exv10w13






 




    Exhibit 10.13

    



 




    CONTRACT
    NUMBER: BMA-B-2/A.2.4.5-03-001



 



    THIS LEASE AGREEMENT, HEREINAFTER REFERRED TO AS “THE
    LEASE AGREEMENT” IS SIGNED ON THE ONE HAND BY BAJA DEL MAR,
    S.A. DE C.V., HEREINAFTER REFERRED TO AS “BAJA DEL
    MAR” AND BANCO UNION, S.A., HEREINAFTER REFERRED TO AS
    “BANCO UNION”, BOTH REPRESENTED IN THIS AGREEMENT BY
    FRANCISCO RUBIO CARDENAS AS THE LEGAL REPRESENTATIVE OF BOTH
    PARTIES, HEREINAFTER REFERRED TO AS THE “LESSOR”; AND
    ON THE OTHER HAND BY BLOCK MEDICAL DE MÉXICO, S.A. DE C.V.,
    REPRESENTED IN THIS AGREEMENT BY MR. EDDIE MENDIBLES AS THE
    LEGAL REPRESENTATIVE, HEREINAFTER REFERRED TO AS THE
    “LESSEE” AND I-FLOW CORPORATION AS THE GUARANTOR,
    REPRESENTED IN THIS AGREEMENT BY MR. JAMES DAL PORTO, VICE
    PRESIDENT, ACCORDING TO THE FOLLOWING DECLARATIONS AND
    CLAUSES:



 




    DECLARATIONS:



 


		
	
    I.  
	
    THE
    LESSOR’S REPRESENTATIVE DECLARES:




 



    A) That on July 24, 1986, by means of Notarized Public
    Instrument number 25,340, Volume 490, notarized by
    Mr. Eduardo Illades Moreno, Notary Public No 6 for the city
    of Tijuana, Baja California, the Mexican Business Corporation
    known as “Baja del Mar, S.A. de C.V.” was established
    and that said company was properly inscribed in the Public
    Property and Commerce Registry of Tijuana, Baja California,
    Mexico, under section number 18,255, volume 35, Auxiliary Book
    Two, Commerce Section.



 



    B) That on August 30, 1988, by means of Notarized
    Public Instrument number 52,878, Volume 908, notarized by
    Mr. Xavier Ibáñez H., Notary Public 3 for the
    city of Tijuana, Baja California, the institution known as Banco
    Unión, S.A. was appointed trustee of the irrevocable trust
    established in favor of the above-mentioned company for the
    property located southeast of Parcel Ninety-Six, bordering on
    the South Irrigation Canal of the Rodríguez Dam of this
    Municipality with an area of 71,264 square meters; and that
    said Public Instrument was registered in the Public Property and
    Commerce Registry of Tijuana, Baja California, Mexico, under
    section number 73,002, volume CDLVI, Civil Section.



 



    C) That on October 26, 1989, by means of Notarized
    Public Instrument number 22,510, Volume 390, notarized by Notary
    Public number 14 of Mexico City, BANCO BCH, S.N.C. (now Banco
    Unión, S.A.), as the Trustee of Baja del Mar, S.A. de C.V.,
    granted power to attorney to Mr. Francisco Rubio
    Cárdenas, including the power to sign this Lease Agreement.
    In addition, Mr. Francisco Rubio Cárdenas declares
    under oath that these powers have not been limited or revoked.



 



    D) That within the Property mentioned in Declaration I-B,
    the LESSOR owns and built the Industrial Building identified as
    B-2 Suite A, Incubator spaces #2, 4 and 5 with a total
    area of 9,963 square feet (3,321 square feet each)
    whose location, distribution, measurements and characteristics
    are specified in Attachments “A” and “B”
    respectively (These attachments are duly signed by the parties
    to this agreement). This industrial building includes the
    following improvements that are the property of the LESSOR and
    are included in the building’s rent:



 


		
	    • 
	    Capacity for 300 AMPS/220V, 4H three-phase electric energy
    with growth potential.

	 
	    • 
	    General lighting.

	 
	    • 
	    No charge for the consumption of non-productive water.

	 
	    • 
	    Shared bathrooms.

	 
	    • 
	    Availability for 2 loading platforms.




 



    E) That the LEASED PROPERTY has water, sewage and water
    tank services with electricity and an available telephone line
    service.




