD.  LEASE
    RATE



 



    Both parties agree that monthly “Base Rent” for the
    Leased Premises shall be equal to that amount in Mexican Pesos
    required to purchase $3,318.00 Dollars (Three thousand three
    hundred and eighteen dollars 00/100 U.S. Cy.) Base Rent
    shall be payable in advance on the
    1st day

    of each calendar month at LANDLORD’S domicile located at
    Calle E No. 4, Fraccionamiento Rubio, La Mesa, in
    Tijuana, Baja California. Notwithstanding the foregoing, TENANT
    at its sole option may elect to pay Base Rent in
    U.S. Dollars and for purposes of this lease, payment of
    Base Rent shall be deemed to be in Mexican Pesos.



 



    LANDLORD hereby acknowledges receipt of an amount in Mexican
    currency equivalent to the amount of purchase $3,318.00 Dollars
    (Three thousand three hundred and eighteen dollars 00/100
    U.S. Cy.), as payment for the first installment of Base
    Rent, and issues hereby the broadest receipt available by law.



 



    Base Rent shall increase on the one year anniversary of the Rent
    Commencement Date, and each subsequent anniversary, by the same
    percentage increase in the Consumer Price Index for Los Angeles,
    California (“C.P.I”), over the previous year as
    published by the U.S. Department of labor Statistics;
    provided however, that Base Rent shall not be increased by less
    than 3% or more than 5% at the time of the increase.



 



    Both parties agree that in the event of late payment of Base
    Rent, TENANT shall pay 3% monthly penalty, starting the
    6th. day

    as from the date on which the Base Rent is due and payable;
    provided that LANDLORD has sent TENANT written notice by
    reputable overnight courier (i.e. Federal Express or DHL), of
    such delay and TENANT has thereafter failed to make payment
    within 2 (two) business days.



 




    FOURTH.  SECURITY
    DEPOSIT.



 



    Upon signature of this Lease, TENANT shall deliver to LANDLORD
    the amount in Mexican currency that is necessary to purchase the
    amount of purchase $3,318.00 Dollars (Three thousand three
    hundred and eighteen dollars 00/100 U.S. Cy.), as security
    deposit, in whole or in part, as the case may be, for the
    compliance of each of the provisions binding TENANT, arising
    from this Lease. The aforementioned amount of deposit shall be
    returned to TENANT upon termination of this Lease, or of the
    individual options of the extension exercised, provided there is
    no balance due to LANDLORD and that TENANT returns the LEASED
    PREMISES in good condition, taking into consideration the normal
    deterioration of the same due to its use. TENANT shall not be
    entitled to receive interests from LANDLORD on such deposit.



 



    Upon signature of this Lease, TENANT shall deliver to LANDLORD
    the amount in Mexican currency that is necessary to purchase the
    amount of $4,000.00 Dollars (Four thousand dollars 00/100) as
    security deposit for the electric power consumption, which will
    be credited on the last electric receipt.



 




    FIFTH.  USE
    OF THE LEASED PREMISES



 



    TENANT shall have the right to use the Leased Premises for its
    non-polluting industrial activities, mainly those related to the
    assembly of medical products, in accordance with applicable
    environmental legislation and will not generate odors, gases,
    smoke, vibrations, dust, nor noises, which constitutes a
    nuisance, or is damaging to LANDLORD or to third parties.




    

    2








 






    Both parties bind themselves to the Interior Rules and
    Regulations of LA MESA INDUSTRIAL PARK, which is enclosed as
    Exhibit “C”.



 




    SIXTH.  RENT
    ABATEMENT



 



    In the event that the LEASED PREMISES are damaged or destroyed,
    by any cause, not attributable to TENANT, and that such damage
    hinders the use of the LEASED PREMISES for the intended lease
    purpose, LANDLORD shall determine within the next thirty
    (30) days following LANDLORD’s acknowledgement of said
    damage or destruction, if the LEASED PREMISES can be restored or
    rebuilt within the next six (6) months, and shall notify
    TENANT of this determination. If LANDLORD resolves that the
    LEASED PREMISES cannot be restored or rebuilt within the six
    (6) months period, both LANDLORD and TENANT shall be
    entitled to terminate this Lease through written notice to the
    other party.



 



    If LANDLORD determines that the LEASED PREMISES can be restored
    or rebuilt within the next six (6) months following the
    date of notice of the casualty, LANDLORD at its own expense,
    will proceed to rebuild or restore the LEASED PREMISES, waiving
    the right to receive rental fees during the period of
    reconstruction provided that the cause is not attributable to
    TENANT.



 



    It is hereby established, that in case of partial destruction of
    the LEASED PREMISES, from causes not attributable to TENANT, the
    rent shall be partially abated to which TENANT is affected in
    the use of the LEASED PREMISES. This binds TENANT to provide
    written notice to LANDLORD no later than one (1) working
    day following the acknowledgement by TENANT of the damage.



