Exhibit 1.1
CAPITAL LEASE OF LAND, PROPERTY AND EQUIPMENT
THIS AGREEMENT TO LEASE LAND, PROPERTY AND EQUIPMENT (this "Agreement") is
entered into as of June 28, 2001 by and between BENTLEY HOUSE FURNITURE COMPANY,
a Philippine corporation ("LESSOR"), having its principal place of business at
502 Midland Mansion, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Ave, Makati City MM, Philippines, on the one
hand, and ▇▇▇▇▇▇.▇▇▇, INC., a Delaware Corporation ("LESSEE"), having a
principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇
8020, on the other hand.
I. THE LEASE
1.1 LEASE OF PROPERTY AND EQUIPMENT WITH OPTION TO PURCHASE. In accordance
with the terms and conditions of this Agreement, Lessor shall lease to Lessee,
and Lessee shall lease from Lessor, the Bentley House Furniture Company
manufacturing complex, buildings, land and equipment, (the "PROPERTY"), more
accurately described as a manufacturing complex, consisting of a large furniture
manufacturing plant, cafeteria, two level separate office block and drying
facility located on the parcel of land with title number T-282176 of the
registry of deeds of Davao City, said parcel of land containing an area of
12,000 square meters ( 2.88 acres) and accompanied by a KPMG audited report and
KPMG's valuers, Asian Appraisal independent valuation report. Included in this
lease is all equipment described on schedule "A" hereto attached, the personal
property, including all substitutions, replacements, repairs, parts and
attachments, improvements and accessions thereto and therein (the "EQUIPMENT").
1.2 TERM OF LEASE. This agreement shall be in effect for a term (the "Lease
Term") commencing on the date hereof and terminating upon the first of: (a)
Legal transfer of title to the Property and Equipment from the Lessor to the
Lessee in accordance with the Option To Purchase in Section 1.4 below (b) on
June 27, 2050.
1.3 MINIMUM LEASE PAYMENTS. Lessee shall pay Lessor rent ("RENT") for the
Property and Equipment in an amount equal $600,000 per year, in cash, cash
equivalents or restricted shares of the lessee's $0.001 common stock, at the
beginning of each year throughout the lease term, reflecting an annual interest
rate of 10%, commencing on the date hereof. Alternatively, the Lessee may pay a
One Time Fee of $6,000,000, payable in cash, cash equivalents or One Million
(1,000,000) restricted shares of the ▇▇▇▇▇▇.▇▇▇, Inc. $0.001 par value Common
Stock ("Shares") upon the date hereof, representing payment in full for all
amounts due by Lessee to Lessor hereunder during the term of this Agreement, the
receipt of which is hereby acknowledged by the Lessor. This One Time Fee is
agreed to be equal to the present value of the Minimum Lease Payments ("Rents")
as of the date hereof.
1.4 OPTION TO PURCHASE. At any time during the Lease Term, the Lessee may,
at its sole option, purchase the Property and Equipment for the sum of One
Hundred Thousand Dollars US ($100,000), providing that the Rent has been paid in
full as described in Section 1.3 hereunder and that upon receipt of payment the
Lessor delivers to Lessee title to the Property and Equipment free of any
claims, tax, liens and all other encumbrances whatsoever. In the event Lessee
exercises this option no later than the first anniversary date of this
Agreement, Lessor agrees to pay all costs associated with the transfer of title
to the Property and Equipment, including all taxes, document fees and costs. In
the event Lessee exercises its option after the first anniversary date of this
Agreement, Lessee shall pay all costs.
II. COVENANTS OF THE PARTIES
2.1 PAYMENTS UNCONDITIONAL; TAX BENEFITS; ACCEPTANCE. THE LEASE SHALL BE A
GROSS LEASE, AND LESSEE'S OBLIGATION TO PAY ALL RENT AND OTHER SUMS THEREUNDER,
AND THE RIGHTS OF LESSOR IN AND TO SUCH PAYMENTS, SHALL BE ABSOLUTE AND
UNCONDITIONAL, AND SHALL NOT BE SUBJECT TO ANY ABATEMENT, REDUCTION, SETOFF,
DEFENSE, COUNTER CLAIM, INTERRUPTION, DEFERMENT OR RECOUPMENT, FOR ANY REASON
WHATSOEVER. Any nonpayment of Rent under this agreement shall result in Lessee's
obligation to promptly pay Lessor as additional Rent on such overdue payment,
for the period of time during which it is overdue (without regard to any grace
period), interest at a rate equal to the lesser of (a) eight percent (8%) per
annum, or (b) the maximum rate of interest permitted by law.