    

    1








 






    F) That the LEASED PROPERTY is available for the
    LESSEE’s intended use, both in terms of its characteristics
    as well as its location, according to the Internal Regulations
    of the “LA MESA PARQUE INDUSTRIAL” (LA MESA INDUSTRIAL
    PARK) specified in Attachment “C”, which was duly
    signed by the parties and is therefore an integral part of this
    Lease Agreement.



 



    G) The LESSOR has obtained all the legal permits required
    by Mexican Law.



 


		
	
    II.  
	
    THE
    LESSEE’S REPRESENTATIVE DECLARES:




 



    A) That the LESSEE is a company legally established
    according to the laws of the Mexican Republic with the legal
    capacity to sign and be bound by this Lease Agreement, as
    established in Notarized Public Instrument number 42,289, Volume
    839, signed and notarized before Eduardo Illades Moreno, Notary
    Public No 7 for the city of Tijuana, Baja California, duly
    inscribed in the Public Property and Commerce Registry.



 




    CLAUSES:



 




    ONE.  OBJECTIVE



 



    Under the terms and conditions of this agreement, the LESSOR
    leases Incubator Spaces #2, 4 and 5, Suite A of
    Building B-2 of the “LA MESA PARQUE INDUSTRIAL” (LA
    MESA INDUSTRIAL PARK), indicated in Declaration I-D of this
    Lease Agreement, to the LESSEE.



 



    The LESSOR states that during the term of this Lease, it has all
    of the rights to the LEASED PROPERTY and guarantees the LESSEE
    the peaceful use and enjoyment of this property.



 




    TWO.  TERM



 



    The initial term of this Agreement will be 3 (three) years,
    starting on August 15, 2003 with a termination clause that
    can be activated with six month’s advance written notice.



 



    Regardless of the commencement date of this Lease, the LESSEE
    will have the right to access the LEASED PROPERTY in order to
    install accessories and equipment, at any time after this
    Agreement is signed.



 



    The LESSER has an option to extend the term of this Lease for 2
    (two) additional periods of 3 (three) years each by means of
    written advance notice from the LESSEE to the LESSOR at least
    one hundred and twenty (120) days prior to the expiration
    of the initial term or any of its extensions.



 




    THREE.  RENT



 



    As monthly rent for the Lease, both parties establish a price in
    National Currency sufficient to acquire the amount of $3,885.57
    dollars (three thousand, eight hundred eighty-five dollars and
    57/100, currency of the United States of America), paid in
    monthly installments in advance on the fifteenth day of each
    calendar month to the LESSOR’s registered office located at
    Calle E #4. Fracc. Rubio, La Mesa, in this city.



 



    The LESSOR hereby receives the amount in National Currency
    sufficient to acquire the amount of $3,885.57 dollars (three
    thousand, eight hundred eighty-five dollars and 57/100, currency
    of the United States of America) for the payment of the first
    month’s rent and hereby issues the most ample receipt
    allowed by law.



 



    The Base Rent will be increased on the first anniversary of the
    Rent Commencement Date and at each subsequent anniversary, by an
    increase percentage equal to the increase percentage of the
    Consumer Price Index of Los Angeles, California during the prior
    year as published by the Department of Labor of the United
    States of America. This index will hereinafter be referred to as
    the CPL. Despite the above, the Base Rent will in no case be
    increased by less than 3% or more than 5% at the time of each
    increase.



 



    The parties agree that if the Base Rent is paid late, the Lessee
    must pay an additional amount equivalent to 3% (three percent)
    for that month if the monthly payment of the Base Rent is not
    made by the sixth
    (6th) day

    after it is due, provided that the Lessor has given the Lessee
    written notice of this lack of payment by means of a
    next-day




    

    2








 






    messenger service with a good delivery reputation, such as
    Federal Express or DHI, for example, and provided that the
    Lessee does not make this payment within the next two
    (2) business days following the date of notification.



 




    FOUR.  GUARANTEE
    DEPOSIT



 



    On the date this Lease is signed, the LESSEE will provide the
    LESSOR with an amount sufficient to acquire the amount of
    $3,885.57 dollars (three thousand, eight hundred eighty-five
    dollars and 57/100, currency of the United States of
    America) as a guarantee deposit, partial or total, according to
    the case, in compliance with all of the LESSEE’s
    obligations under this Lease. The above-mentioned deposit amount
    will be returned to the LESSEE upon the termination of this
    Lease or at the end of any of the extension options, according
    to the case, provided that there is no balance due in favor of
    the LESSOR and provided that the LESSEE returns the LEASED
    PROPERTY in good condition, taking into consideration normal
    wear and tear for the use of the building. The LESSEE will not
    have the right to receive any interest for this deposit.



