Document:

exv10w12

    Exhibit 10.12

 

	 	 	 
	
    CONVENIO MODIFICATORIO AL
    CONTRATO No. BMA-D-1-99-001.
	
 
	AMENDMENT TO LEASE AGREEMENT
    

No. BMA-D-1-99-001.

	 

	

    Convenio Modificatorio que celebran:

	
 
	
    Amendment Agreement entered by and among:

	 
	

    1. Vesta Baja California, S. de R.L. de C.V. (el
    “Arrendador”) representada por el Lic.
    Alejandro Ituarte Egea.

	
 
	

    1. Vesta Baja California, S. de R.L. de C.V. (the
    “Landlord”), represented by Mr.
    Alejandro Ituarte Egea.

	 
	

    2. Block Medical de México, S.A. de C.V. (el
    “Arrendatario”) representada por el Sr.
    José Luis Avendaño Pérez.

	
 
	

    2. Block Medical de México, S.A. de C.V. (the
    “Tenant”) represented by Mr. José
    Luis Avendaño Pérez; and

	 
	

    3. I- Flow Corporation (el
    “Fiador”), representada en este acto por
    el señor James Dal Porto.

	
 
	

    3. I-Flow Corporation (the
    “Guarantor”) represented by Mr. James
    Dal Porto.

	
    De conformidad con las siguientes Declaraciones
    y Cláusulas:
	
 
	
    According to the following Representations and Clauses:

 

	 	 	 
	
    DECLARACIONES
	
 
	
    REPRESENTATIONS

	 

	

    1. Con fecha 30 de Noviembre de 1999, se celebró
    el contrato de arrendamiento número
    BMA-D-1-99-001
    (el “Contrato de Arrendamiento”)
    respecto del edificio marcado como D-lcon una superficie total
    de 25,738 pies cuadrados (la
    “Propiedad”).

	
 
	

    1. On November
    30th,

    1999 the lease agreement number BMA-D-1-99-001 (the
    “Lease Agreement”) was executed with
    respect to the building identified as D-l, with a total area of
    25,738 square feet (the “Property”).

	 
	

    2. Es la voluntad de las partes modificar el Contrato de
    Arrendamiento de conformidad con los términos que más
    adelante se detallan.

	
 
	

    2. It is the will of the parties hereto to amend the Lease
    Agreement, pursuant to the terms set forth below.

	 
	

    3. Las partes de este Convenio se reconocen la personalidad
    con la que cada una se ostenta.

	
 
	

    3. The parties recognize to each other the capacity in
    which each of them appears hereto.

	 
	
    Estando de acuerdo con las declaraciones anteriores, las partes
    convienen en obligarse de conformidad con las siguientes:
	
 
	
    Being in agreement with the representations above, the parties
    agree to bind themselves in accordance with the following:

 

	 	 	 
	
    CLAUSULAS
	
 
	
    CLAUSES

	 

	
    Primera.  Las partes convienen en modificar la
    Cláusula Segunda del Contrato de Arrendamiento, para que a
    partir de esta fecha, la misma quede redactada al tenor literal
    siguiente:
	
 
	
    First.  The parties hereby agree to amend
    Clause Second of the Lease Agreement, for it to, as of the date
    hereof, be read as follows:

	
    “SEGUNDA. — Término.:  El
    término de este Contrato comenzará en la fecha del
    mismo y terminará el dia 31 de Diciembre del 2011.
	
 
	
    “SECOND. Term.  The term of this Agreement
    shall start on the date hereof, and will end on
    December 31, 2011.

	 
	
    La Arrendataria cuenta con una opción para
    prorrogar el término de este Arrendamiento por 2 (dos)
    periodos adicionales de 3 (tres) años cada uno, mediante
    aviso por escrito entregado por la Arrendataria a la Arrendadora
    para tales fines con por lo menos 120 (ciento veinte) dias
    naturales anteriores a la expiración del término
    inicial o de cualquiera de sus prorrogas.”
	
 
	
    The Tenant shall have and option to extend the term of this
    Agreement for 2 (two) additional periods, each of 3 (three)
    years, through written notice delivered by the Tenant to the
    Landlord with at least 120 (one hundred and twenty) calendar
    days in advance to the expiration of the initial term of any of
    its extensions.”