2.2 USE OF PROPERTY AND EQUIPMENT. Lessee shall use the Property and
Equipment as it sees fit, in a manner and for the use contemplated by the
manufacturer thereof, and in compliance with all laws, rules and regulations of
every governmental authority having jurisdiction over the Property and Equipment
or Lessee. Lessee shall pay all costs, expenses, fees and charges incurred in
connection with the use and operation of the Equipment.
2.3 TAXES, LIENS, ENCUMBRANCES, TRANSFER OF TITLE. Lessor warrants and
represents to Lessee that the title to the Property and Equipment leased is
good, its transfer is rightful, and the Property will be delivered free from any
security interest or other lien, tax liability or encumbrance of any type
whatsoever and that no lien, tax liability or other encumbrance whatsoever will
arise during the lease term from activities, agreements or other actions or acts
committed by the Lessor.
Lessor, for Lessor and for Lessor's executors, administrators and assigns,
covenants and agrees with Lessee to warrant and defend title to the Property and
Equipment hereby leased to the Lessee, his executors, administrators, and
assigns against all and every person and persons whomsoever.
Lessor shall be obligated to pay, and hereby indemnifies Lessee and its
successor and assigns against, and holds each of them harmless from, all license
fees, assessments, and sales, use, property, excise and other taxes and charges,
other than those measured by Lessee's net income, now and hereafter imposed by
any governmental body or agency upon or with respect to any of the Property and
Equipment, or the possession, ownership, use or operation thereof, or the
consummation of the transactions contemplated in this Agreement. Notwithstanding
the foregoing, Lessor shall file all required personal property tax returns, and
shall pay all personal property taxes payable with respect to the Equipment.
Notwithstanding anything to the contrary in this Agreement, Lessor hereby
acknowledges, affirms and warrants that the Property and Equipment shall be free
of any security interest, lien, tax, or any other type of encumbrance whatsoever
upon the execution date of this Agreement.
2.4 LOSS OF EQUIPMENT. Lessee and Lessor shall jointly bear the risk of the
Equipment being lost, destroyed or otherwise permanently unfit or unavailable
for use from any cause whatsoever (an "EVENT OF LOSS") after Lessee taking
possession of the Property and Equipment. If an Event of Loss shall occur with
respect to any item of Equipment, Lessee shall promptly notify Lessor thereof in
writing. On or before the expiration date of this Agreement, Lessee shall pay to
Lessor a sum equal to one half the Casualty Value of such item of Equipment as
of the date of such payment. Provided that Lessor has received the Casualty
Value of any item of Equipment, Lessee shall be entitled to the proceeds of any
recovery in respect of such item of Equipment from insurance or otherwise.
2.5 INDEMNITY. Except with respect to the gross negligence or willful
misconduct of Lessee, Lessor hereby indemnifies, protects, defends and holds
harmless Lessee and its successors and assigns, from and against any and all
claims, liabilities (including negligence, tort and strict liabilities),
demands, actions, suits, and proceedings, losses, costs, expenses and damages,
including without limitation, reasonable attorneys' fees and costs
(collectively, "CLAIMS"), arising out of, connected with, or resulting from this
Agreement, any Lease or any of the Property and Equipment, including, without
limitation, the manufacture, selection, purchase, delivery, possession,
condition, use, operation, or return of the Equipment. Each of the parties shall
give the other prompt written notice of any Claim of which it becomes aware. The
provisions of this Section 2.5 shall survive the expiration or termination of
this Agreement.
2.6 PROHIBITIONS RELATED TO LEASE AND EQUIPMENT. Without the prior written
consent of Lessor, which consent as it pertains to subsections (a) and (b) below
shall not be unreasonably withheld, Lessee shall not (a) move any of the
Equipment from the location at which it is currently installed; or (b) permit
any of the Equipment to be moved outside the continental limits of the
Philippines.
2.7 ALTERATIONS AND MODIFICATIONS. Without the prior written consent of
Lessor, which consent shall not be unreasonably withheld, lessee shall not make
any material additions, attachments, alterations or improvements to the Property
and Equipment.