 



    On the date this Lease Agreement is signed, the LESSEE will
    provide the LESSOR with an amount sufficient to acquire the
    amount of $750.00 dollars (seven hundred and fifty dollars and
    00/100, currency of the United States of America) as a guarantee
    deposit for the consumption of electricity which will be
    credited to the final electricity bill.



 




    FIVE.  INTENDED
    USE OF THE LEASED PROPERTY



 



    The LESSER will use the leased property to conduct
    non-contaminating industrial activities, mainly those relating
    to storage according to applicable environmental legislation and
    that do not produce odors, gases, smoke, vibrations, dust or
    noise that could cause any damage to the LESSOR or to third
    parties.



 



    Both parties agree to comply with the Internal Regulations of
    the “LA MESA PARQUE INDUSTRIAL” (LA MESA INDUSTRIAL
    PARK) which are included as Attachment “C”.



 




    SIX.  RIGHT
    TO A REDUCTION IN RENT



 



    If the LEASED PROPERTY suffers serious damage or is destroyed by
    any cause not imputable to the LESSEE that prevents the LEASED
    PROPERTY from being used for the purposes for which it was
    leased, the LESSOR must determine, within 30 (thirty) days after
    the date the LESSOR is informed of said damage or destruction,
    whether the LEASED PROPERTY can be restored or reconstructed
    within the next 6 (six) months and notify the LESSEE of this
    determination.



 



    If the LESSOR determines that the LEASED PROPERTY cannot be
    restored or reconstructed within a period of 6 (six)
    months, both the LESSOR as well as the LESSEE will have to right
    to terminate this Lease Agreement by providing written notice to
    the other party.



 



    It has been established that in the event of the partial
    destruction of the LEASED PROPERTY, for reasons not imputable to
    the LESSEE, the rent must be partially reduced in proportion to
    the affect on the LESSEE’s use of the property. Therefore,
    the LESSEE must provide written notice to the LESSOR no later
    than one (1) business day after the date the LESSEE becomes
    aware of said damage.



 




    SEVEN.  GUARANTOR



 



    I-Flow Corporation, through its representative, Mr. James
    Dal Porto, with registered address at 20202 Windrow
    Dr. Lake Forest, California 92630, USA, is established as
    the LESSEE’s Guarantor and guarantees all the commitments
    that the LESSEE makes under this Lease Agreement. This
    obligation will continue until the LEASED PROPERTY has been
    returned to the LESSOR’s satisfaction.



 



    In accordance with the above, the Guarantor, I-Flow Corporation,
    agrees to sign the “Guarantee Contract” that is
    attached to this Agreement as Attachment “D”.



 




    EIGHT.  IMPROVEMENTS
    MADE BY THE LESSEE



 



    The LESSEE will have the right to make interior modifications to
    the LEASED PROPERTY at its own expense, provided that said
    modifications do not affect the structural integrity or the
    exterior appearance of the property.




    

    3








 






    Despite the above, the LESSEE agrees not to make any structural
    or other modifications without the prior written authorization
    of the LESSOR. The request for these modifications must be sent
    together with a set of plans and specifications to the LESSOR
    for approval. If the LESSOR does not oppose these modifications
    within a period of no more than 10 (ten) days, it will be
    understood that the LESSOR has granted its approval. The LESSEE
    must return the LEASED PROPERTY to the LESSOR in the condition
    and with the characteristics that it was in at the time this
    Lease Agreement was signed, with the exception of reasonable
    wear and tear, and the LESSEE must pay the LESSOR for any
    damages that result from taking out, removing or eliminating
    said improvements in order to return the LEASED PROPERTY to its
    original condition.



 




    NINE.  PUBLIC
    UTILITY SERVICES AT THE LEASED PROPERTY



 



    The LESSEE must pay for its own utility services that have been
    or that will be established in the LEASED PROPERTY, such as
    electricity, water, telephone, etc.



 


		
	    • 
	    Electricity:  The LESSEE must pay the
    LESSOR for the cost of electricity in the form of a monthly fee
    based on the amount of consumption shown on the electric meter.
    This fee will be based on the rates used by the Federal
    Electricity Commission.

