LEASE AGREEMENT

The Lessor, through its legal representative, states:

A.

That Lessor is a corporation duly organized and existing under the laws of the United Mexican States.

B.

That Lessor is duly represented herein by Pablo Charvel Orozco, who has full power and authority to execute this Agreement on its behalf, as evidenced by the public instrument attached hereto as Exhibit A .  Furthermore, Pablo Charvel Orozco hereby represents that such authority has not been limited nor revoked in any manner whatsoever.

C.

That as evidenced by public instrument number 3,807, dated January 6, 1997, granted before Mr. Horacio Carvajal Moreno, Notary Public Number 46, for the Judicial District of Tlalnepantla, State of Mexico, Mexico, which was duly recorded at the Public Registry of Property and Commerce of Mexicali, Baja California, Mexico, under record number 17,617, Civil Section, Lessor is the owner in fee simple of Lot Number Ninety-Eight (“Lot 98”) of Colonia Rivera, located in the city of Mexicali, Baja California, Mexico, which has a surface area of five (5) hectares approximately.  A legal description of Lot 98 is attached hereto as Exhibit B , which has a total surface area of 45,566.011 square meters.  That Lessor has the authorization to develop the Calafia Industrial Park (hereinafter referred to as the “Park”) granted by the Urban Control Department of Municipal Government issued on December 18, 1997.

D.

Lessor leases to Lessee a portion of an industrial building (the “Building”) located within the Park and commonly known as Av. Eucalipto, #2351, Col. Rivera, Modulo Cy D, C.P. 21259, Mexicali, Baja California, Mexico   as depicted on Exhibit C attached hereto (hereinafter “Leased Premises”).

A.

That Lessee is a corporation duly organized and existing in accordance with the laws of the United Mexican States.

B.

That Lessee is duly represented by Sergio Taglapietra Nassri, who has full power and authority to execute this Agreement on its behalf, as evidenced by the public instrument attached hereto as Exhibit D Furthermore, Sergio Taglapietra Nassri hereby represents that such authority has not been limited nor revoked in any manner whatsoever.

C.

That Lessee wishes to enter into this Lease in order to lease the Leased Premises from the Lessor under the terms and conditions herein set forth.

Having stated the foregoing, the parties agree on the following:

1.1

Subject to the terms and conditions set forth herein, the Lessor hereby agrees to lease to Lessee and Lessee hereby agrees to lease from Lessor the Leased Premises.  Lessee shall also have the right to (i) the exclusive use of forty-eight (48) parking spaces located the parking area adjacent to the Building and (ii) the non-exclusive use together with other tenants in the Park of all common areas located in the Park.

1.2

Lessor represents and warrants that the Leased Premises is comprised of 23,238 usable square feet and the improvements located within the Leased Premises have been constructed in accordance with the specifications set forth in Exhibit G attached hereto and the plans and specifications prepared by Lessor dated April 5, 2005.  Lessor further represents and warrants that (i) the Building shall contain no structural defects or defective systems; (ii) the Building systems shall be in proper working order and condition and that the Building and the Leased Premises shall be in compliance with all applicable laws, ordinances, rules, regulations and codes; (iii) the use of the Leased Premises by Lessee for the purposes described in Article 3 are permissible under all applicable zoning codes, laws, rules and regulations; (iv) the Building is served by all utilities necessary for Lessee’s intended use of the Leased Premises as described in Article 3 and such utilities are adequate with respect to service and capacity for Lessee’s intended use of the Leased Premises as described in Article 3; and (v) the Building, the Leased Premises, and Lessor’s Work (as hereinafter defined) are free from all defects, patent, latent or otherwise.

2.1

Lessor represents and warrants that Lessor is the sole owner and has clear and marketable title to the Building and the Leased Premises and the common areas contiguous thereto, and warrants that Lessee, upon Lessee’s payment of rent and compliance with Lessee’s obligations hereunder, Lessee shall have the quiet enjoyment of the Leased Premises.  Lessor and Lessee agree that, as provided by the Civil Code of the State of Baja California, this Lease shall survive any foreclosure of any lien or any mortgage on the Leased Premises and that any default in payment of any such lien or mortgage shall in no way prejudice the terms of this Lease, the rights of Lessee hereunder, or any extensions thereof. Any amendments to such mortgages or any new mortgages on the Leased Premises shall contain a provision acknowledging the existence and duration of this Lease and Lessee’s right to extend the term of this Lease pursuant to Article 21 hereof and the options to lease additional space as set forth in Articles 22 and 23 hereof.