	
    Segunda.  El Arrendador en este acto conviene
    sellar cualesquiera goteras o filtraciones en la techumbre del
    Inmueble Arrendado ya sea a través del reemplazo de toda la
    techumbre o bien a través de la aplicación de una
    cubierta elastomerica sobre toda la superficie de la techumbre,
    lo anterior a juicio exclusivo del Arrendador.
	
 
	
    Second.  Landlord hereby agrees to seal and
    repair each and any leak or filtrations in the roof of the
    Property, by either replacing the entire roof or through the
    application of a elastomeric coat over entire roof surface, all
    the above at the exclusive discretion of the Landlord.

    

    1

 

	 	 	 
	
    Las reparaciones descritas en el párrafo que antecede,
    iniciarán dentro de un periodo no mayor a 60 días
    hábiles a partir de la fecha de celebración del
    presente Convenio. La garantía otorgada por el
    proveedor al Arrendador será extendida del Arrendador al
    Arrendatario. Los trabajos arriba mencionados no causarán
    interrupción alguna a las operaciones del Arrendatario.
	
 
	
    The repairs described in paragraph above, will start within a
    period not exceeding 60 working days from the date of execution
    of this Agreement. The guaranty granted from the supplier to
    Landlord will be extended from Landlord to Tenant. The works
    above mentioned will not cause any interruption to Tenant’s
    operations.

	
    Asimismo, el Arrendador conviene en dar, a partir de la fecha de
    este Convenio, mantenimiento preventivo a los accesos a las
    máquinas de aire acondicionado (“pasa-gatos”).
	
 
	
    Likewise, the Landlord hereby agrees to, from the date hereof,
    provide preventive maintenance to the accesses to the air
    conditioning machines (“cat-walks”).

	
    Tercera.  El Arrendatario en este acto reconoce
    para beneficio del Arrendador que la renta pagadera por el
    Arrendatario a la fecha de este Convenio es igual a la cantidad
    de US$ 12,365.41 (Doce mil trescientos sesenta y cinco
    dólares 41/00 USCy.) más el impuesto al valor
    agregado, la cual se incrementará en cada aniversario del
    Contrato de Arrendamiento, es decir, los días 1 de
    Enero, conforme a lo previsto en la Cláusula Segunda del
    Contrato de Arrendamiento.
	
 
	
    Third.  Tenant hereby acknowledges for the
    benefit of the Landlord that the rent payable by the Tenant at
    the date hereof is the amount of US$ 12,365.41 (Twelve thousand
    three hundred and sixty five dollars 41/00 USCy.) plus the
    value added tax, which shall be adjusted each anniversary of the
    Lease Agreement, meaning each January
    lst,

    pursuant to the provisions of Clause Second of the Lease
    Agreement.

	
    Cuarta.  Las partes convienen expresamente que
    las modificaciones al Contrato de Arrendamiento conforme a este
    Convenio, no constituyen una novación del Contrato de
    Arrendamiento.
	
 
	
    Fourth.  The parties expressly agree that the
    amendments to the Lease Agreement made pursuant to this
    Agreement, shall not constitute novation of the Lease Agreement.

 

	
    Sexta.  Excepto por las modificaciones
    acordadas en este Convenio, el resto de los términos y
    condiciones del Contrato de Arrendamiento continúan
    vigentes, por lo que las partes en este acto ratifican todos y
    cada uno de los términos y condiciones del Contrato de
    Arrendamiento y sus anexos.
	
 
	
    Sixth.  Except for the amendments to the Lease
    Agreement agreed herein, the rest of the terms and conditions of
    the Lease Agreements remain in full force and effect; hence the
    parties hereby ratify each and all the terms and conditions of
    the Lease Agreement and its annexes.
 

	
    Séptima.  El Fiador comparece a la
    celebración de este Convenio, con el propósito de
    ratificar su obligación de continuar garantizando las
    obligaciones del Arrendatario conforme al Contrato de
    Arrendamiento, según el mismo ha sido modificado conforme a
    este Convenio, y a través de su firma en este instrumento,
    se hace sabedor de, y manifiesta su conformidad respecto de las
    modificaciones al Contrato de Arrendamiento que se detallan en
    este Convenio.
	