	 
	    • 
	    Water:  The LESSOR provides water for
    the bathrooms. The LESSOR will charge the LESSEE for the
    additional consumption of water.

	 
	    • 
	    Telephone:  The LESSEE must contract
    with TELNOR for the telephone lines and must agree to make
    periodic payments to this company for the cost of this service.




 




    TEN.  MAINTENANCE
    OF THE LEASED PROPERTY BY THE LESSOR



 



    During the term of this Lease Agreement, the LESSOR must
    maintain the roofs, exterior walls, exterior doors, floors,
    electrical and sewage systems and any other component of the
    Leased Property, including the water storage system and the
    corresponding plumbing in good and working condition. Any
    repairs that are necessary for the proper functioning of the
    items that the Lessor is responsible to maintain will be made
    immediately and will be made at the expense of the Lessor,
    including reasonable preventive maintenance.



 




    ELEVEN.  MAINTENANCE
    OF THE LEASED PROPERTY BY THE LESSEE



 



    The LESSEE will maintain the electrical and sewage systems
    (including the bathrooms), the hydro-pneumatic pump (excluding
    the water storage system and its plumbing), the interior paint,
    carpeting, non-structural walls, partitions, ceilings, doors and
    windows in perfect condition at all times and will make all the
    necessary repairs at its expense, including reasonable
    preventive maintenance. The LESSEE agrees to maintain the LEASED
    PROPERTY in good general condition and not permit the
    accumulation of waste, garbage or any other rubbish in the
    interior and exterior as well as in the property’s loading
    and unloading areas. The LESSEE will not use the roof as a
    storage area.



 




    TWELVE.  RIGHT
    TO SUBLET



 



    The LESSEE will have the right to totally or partially sublet
    the LEASED PROPERTY, for industrial purposes, according to
    applicable environmental legislation, only with prior written
    authorization from the LESSOR with the understanding that the
    LESSEE will be responsible for the obligations of said sublease
    agreement.



 




    THIRTEEN.  TERMINATION
    OF THE AGREEMENT BY THE LESSEE



 



    The LESSEE has the right to terminate the Lease Agreement at any
    time in the event of a case of force majeure, an unforeseen
    circumstance or acts of Government (expropriation, confiscation,
    etc.) that substantially impede the LESSEE’s industrial use
    of the LEASED PROPERTY. If the LESSEE exercises this right, the
    LESSEE must provide the LESSOR with written notice 60 (sixty)
    days before the effective termination date.




    

    4








 







    FOURTEEN.  INSURANCE



 



    During the term of this Lease Agreement, the LESSEE will pay the
    LESSOR the amount of $1,095.93 dollars (one thousand,
    ninety-five dollars and 93/100, currency of the United States of
    America) every year on the anniversary date of the Lease
    Agreement, as payment for a suitable insurance policy against
    any damage caused to the LEASED PROPERTY by: fire, lightning,
    explosion, collision of airplanes, smoke, storms, collision of
    any type of vehicle, strike, popular or student riots, acts of
    vandalism, flooding, and acts by employees, workers,
    contractors, suppliers, clients, visitors and directors of the
    LESSEE. This policy does not include the contents of the
    building.



 




    FIFTEEN.  PAYMENT
    OF VALUE-ADDED TAX



 



    The Value-Added Tax resulting from this Agreement will be
    covered by the LESSEE and approved by the LESSOR.



 




    SIXTEEN.  PARK
    ASSOCIATION FEE



 



    The LESSEE is responsible for paying the LESSOR the annual fee
    of $996.30 (nine hundred ninety-six dollars and 30/100, currency
    of the United States of North America) for maintenance and
    security services.



 




    SEVENTEEN.  REGISTERED
    OFFICES



 



    For all the corresponding legal effects of this Lease Agreement,
    the parties indicate the following addresses for service:



 



    THE LESSOR




    La Mesa Parque Industrial [La Mesa Industrial Park]




    Calle E #4




    Fraccionamiento Rubio. La Mesa




    Tijuana, B.C. 2250



 



    THE GUARANTOR




    20202 Windrow




    Dr. Lake Forest, CA 92630



 



    THE LESSEE




    Privada Baja California y Avenida Baja California




    Edificio B-2 A Incubadoras 2, 4 y 5 [Building B-2 A Incubator
    Spaces 2, 4 and 5]




    Calle 34 Sur No. 8141




    La Mesa Parque Industrial




    Tijuana, B.C. 22116



 



    Any notice to be delivered under this agreement must be sent to
    the other party in writing or sent by certified mail or by
    specialized messenger service (DHL, Fed-EX, UPS, etc.) to the
    registered office indicated above, in which case the
    corresponding notice will be considered delivered fourteen
    (14) days after the date said notice is sent.