 




    SEVENTH.  GUARANTOR



 



    I-Flow Corporation, through its representative Mr. James
    Dal Porto, at 20202 Windrow Dr., Lake Forest, California
    92630 — USA, constitutes itself as TENANT’s
    guarantor, guaranteeing all TENANT’s obligations hereunder,
    and this obligation shall not cease until LANDLORD receives to
    its satisfaction the LEASED PREMISES.



 



    Accordingly I-Flow Corporation agrees to execute the “
    Absolute Guaranty of Lease” which is attached hereto as
    Exhibit “D”.



 




    EIGHTH.  ALTERATIONS
    BY TENANT



 



    TENANT shall be entitled to make interior alterations to the
    LEASED PREMISES, at its sole and exclusive expense, as long as
    such alteration do not affect its structural integrity or
    exterior appearance. Thus, TENANT agrees not to make any
    alteration that could affect the structural integrity or
    exterior appearance, without prior consent by LANDLORD. The
    request for such alterations shall be shown on a set of drawings
    or blue prints and specifications submitted to LANDLORD for its
    authorization. If LANDLORD does not opposes during a period no
    longer than ten (10) days to such alteration, it shall be
    understood that LANDLORD has granted its authorization. TENANT
    agrees to return the LEASED PREMISES to LANDLORD in the
    conditions and with the characteristics it has to the date of
    execution of this Lease, except for the deterioration it may
    suffer from the normal use, being obligated to pay for losses or
    damages that LANDLORD may suffer for the removal of said
    improvements in order to return the LEASED PREMISES to its
    original state.



 




    NINTH.  UTILITIES
    OF THE LEASED PREMISES



 



    TENANT agrees to pay, the periodic costs of the utilities that
    are available or will be available for the LEASED PREMISES, such
    as electricity, water, telephone, etc.



 


		
	    • 
	    Electricity:  TENANT shall pay to
    LANDLORD the cost of electricity on a monthly basis, in
    accordance to the consumption on their power meter at the same
    rate charged by the electric company.

	 
	    • 
	    Water:  LANDLORD provides water for
    restrooms. Any other water consumption, LANDLORD will charge to
    TENANT.

	 
	    • 
	    Telephone:  TENANT shall deal directly
    with contract the telephone service and agrees to pay the
    periodic cost of this utility.





    

    3








 





 




    TENTH.  MAINTENANCE
    OF THE LEASED PREMISES BY LANDLORD



 



    LANDLORD shall keep in good working order during the term of
    this Lease, the roof, exterior walls, exterior doors, floors and
    other structural components of the LEASED PREMISES, including
    water storage systems and associated piping. Repairs thereto
    necessary for their good functioning shall be completed promptly
    and at LANDLORDS expense, including reasonable preventive
    maintenance.



 




    ELEVENTH.  MAINTENANCE
    OF THE LEASED PREMISES BY TENANT



 



    TENANT will maintain the electrical and plumbing systems
    (including bathrooms) and the hydrophneumatic pump (excluding
    water storage systems and related piping), the interior painting
    and carpeting, non structural walls, partitions and ceilings,
    ventilation and air conditioning systems and ducts, doors and
    windows, in good order and condition at all times, and will make
    all necessary repairs thereto at its own expense, including
    reasonable preventive maintenance. TENANT shall not permit undue
    accumulations of garbage, trash, rubbish and other refuse,
    inside, outside or in the loading and unloading zones. TENANT
    will not use the roof as a storage area.



 



    All leasehold improvements mentioned in statement I-D hereof,
    shall be maintained by TENANT.



 




    TWELFTH.  RIGHT
    TO SUBLETTING



 



    TENANT shall be entitle to sublease in whole or in part the
    LEASED PREMISES for industrial purposes, in accordance to the
    applicable environmental legislation, only with previous written
    authorization by LANDLORD, in the understanding that TENANT
    shall be liable for the obligations contained hereunder.



 




    THIRTEENTH.  TERMINATION
    OF THE LEASE BY TENANT



 



    TENANT shall be entitle to terminate the Lease at any time, in
    the event of any circumstance of force majeure, fortuitous
    accident or acts of Government that substantially hinder or
    prevent TENANT’s industrial use of the LEASED PREMISES. In
    the case that TENANT exercises this right, TENANT shall notify
    LANDLORD in writing sixty (60) days prior to effective
    termination date.



 




    FOURTEENTH.  INSURANCE



 



    During the term of this Lease Agreement TENANT shall pay
    LANDLORD yearly on the anniversary date of the Lease Agreement
    the amount of $869.00 Dollars (Eight hundred dollars 00/100
    U.S. Cy.) as payment of adeauate insurance policies,
    against any damage caused to the LEASED PREMISES by: fire,
    lighting, explosions, airplane collisions, smoke, storms,
    collisions of any type of vehicle, strike, popular or student
    disturbances, acts of vandalism and flood, and acts by
    TENANT’s employees, workmen, contractors, vendors, clients,
    visitors and officers. This policy does not include
    building’s contents.