 
	
    Seventh.  The Guarantor appears to the
    execution of this Agreement, with the purpose of ratifying its
    obligation to continue guaranteeing the obligations of the
    Tenant pursuant to the Lease Agreement, as amended in accordance
    with this Agreement, and through its signature in this
    Agreement, acknowledges and agrees to the amendments made to the
    Lease Agreement as set forth herein.

	
    Octava.  Cualquier aviso o notificación
    que hayan de hacerse las partes respecto del presente Convenio,
    deberá ser hecha por escrito y entregada a la parte que
    corresponda en términos de lo dispuesto en la Cláusula
    Décima Sexta del Contrato de Arrendamiento.
	
 
	
    Eight.  Any communication or notice that the
    parties shall need to make in connection with this Agreement,
    shall be done in writing and delivered to the corresponding
    party in the terms set forth in Clause Sixteen of the Lease
    Agreement.

 

	
    Novena.  El Contrato de Arrendamiento y el
    presente Convenio se regirán por las leyes sustantivas
    aplicables en el Estado de Baja California, México.
	
 
	
    Ninth.  The Lease Agreement and this Agreement
    shall be subject to the laws of Baja California, Mexico.

	
    Cualquier controversia entre las partes derivada del Contrato de
    Arrendamiento y/o del presente Convenio, será resuelta de
    conformidad con lo previsto en la Cláusula Vigésima
    del Contrato de Arrendamiento.
	
 
	
    Any controversy among the parties deriving from the Lease
    Agreement and/or this Agreement shall be resolved in accordance
    to the provisions set forth in Clause Twenty of the Lease
    Agreement.

    2

 

	 	 	 
	
    Décima.  El Contrato de Arrendamiento
    según el mismo ha sido modificado conforme a este Convenio
    y este Convenio, constituyen el acuerdo íntegro y final
    entre las partes.
	
 
	
    Tenth.  The Lease Agreement as amended pursuant
    to this Agreement and this Agreement, constitute the full and
    final agreement among the parties.

	
    Décima Primera.  Este Convenio se firma en
    cuatro (4) ejemplares cada uno de los cuales constituye un
    original, y en su conjunto constituyen uno y el mismo Convenio.
	
 
	
    Eleventh.  This Agreement is signed in 4
    counterparts, each of which constitutes and original and all
    together constitute one and the same Agreement.

	 
	
    Décima Segunda.  Este Convenio se suscribe
    en versión inglés y español, las cuales
    tendrán el mismo valor, excepto que en caso de controversia
    sobre este Convenio, la versión de español
    prevalecerá.
	
 
	
    Twelve.  This Agreement is being executed in
    both English and Spanish languages, both versions shall have the
    same force, except that in case of controversy, the Spanish
    version shall prevail.

	
 
	
 
	
 

	
    EN TESTIMONIO DE LO CUAL, las partes suscriben el presente
    Convenio a través de sus representantes debidamente
    autorizados para tal efecto, el día 30 de Abril del
    2008, después de haber revisado los términos y
    condiciones de este Convenio y haber comprendido el alcance
    legal del mismo.
	
 
	
    IN WITHNESS THEREOF, the parties execute this Agreement through
    their authorized representatives, this April
    30th,

    2008, after having read and reviewed the terms and conditions of
    this Agreement and having understood the legal effects of the
    same.

 

    LA ARRENDADORA/ THE LANDLORD

    Vesta Baja California, S. de R.L. de C.V.

 

 /s/  Alejandro
    Ituarte Egea

    Por/By: Alejandro Ituarte Egea

    Cargo/Title: Attorney in fact.

 

    LA ARRENDATARIA/THE TENANT

    Block Medical de México, S.A. de C.V.

 

/s/  José
    Luis Avendaño Pérez

    Por/By: José Luis Avendaño Pérez

    Cargo/Title: Attorney in fact.

 

    EL FIADOR/THE GUARANTOR

    I-Flow Corporation

 

    /s/  James
    Dal Porto

    Por/By: James Dal Porto

    Cargo/Title: Attorney in fact.

    3exv10w13

 

    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

    

    6

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