 




    EIGHTEEN.  TRANSFER
    OR ASSIGNMENT



 



    The LESSEE may transfer or negotiate its rights under this Lease
    Agreement to any Credit or Banking Institution, either national
    or foreign, or to any other legally established Company or
    individual person, provided that the assignee or purchaser of
    said rights agrees not to disrupt possession of the LEASED
    PROPERTY or any other right belonging to the LESSEE under this
    Lease Agreement, while the LESSEE shall continue to fulfill its
    commitments made under this Agreement. If the LEASED PROPERTY is
    purchased, the buyer must accept the LESSEE as a tenant under
    this Lease Agreement and comply with all of the obligations
    assumed by the LESSOR under this Lease Agreement. For its part,
    the LESSEE agrees to recognize said assignee or any other person
    who acquires the LEASED PROPERTY.



 



    For this purpose, and only and exclusively for this purpose,
    within ten (10) days after receiving the corresponding
    notification, the LESSEE and the Guarantor must provide the
    LESSOR with a copy of its last published Financial




    

    5








 






    Statement and other documentation such as a report from
    Dun & Brad street that the LESSOR requires for this
    transaction.



 



    In this case, the LESSOR will provide the LESSEE with written
    notification about the transfer of rights under this Agreement
    and from that time forward, the LESSEE must make the rent
    payment to the registered address of the Institution, company or
    person indicated, provided that said costs or payments do not
    violate the corresponding tax and foreign exchange regulations.



 




    NINETEEN.  GOOD
    FAITH, AUTHORITY AND INTENT



 



    By signing this Agreement, both parties declare that there was
    no error, coercion or bad faith between both parties and that
    they have sufficient authority which has not been revoked,
    reduced or limited in any manner.



 




    TWENTY.  BREACH



 



    The parties expressly agree that in the event of the breach of
    any of the obligations by any of the parties, the other party
    shall have the right to either request mandatory compliance or
    the termination of this Lease Agreement.



 




    TWENTY-ONE.  COMPETENCY



 



    For all matters related to the interpretation and fulfillment of
    this Lease Agreement, the parties expressly submit to the
    authority and jurisdiction of the Courts of the city of Tijuana,
    State of Baja California and to the applicable laws of said
    institution and they hereby renounce any jurisdiction that may
    correspond to them by reason of their present or future
    registered office.



 



    The Spanish language version of this Agreement shall prevail.



 



    The parties are aware of the contents, scope and legal
    consequences of each and every one of the preceding Clauses and
    agree to comply with and respect them at all times and they sign
    below before witnesses in the City of Tijuana, Baja California,
    on July 29, 2003.



 


	 	 	 
	
    THE LESSOR
	
 
	
    THE LESSEE

	 

	
    BANCO UNION, S.A.

    Trustee of:

    BAJA DEL MAR, S.A. DE C.V.
	
 
	
    BLOCK MEDICAL DE MEXICO

    S.A. DE C.V.

	
 
	
 
	
 

	
    

	
 
	
    


	

    Lic. Francisco Rubio Cárdenas

    Legal Representative


	
 
	

    By: Eddie Mendibles

    Legal Representative



	
 
	
 
	
 

	

    BAJA DEL MAR, S.A. DE C.V.


	
 
	
 

	
 
	
 
	
 

	
    

	
 
	
 

	

    Lic. Francisco Rubio Cárdenas

    Legal Representative


	
 
	
 









 


	 	 	 	 	 
	
 
	
 
	
    THE GUARANTOR
	
 
	
 

	
 
	
 
	
    I-FLOW CORPORATION

    

	
 
	
 

	
 
	
 
	
    By: James Dal Porto
	
 
	
 









 


	 	 	 
	
    WITNESS
	
 
	
    WITNESS

	

    Elías Laniado Laborin


	
 
	
    Rigel Navarro García










    

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