 




    FIFTEENTH.  PAYMENT
    OF VALUE ADDED TAX



 



    The Value Added Tax caused by this Lease shall be paid by TENANT
    and declared by LANDLORD.



 




    SIXTEENTH.  SECURITY
    AND MAINTENANCE FEES.



 



    TENANT is responsible for paying LANDLORD in a yearly basis, the
    amount of $790.00 Dollars (Seven hundred and ninety dollars
    00/100 US Cy.) for maintenance and security fees.




    

    4








 







    SEVENTEENTH.  DOMICILE



 



    For all legal effects arising from this Lease, the Parties
    designate the following domiciles:



 



    THE LANDLORD

    Bosque de Ciruelos 304 Piso 7

    Col. Bosques de Las Lomas

    Delegación Miguel Hidalgo

    México, D.F. 11700



 



    THE GUARANTOR

    20202 Windrow Dr.

    Lake Forest, CA 92360

    USA



 



    THE TENANT

    Privada Baja California edificio B2-B1

    La Mesa Industrial Park

    Paseo Reforma No. 8141 Fracc. Rubio

    Tijuana, B.C. México 22116



 



    Any notices to be given hereunder shall be in writing and shall
    be delivered personally to the other party, or sent by certified
    mail or specialized mail (DHL, UPS, Fed-Ex, etc.), to the
    domicile mentioned above, in which case the corresponding notice
    shall be deemed delivered fourteen (14) days after the
    mailing date therefrom.



 




    EIGHTEENTH.  ASSIGNMENT
    BY LANDLORD; SUBORDINATION



 



    LANDLORD may assign its rights under this Lease to a Lending or
    Banking Institution, whether it be national or foreign, or any
    other legally incorporated Corporation or individual, provided
    that the assignee or purchaser of said rights agrees not to
    disturb the possession of the LEASED PREMISES or any other right
    of TENANT derived from this Lease, provided TENANT continues to
    comply with the obligations herein. In the event of acquisition
    of the LEASED PREMISES, said assignee shall be bound to accept
    TENANT under the terms of this Lease Agreement and to comply
    with the provisions imposed upon LANDLORD hereto, TENANT agrees
    to recognize said assignee or any other individual who acquires
    the property of the LEASED PREMISES.



 



    Exclusively for the aforementioned purposes TENANT and Guarantor
    shall provide LANDLORD with a copy of the last Financial
    Statements published and any other documentation needed by
    TENANT such as the Dun & Brad Street Report, within
    the 10 (ten) days following the reception of the corresponding
    notice.



 



    In the event of such assignment, LANDLORD shall notify TENANT in
    writing of such assignment and TENANT shall have the obligation
    to make all rental payments thereafter at the domicile of the
    Credit Institution, Corporation or individual to which this
    Lease was assigned to, provided said payments do not violate
    applicable fiscal and exchange control laws and regulations.



 




    NINETEENTH.  GOOD
    FAITH, AUTHORITY AND INTENTIONS



 



    Both parties declare, that in the execution hereof, there has
    not been any error, violence or bad will against the other
    party, and that they have sufficient authority which has not
    been revoked, diminished or limited in any matter whatsoever.



 




    TWENTIETH.  NON-COMPLIANCE



 



    The parties covenant and agree, that non-compliance of any of
    the provisions by a party, will originate in favor of the other
    party the right to, either, request the forceful compliance or
    the termination of this Lease.




    

    5








 







    TWENTIFIRST.  GOVERNING
    LAW



 



    The parties expressly agree that for the interpretation and
    enforcement of this Lease they will submit themselves to the
    jurisdiction of the courts of the city of Tijuana, Baja
    California and to the applicable laws thereto waiving any other
    jurisdiction that may be applicable for the reason of their
    present or future domiciles.



 



    The Spanish language version of this lease will prevail.



 



    The Parties hereto, have read the contents of this Lease and are
    aware of the legal consequences of all and each of the
    provisions herein and agree to be bind at all times by them, and
    signed this agreement before witnesses on June
    30th,

    2005, in the city of Tijuana, Baja California.



 


	 	 	 
	
    LANDLORD

    VESTA BAJA CALIFORNIA,

    S. DE R.L. DE C.V.
	
 
	
    TENANT

    BLOCK MEDICAL DE MEXICO S.A. DE C.V.

	
 
	
 
	
 

	

    /s/  Lic.
    Alejandro Ituarte
    Egea
Lic.
    Alejandro Ituarte Egea

    Legal Representative.


	
 
	
    /s/  Mr.
    Pablo
    Quintana
By:
    Mr. Pablo Quintana

    Legal Representative









 


	 	 	 	 	 
	
 
	
 
	
    GUARANTOR

    I-FLOW CORPORATION.
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
    By:
    Mr. James Dal Porto

    Vice-President
	
 
	
 









 


	 	 	 
	

    WITNESS


	
 
	
    WITNESS

	
 
	
 
	
 

	

    Ing.
    Elías Laniado Laborín


	
 
	
    Héctor
    Alonso Barajas Nava










    

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