2.8 EQUIPMENT TO BE PERSONAL PROPERTY. Lessee acknowledges and represents
that the Equipment shall be and remain personal property, notwithstanding the
manner in which it may be attached or affixed to realty, and Lessee shall do all
acts and enter into all agreements necessary to ensure that the Equipment
remains personal property.
2.9 FINANCIAL STATEMENTS. Lessee shall promptly furnish to Lessor such
financial or other statements respecting the condition and operations of Lessee,
as Lessor may from time to time reasonably request. Lessor shall promptly
furnish to Lessee such financial or other statements respecting the condition
and operations of Lessor, as Lessee may from time to time reasonably request.
2.10 LESSEE REPRESENTATIONS. Lessee hereby represents that, with respect to
this Agreement: (a) the execution, delivery and performance thereof by Lessee
have been duly authorized by all necessary corporate action; and (b) the
individual executing such document is duly authorized to do so; (c) such
document constitutes a legal, valid and binding obligations of Lessee,
enforceable in accordance with its terms.
2.11 LESSEE'S RIGHT TO TRANSFER, PLEDGE, ENCUMBER AND HYPOTHECATE. Provided
the Lessee pays the Lessor a One Time Fee of $6,000,000, payable in cash, cash
equivalents or One Million (1,000,000) restricted shares of the ▇▇▇▇▇▇.▇▇▇, Inc.
$0.001 par value Common Stock ("Shares"), in full for all amounts due by Lessee
to Lessor hereunder during the term of this Agreement, there shall be no
prohibitions related to the Lessee's ability to: (a) assign, transfer, pledge,
encumber, hypothecate or otherwise dispose of this Lease or any rights or
obligations thereunder; (b) sublease any of the Land, Property and Equipment;
(c) create or incur, or permit to exist, any lien or encumbrance with respect to
any of the Land, Property and Equipment, or any part thereof.
2.12 LESSOR'S COVENANT NOT TO TRANSFER, PLEDGE, ENCUMBER AND HYPOTHECATE.
Lessor hereby acknowledges, affirms and warrants that it will not: (a) assign,
transfer, pledge, encumber, hypothecate or otherwise dispose of this Lease or
any rights or obligations thereunder; (b) sublease any of the Land, Property and
Equipment; (c) create or incur, or permit to exist, any lien or encumbrance with
respect to any of the Land, Property and Equipment, or any part thereof.
III. DEFAULT AND REMEDIES
3.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an "Event of Default" hereunder: (a) Lessee shall fail to pay any
Rent or other payment due hereunder within five (15) days after it becomes due
and payable; (b) any representation or warranty of Lessor made in this
Agreement, or in any document furnished pursuant to the provisions of this
Agreement or otherwise, shall prove to have been false or misleading in any
material respect as of the date when it was made; (c) Lessee or their
affiliates, or Lessor and their affiliates, shall fail to perform any covenant,
condition or agreement made by it under any Lease, and such failure shall
continue for twenty (20) days after its receipt of notice thereof; (d)
bankruptcy, receivership, insolvency, reorganization, dissolution, liquidation
or other similar proceedings shall be instituted by or against Lessee or all or
any part of its property under the Federal Bankruptcy Code or other law of the
United States or of any other competent jurisdiction, and, if such proceeding is
brought against Lessee, it shall consent thereto or shall fail to cause the same
to be discharged within thirty (30) days after it is filed; (e) Lessee shall
default under any agreement with respect to the purchase or installation of any
of the Equipment; or (f) Lessee or any guarantor of Lessee's obligations under
any Lease shall default under any other agreement with Lessor.
3.2 REMEDIES. If an Event of Default hereunder shall occur and be
continuing, Lessor may exercise any one or more of the following remedies: (a)
terminate any or all of the Lessee's rights thereunder; (b) proceed, by
appropriate court action or actions, to enforce performance by Lessee of the
applicable covenants of any or all of the Leases or to recover damages for the
breach thereof; (c) recover from Lessee an amount equal to the sum of (i) all
accrued and unpaid Rent and other amounts due under any or all of the Leases
(ii) as liquidated damages for loss of a bargain and not as a penalty, the
present value of (A) the balance of all Rent and other amounts under any or all
of the Leases discounted at a rate of five percent (5%) per annum, and (B)
Lessor's estimated fair market value of the Equipment at the expiration of the
Original Term; (d) personally, or by its agents, take immediate possession of
any or all of the Equipment from Lessee and, for such purpose, enter upon
Lessee's premises where any of the Equipment is located with or without notice
or process of law and free from all claims by Lessee; and 9e) require the Lessee
to assemble the Equipment and deliver the Equipment to Lessor at a location
which is reasonably convenient to Lessor and Lessee. The exercise of any of the
foregoing remedies by Lessor shall not constitute a termination of this
Agreement unless Lessor so notifies Lessee in writing.