2.2

Lessor represents that the rules and regulations, attached hereto as Exhibit E (the “Park Rules”) are legally binding against the Park and, thus, the Leased Premises.  Lessor and Lessee acknowledge the existence of the Park Rules and understand the binding nature of the same upon anyone claiming an interest in Lot 98.

4.1

The term of this Lease (the “Term”) shall commence on February 1, 2006 (“Lease Commencement Date”) and shall expire seventy-four (74) months thereafter.  The Leased Premises shall be delivered to Lessee on the Lease Commencement Date broom clean and free of personal property of others and Lessor shall have completed Lessor’s Work in accordance with the terms and provisions set forth in Exhibit G , attached hereto and incorporated herein by reference.

4.2

Lessee may terminate this Lease prior to the expiration of the Term, provided however, that Lessee previously fulfills each and all of the following conditions: (i) that Lessee serves and provides Lessor written notice thereof at least six months prior to the proposed date of termination; (ii) that Lessee together with the mentioned notice, delivers and pays to Lessor as consideration for such early termination, an amount equivalent to the sum of all monthly rental payments (based on the then current monthly rent) for the remaining period of the Lease Term discounted at a rate of 7%.

4.3

The parties agree that the Lessee may commence its occupation of the Leased Premises on December 20,   2005 (the “Early Occupation Period”) with no obligation to pay rent to Lessor until such time as specified in Section 5.1 below.  Lessor shall provide Lessee with temporary office space to accommodate seven (7) employees of Lessee as needed by Lessee during the Early Occupation Period.

5.1

Commencing on April 1, 2006 (the “Rent Commencement Date”), Lessee shall pay rent on a monthly basis to Lessor, without any formal demand from Lessor, for the first year of the Lease Term, in an amount equal to the rate of $0.39 per square foot multiplied by the usable square feet of the Leased Premises as set forth in Article 1 (it being the intention of the parties that Lessee shall be entitled to a rental abatement for the months of February and March of 2006).  In addition to the rental rate set forth in this Section 5.1, Lessee shall also be responsible for the monthly maintenance fee as set forth in Section 8.3.  During the remaining five (5) years of the Term and any renewal terms, Lessee shall pay rent on a monthly basis in an amount calculated in accordance with Section 5.2 below.

5.2

On each anniversary of the Lease Commencement Date during the Term and any Extension Period, to the extent such option shall be exercised, monthly rent shall be increased at the rate of three percent (3%) over the monthly rent for the prior year and shall be as follows:

5.3

Lessee shall pay rent to Lessor at the address specified in Section 24 below in monthly installments, in advance, on or prior to the tenth (10 ^th ) day each calendar month, throughout the Term without deduction, offset, prior notice, or demand, in lawful money of the United States.

5.4

The Lessee shall pay the Value Added Tax which may be applicable to the monthly rent payment, and the Lessor shall issue the corresponding invoice simultaneously with such payment, containing all requirements of Fiscal Law, evidencing the payment of rent and the Value Added Tax by Lessor.

5.5

In the event Lessee does not pay rent on or prior to the tenth (10 ^th ) day of the month, Lessee shall pay Lessor interest on the unpaid amount at the per annum rate of eighteen percent (18%).  Such interest shall continue to accrue until such time payment has been made in full by Lessee.

6.1

The Lessee shall, as of the Lease Commencement Date and during the Term of this Lease, pay and timely discharge all electrical service charges, natural gas service charges, if any, telephone service charges and water and sewer charges.  All license and permit fees and other Federal, State or Municipal charges imposed upon the Leased Premises shall be paid by Lessor during the Lease Term.  Notwithstanding anything to the contrary set forth herein, Lessor shall be responsible for the payment of all real estate property taxes assessed against the Leased Premises.

6.2

Lessor, at Lessor’s sole cost and expense, shall install or have installed all water, sewer and electrical and telephone lines for the general supply of water, sewer, electrical and telephone service to the Leased Premises, in accordance with all federal, state and local regulations, and shall cause the installation of the same to be accepted and approved by the Federal, State, or local authorities having jurisdiction over all streets abutting the Leased Premises.  Lessee shall contract and pay for all utilities it shall use.  Lessor, at Lessor’s sole cost and expense, shall have further installed all lighting fixtures, a power station and air conditioning in the Leased Premises for use by Lessee in accordance with Exhibit G .

6.3

It is agreed and understood by the parties that Lessor will use its best efforts to assist Lessee to contract all utility services necessary for Lessee’s operations in the Leased Premises.  Lessee shall contract for such utility services in Lessee’s name, with the understanding that the contracting fees and the fees for the supply of such utilities will be paid by Lessee.

