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EXHIBIT 10.10
LETTER OF INTENT FOR
LEASE AGREEMENT WITH OPTION TO PURCHASE
March 3, 1999
Mr. Scott B. Timmington
Select I. A., Inc.
Box 9080
Fargo, ND 58106
Re: Lease Agreement with Option to Purchase
Dear Mr. Timmington:
Over the past weeks, Territorial Inns Management, Inc., a Nevada
corporation, a wholly owned subsidiary of Country Maid Financial, Inc., a
Washington corporation (herein referred to as the "Lessee") has worked in
good faith with you and other representatives of Select I.A., Inc., a
Minnesota corporation, to enter into a lease agreement with option to
purchase for the ten (10) properties, as described in Exhibit A, currently
owned by Select I.A. Inc. (herein referred to as the "Lessor").
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 stock purchase
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 May 1, 1999 to May 1, 2004, renewable at the election of
the Lessee for 4 more consecutive terms.
Option to Purchase: Lessee shall have an option to purchase
the properties for the total amount of $18,000,000. Consideration for
the option will be the issuance of 100,000 shares of Class A
Preferred Stock of the Lessee's Parent Company Country Maid
Financial, Inc. valuing at $3,500,000 on the date of the execution of
the Lease Agreement. The
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preferred stock shall be convertible to the common stock of Country
Maid Financial, Inc. at the election of SIA (please verify this
provision). The preferred stock shall have a cash dividend rate of
8% paid monthly. SIA shall have registration rights to sell $500,000
worth of the preferred stock of Country Maid Financial, Inc.)
received from this transaction when Country Maid Financial, Inc.
conducts its initial public offering.
Minimum Lease Payment: $1,750,000 annually, triple net
including required reserves for replacement.
No Additional Rent. Lease payments shall not be credited
towards the purchase price of the properties.
Base Value: The Base Value for the properties to be included
in the lease shall be $21,500,000.
Closing. The Lease Agreement shall be entered into on or about
May 1, 1999, or upon a later date as agreed upon by the parties.
Upon Closing, Country Maid Financial, Inc. shall pay $100,000 to
SIA.
Access: Lessor to permit Lessee to conduct its due diligence
investigation, as long as this Letter of Intent remains in effect.
The Lessor will permit the Lessee 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 Lessee such financial data, operating data,
and other information as the Lessee shall reasonably request. The
Lessee agrees to retain all such information on a confidential
basis. Upon the termination of this Letter of Intent for any reason,
the Lessee shall return promptly to the Lessor all printed
information received by the Lessee from the Lessor 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 May 1, 1999
("Exclusivity Period"). The Lessee shall have the right to request
the consent of the Lessor to a sixty (60) day extension, and such
consent shall not be unreasonably withheld. The parties agree that
during such period that the Lessee shall have the exclusive right to
negotiate with the Lessor for the Lease Agreement, and during such
period the Lessor agrees not to directly or through intermediaries
solicit, entertain or otherwise discuss with any person any offers
to lease or sell the subject properties.
News Release: The Lessor or the Lessee 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 Lessee, 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.
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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.
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.
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By: C. Richard Kearns, CEO
ACCEPTED AND AGREED TO:
SELECT I.A., INC., a Minnesota corporation
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Scott B. Timmington, Its Authorized
Representative/President
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