3.3 DISPOSITION OF EQUIPMENT. In the event, upon the occurrence of an Event
of Default, Lessor repossesses any of the Property and Equipment, Lessor may
sell or lease any or all of such Property and Equipment, at one or more public
or private sales. The proceeds of (i) any rental of the Property and Equipment
for the balance of the Original Term (discounted to present value at the rate of
five percent (5%) per annum) or (ii) any sale of the Property and Equipment
shall be applied to the payment of (A) all costs and expenses (including,
without limitation, reasonable attorneys' fees) incurred by Lessor in retaking
possession of, and removing, storing, repairing, refurbishing and selling or
leasing such Equipment and (B) the obligations of Lessee to Lessor pursuant to
this Agreement. Lessee shall remain liable to Lessor for any deficiency.
IV. MISCELLANEOUS
4.1 PERFORMANCE OF LESSEE'S OBLIGATIONS. Upon Lessee's failure to pay rent
(or any other sum due hereunder) or perform any obligation hereunder when due,
Lessor shall have the right, but shall not be obligated, to pay such sum or
perform such obligation, whereupon such sum or cost of such performance shall
immediately become due and payable hereunder as additional Rent, with interest
thereon at the highest legal rate from the date such payment or performance was
made.
4.2 QUIET ENJOYMENT. So long as no Event of Default shall have occurred and
be continuing, neither Lessor not its assignee shall interfere with Lessee's
right of quiet enjoyment and use of the Equipment.
4.3 FURTHER ASSURANCES. Lessee shall, upon the request of Lessor, from time
to time, execute and deliver such further documents and do such further acts as
Lessor may reasonably request in order fully to effect the purpose of Lessor's
rights hereunder. Lessor shall, upon the request of Lessee, from time to time,
execute and deliver such further documents and do such further acts as Lessee
may reasonably request in order fully to effect the purpose of Lessee's rights
hereunder
4.4 RIGHT AND REMEDIES. Each and every right and remedy granted to Lessor
under this Agreement shall be cumulative and in addition to any other right or
remedy therein specifically granted to nor or hereafter existing in equity, at
law, by virtue of statute or otherwise, and may be exercised by Lessor from time
to time concurrently or independently and as often as Lessor may deem expedient.
Any failure or delay on the part of Lessor in exercising any such right or
remedy, or abandonment or discontinuance of steps to enforce the same, shall not
operate as a waiver thereof or affect Lessor's right thereafter to exercising
the same. Waiver of any right or remedy on one occasion shall not be deemed to
be a waiver of any other right or remedy or of the same right or remedy on any
other occasion.
4.5 NOTICES. Any notice, request, demand, consent, approval or other
communication provided for or permitted hereunder shall be in writing and shall
be conclusively deemed to have been received by a party hereto on the day it is
delivered to such party at its address as set forth above (or at such other
addresses such party shall specify to the other party in writing), or if sent by
registered or certified mail, return receipt requested, on the fifth day after
the day on which it is mailed, postage prepaid, addressed to such party.
4.6 SECTION HEADINGS; COUNTERPARTS. Section headings are inserted for
convenience of reference only and shall not affect any construction or
interpretation of this Agreement. This Agreement may be executed in
counterparts, and when so executed each counterpart shall be deemed to be an
original, and such counterparts together shall constitute one and the same
instrument.
4.7 ENTIRE LEASE. This Agreement constitutes the entire agreement between
Lessor and Lessee with respect to the lease of the property and Equipment. No
amendment of, or any consent with respect to, any provision of this Agreement
shall bind either party unless set forth in a writing, specifying such waiver,
consent, or amendment, signed by both parties.
4.8 SEVERABILITY. Should any provision of this Agreement be or become
invalid, illegal, or unenforceable under applicable law, the other provisions of
this Agreement shall not be affected and shall remain in full force and effect.
4.9 ATTORNEYS' FEES. Should either party institute any action or proceeding
to enforce this Agreement, the prevailing party shall be entitled to receive
from the other party all reasonable out-of-pocket costs and expenses, including,
without limitation, attorneys' fees.