8.1

Lessor, at Lessor’s sole cost and expense, shall be solely responsible for the prompt maintenance (including preventive maintenance) and repair of all structural components and systems of the Building, including, but not limited to, the roof and gutters, columns, floor slab, exterior walls, foundations, heating and air conditioning systems, plumbing systems, mechanical systems, electrical systems, sprinkler systems, sewer systems and paved areas on the land (i.e., parking lots, walkways, roadways and driveways).  It is agreed and understood by the Lessee that none of its employees, contractors, dependents or representatives may get on the roof for any work whatsoever without the prior authorization from the Lessor, which may not be unreasonably withheld.

8.2

Lessee shall be responsible to maintain the Leased Premises by providing proper janitorial services and making routine and ordinary repairs, restoration, and minor replacements to the Leased Premises that are not otherwise the responsibility of Lessor under Sections 8.1 and 8.3.  Lessor shall not be called upon to make any repairs caused by improper use or negligent acts of the Lessee, its employees, agents or visitors.

8.3

Lessor shall be responsbile for the maintenance and cleanliness of streets, common areas of the Park, as well as for 24-hour security and all other industrial park services, including, but not limited to, lawn and shrubbery, maintenance, parking lot maintenance, walkway maintenance, common area lighting, trash removal, exterior exterminating, exterior painting and roof repairs.  On or prior the tenth (10th) day of each month of the Term, Lessee shall pay to Lessor a monthly maintenance fee of one cent ($0.01 U.S.) per usable square foot of Leased Premises.  The usable square footage of the Leased Premises is set forth in Article 1.

8.4

Lessor shall be fully responsible for the expense and liability associated with any Hazardous Substances (as hereinafter defined) which are now present or which may in the future come to be located (whether by migration through soil or groundwater or otherwise) on or under Leased Premises or Lot 98, excepting only those Hazardous Substances which the Lessor can demonstrate are the result of an active spill by Lessee during Lessee’s operations at the Leased Premises.  In addition, Lessor hereby agrees to pay, discharge, indemnify, release, save and hold harmless Lessee and Lessee’s employees, directors, officers, shareholders, parent companies and agents and each of the foregoing parties’ respective successors and assigns (individually, a “Lessee Indemnitee” and collectively, the “Lessee Indemnities”) from and against all losses, claims, liabilities, damages (including without limitation incidental and consequential damages and lost profits), suits, proceedings, assessments or other actions which may be asserted against or incurred by a Lessee Indemnitee, arising out of or related to the actual or alleged presence or migration of Hazardous Substances on, under, from or into the Leased Premises or Lot 98.

8.5

For purpose of this Agreement, “Hazardous Substances” means any chemical, compound, material mixture, living organism or substance that is now or hereafter defined or listed in or otherwise classified or regulated in any way pursuant to, the  environmental laws of the City of Mexicali, State of Baja California, México as a “hazardous waste, “ hazardous substances,” “hazardous material,” “extremely hazardous waste,” “infectious waste,” “toxic substance,” “toxic pollutant” or any other formulation intended to define, list or classify substances by reason of deleterious properties, including without limitation, ignitability, corrosives, reactivity, carcinogenicity, or toxicity, such materials, including without limitation, oil, waste oil, petroleum, waste petroleum, polychlorinated biphenyls (PCBs), asbestos, radon, natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel (or mixtures of natural gas and such synthetic gas).

9.1

As of the Lease Commencement Date and throughout the Lease Term, Lessor, at Lessor’s sole cost and expense, shall insure the Leased Premises and the Building against any (i) loss or damage by fire; (ii) loss or damage from all other risks, hazards, or casualties covered by an “Extended Coverage Endorsement” in the State of Baja California, Mexico; and (iii) loss for flood; as well as such other risks as a reasonably prudent owner of similar industrial buildings in the locality where the Building is located would normally insurance against.  Insurance obtained by Lessor pursuant to the terms hereof shall provide for payment in the amount of the full insurable value (expressed in U.S. Dollars, but payable in Mexican Currency at the then present rate of exchange) of the Leased Premises, Building, and other improvements or infrastructure located in the Park. The “Extended Coverage Endorsement” shall include but not be limited to insurance against risks such as: lightning, explosion, hurricane and wind damage, hail, airplane and other vehicles, smoke, earthquakes, strikes, riots, civil disorders & vandalism. The insurance required to be provided by the Lessor under this Article 9 shall be purchased by the Lessor on an annual basis during the Term of this Lease, effective upon the Lease Commencement Date.  Lessor shall deposit certificates of such required insurance with Lessee prior to the Lease Commencement Date.  Said certificates shall evidence that the insurance is in force and state that such policy or policies have been endorsed to provide that they will not be cancelled or materially altered with respect to the Leased Premises except after thirty (30) days’ written notice to Lessee.  Lessee and Guarantor will be named as additional insureds and/or loss payees in any such policies, as appropriate.

