1
EXHIBIT 10.9
LETTER OF INTENT FOR
LEASE AGREEMENT WITH OPTION TO PURCHASE
October 20, 1998
Greg Miller, President
Best Inns, Inc., a Kansas corporation
16605 NW Dublin Court
Portland, OR 97229-1895
Re: Lease Agreement with Option to Lease
Dear Mr. Miller:
Over the past several months, Territorial Inns Management, Inc., a
Nevada corporation (the "Lessee") has worked in good faith with you and other
representatives of Best Inns, Inc., a Kansas corporation, to enter into a lease
agreement with option to Purchase for the properties currently owned by Best
Inns, Inc. ("Lessor") as described in Exhibit A.
This offer reflects our most recent discussion and is intended to
conform with the terms under which we have been advised that the Lessor's board
of directors is prepared to accept.
The parties recognize that the transaction will require further
documentation and approvals, including the preparation and approval of a formal
agreement setting forth the terms and conditions of the proposed lease agreement
with option to purchase ("Lease Agreement"); nevertheless, they execute this
letter to evidence their intention to proceed in mutual good faith to complete
work required to negotiate terms of the Lease Agreement that are consistent with
this letter.
The proposed terms and conditions include, but are not limited to, the
following:
Term of Lease: The Lease between Lessee and Lessor for the properties
listed on Exhibit A of this letter of intent shall commence on December 1, 1998
to November 30, 2003 (OR JANUARY, 1, 1999 TO DECEMBER 31, 2004), renewable at
the election of the tenant for 4 more consecutive terms.
1
2
Option to Purchase
Tenant shall have an option to purchase the properties for the total
amount of $24,000,000. Consideration for the option will be the issuance of
common stock of the Tenant's Parent Company Country Maid Financial, Inc. worth
$3,000,000 on the date of the execution of the Lease Agreement. Lease payments
shall not be credited towards the purchase price of the properties.
Minimum Lease Payment: $1,980,000
No Additional Rent
Closing: The Lease Agreement shall be entered into on or about October
30, 1998 or upon a later date as agreed upon by the parties.
Access: To permit the Tenant to conduct its due diligence investigation,
as long as this Letter of Intent remains in effect, the Landlord will permit the
Tenant and their agents to have reasonable access to the properties being
contemplated for the Lease Agreement and to all of their books, records, and
personnel files and will furnish to the Tenant such financial data, operating
data, and other information as the Tenant shall reasonably request. The Tenant
agrees to retain all such information on a confidential basis. Upon the
termination of this Letter of Intent for any reason, the Tenant shall return
promptly to the Landlord all printed information received by the Tenant from the
Landlord in connection with the transaction contemplated by this Letter of
Intent.
Exclusivity: The parties agree to use their best efforts to enter into
the Lease Agreement not later than November 30, 1998, ("Exclusivity Period").
The Tenant shall have the right to request the consent of the Landlord to a
thirty (30) day extension, and such consent shall not be unreasonably withheld.
The parties agree that during such period that the Tenant shall have the
exclusive right to negotiate with the Landlord for the Lease Agreement, and
during such period Landlord agrees not to directly or through intermediaries
solicit, entertain or otherwise discuss with any person any offers to lease the
subject properties.
News Release: The Landlord or the Tenant may issue news releases or
other announcements concerning the transaction without the prior approval of the
other as to the contents of the announcement and its release.
This offer is contingent upon: (i) the completion by the Tenant, to its
satisfaction, of due diligence on the subject properties, their markets,
prospects and potential; (ii) satisfactory completion of legal due diligence,
including review of material contracts and due diligence with respect to
evaluation of potential liabilities related to the properties business and tax
matters; (iii) receipt of all required approvals, consents and authorizations of
applicable state and federal regulatory authorities; (iv) receipt of all
required consents of third parties; (v) the occurrence of no material adverse
change in the business or prospects of the properties; and (vi) the completion
of satisfactory legal documentation including adequate indemnifications and
representations.
None of the parties hereto shall be under any obligation to any other
party (except for the Exclusivity provision) until a definitive Lease Agreement
is executed.
This Letter of Intent may be executed in several counterparts and all so
executed shall constitute one letter binding on all the parties hereto even
though all the parties are not signatories to the original or the same
counterpart.
2
3
If the foregoing is acceptable to you, kindly execute a copy of this
letter in the place set forth below and return it by fax or overnight mail to C.
Richard Kearns, Chief Executive Officer of Country Maid Financial, Inc.
Very truly yours,
Country Maid Financial, Inc.
- -------------------------------------
By: C. Richard Kearns, CEO
ACCEPTED AND AGREED TO:
BEST INNS, INC., a Kansas corporation
- -------------------------------------
Greg Miller, President
3