9.2

Lessee, at its sole cost and expense, shall insure the contents of the Leased Premises, and maintain general public liability insurance against claims for personal injury, death or property damage occurring upon or about the Leased Premises, in an amount not less than One Million U.S. Dollars ($1,000,000.00).

9.3

The policies obtained by Lessee pursuant to paragraph 9.2 shall provide that no cancellation thereof shall be effective until Lessor has provided with at least thirty (30) days prior written notice.  In addition, within fifteen (15) days of the Lease Commencement Date, the Lessee shall provide the Lessor with certificates evidencing compliance with the requirements of this Article 9.

9.4

Rental Insurance:  During the Lease Term, as same may be extended, Lessor, at Lessor’s sole cost and expense, shall purchase a rent insurance policy which shall provide for the payment of rents during any period of reconstruction or repair of the Leased Premises during periods of rental abatement where the Lessee is unable to utilize the Leased Premises for Lessee’s intended purposes as described in Article 3.

9.5

Waiver of Subrogation.  The parties release each other, and their respective authorized representatives, from any claim for damage to any person or to the Leased Premises or to the fixtures, personal property, or improvements located in the Leased Premises caused by or as a result of any damage insured against under any insurance policies carried by the parties.  All policies of insurance maintained by Lessor and Lessee pursuant to the terms set forth herein shall provide that the insurance company waives all right to recovery by way of subrogation against either party in connection with any damage covered by any policy maintained by either Lessor or Lessee.  If, through reasonable efforts, a party hereto is unable to obtain such waiver of subrogation, such party shall name the other party as an additional insured under its policy in order to accomplish the intent of this provision.

10.1

In the event of damage to or destruction of the Building or any improvements within the Leased Premises, Lessor will promptly, and at Lessor’s sole cost and expense, make such repairs, restoration or rebuilding to the extent that is necessary to provide the Lessee with a premises of equal utility and design and construction quality to that which existed prior to such damage or destruction; and this Lease shall remain in full force and effect during the time such repairs, restoration or rebuilding are being effected.  During the period of reconstruction and repair, Lessee’s obligation to pay rent shall be abated in proportion to the amount of the Leased Premises rendered untenantable (utilizing the same per square foot rate used to calculate the regular monthly rent prior to the casualty) until the Leased Premises are repaired or restored.

10.2

In the event that such repairs, restoration or rebuilding cannot be accomplished within one hundred and fifty (150) days after the occurrence of the damage or destruction or in the event that Lessor fails to commence repair and restoration of any such damage or casualty within thirty (30) days of the occurrence of the damage or casualty, Lessee may, at its option and without further liability hereunder, terminate this Lease effective immediately upon written notice to the Lessor.  Notwithstanding the foregoing, if fifty-percent (50%) or more of the value of the improvements on the Leased Premises are lost due to such destruction or damage (a) during the last year of the original Lease Term or (b) during the last year of any extension elected by Lessee in accordance with Article 21 below; Lessor may elect to terminate this Lease effective immediately upon written notice delivered to the Lessee within thirty (30) days of such damage, unless otherwise negotiated with Lessee.

11.1

Lessee shall, on the last day of the Term of this Lease including all extensions thereof, surrender and deliver the Leased Premises into the possession and use of the Lessor without delay, in good order, condition and repair, except for normal wear and tear due to normal use and the passage of time, and except for damage caused by fire or other casualty.  For purposes hereof, the parties shall, within a term of one (1) month prior to the end of the Lease Term, effect a joint inspection of the Leased Premises in order to determine the condition of the Leased Premises.

11.2

All signs, inscriptions, canopies and installations of like nature made by Lessee shall be removed at or prior to the expiration of the term of this Lease.

11.3

All furniture, trade fixtures and business equipment installed by Lessee shall remain the property of the Lessee and may be removed by Lessee at any time during or at the end of the Lease Term.  Lessee shall, at its own expense, repair all damage to the Leased Premises resulting from the installation or removal of its furniture, trade fixtures and business equipment.  All furniture, trade fixtures, or business equipment no so removed will conclusively be deemed to have been abandoned by Tenant and may be appropriated sold, stored, destroyed, or otherwise disposed of by Lessor without notice to Lessee.