4.10 This Agreement shall be governed by and construed in accordance with
the laws of the State of Colorado, U.S.A., applicable to agreements made in and
wholly to be performed in that jurisdiction, except for matters arising under
the Act or the Exchange Act which matters shall be construed and interpreted in
accordance with such laws.
Subscriber and the Company each hereby irrevocably agree to submit any and
all disputes between them arising under this Agreement to binding,
non-appealable arbitration, to be conducted in accordance with this Section 5.
The parties further agree irrevocably to submit themselves, in any suit to
confirm the judgment or finding of such arbitrator, to the jurisdiction of the
Superior Court for the County of Arapaho, State of Colorado, and hereby waive
and agree not to assert (by way of motion, as a defense or otherwise) (a) any
and all objections to jurisdiction that they may have under the laws of the
State of Colorado or the United States, and (b) any claim (i) that it or
[he/she] is not subject personally to jurisdiction of such court, (ii) that such
forum is inconvenient, (iii) that venue is improper, or (iv) that this Agreement
or its subject matter may not for any reason be arbitrated or enforced as
provided in this Section 5.
The aggrieved party shall, upon written notice to the other, submit any
dispute or controversy respecting actual or alleged breach of, or interpretation
of, or enforcement of, this Agreement to binding non-appealable arbitration
before a retired judge of the Superior Court of the State of Colorado in and for
the County of Arapaho, to be conducted by means of a reference pursuant to the
applicable sections of the Colorado Code of Civil Procedures. Within ten (10)
business days after receipt of the notice submitting a dispute or controversy to
arbitration, the parties shall attempt in good faith to agree upon an arbitrator
to whom the dispute will be referred and on a joint statement of contentions.
Failing agreement thereto within ten (10) business days after receipt of such
notice, each party shall name three (3) retired judges and thereafter either
party may file a petition seeking the appointment of one of the persons named by
the party as a referee by the presiding Judge of the Superior Court, which
petition shall recite in a clear and meaningful manner the factual basis of the
controversy between the parties and the issues to be submitted to the referee
for decision. Each party hereby agrees that service of process in such action
will be deemed accomplished and completed when a copy of the documents is sent
in accordance with the notice provisions in Section 5 hereof.
The hearing before the referee shall be held within thirty (30) days after
the parties reach agreement as to the identity of the referee (or within thirty
(30) days after the appointment of a referee by the court). Unless more
extensive discovery is expressly permitted by the referee, each party shall have
only the right to two document production requests, shall serve but two sets of
interrogatories and shall only be entitled to depose those witnesses which the
referee expressly permits, it being the parties' intention to minimize discovery
procedures and to hold the hearing on an expedited basis. The referee shall
establish the discovery schedule promptly following submission of the joint
statement of contentions (or the filing of the answer to the petition) which
schedule shall be strictly adhered to. To the extent the contentions of the
parties relate to custom or practice in the Company's business model, or the
technical industry generally, or to accounting matters, the referee shall select
an independent expert or accountant (as applicable) with substantial experience
in the industry segment involved to provide recommendations to the referee. All
decisions of the referee shall be in writing and shall not be subject to appeal.
The referee shall make all rulings in accordance with Colorado law and shall
have authority equal to that of a Superior Court judge, to grant equitable
relief in an action pending in Reston Superior Court in which all parties have
appeared.
Except as otherwise provided in this Agreement, the fees and costs of the
referee and of any experts retained shall be shared equally by the parties to
such dispute. The referee shall award legal fees, disbursements and
reimbursement of other expenses to the prevailing party for such amounts, if
any, as determined by the referee to be appropriate. Judgment upon the referee's
award may be entered as if after trial in accordance with Colorado law.
(Remainder of Page Left Intentionally Blank)
4.11 SURVIVAL. All continuing obligations of Lessee and Lessor hereunder
shall survive the termination of this Agreement.
LESSEE, BY THE SIGNATURE BELOW OF ITS AUTHORIZED REPRESENTATIVE,
ACKNOWLEDGES THAT IT HAS READ THIS LEASE, UNDERSTANDS IT, AND AGREES TO BE BOUND
BY ITS TERMS AND CONDITIONS.
LESSOR, BY THE SIGNATURE BELOW OF ITS AUTHORIZED REPRESENTATIVE,
ACKNOWLEDGES THAT IT HAS READ THIS LEASE, UNDERSTANDS IT, AND AGREES TO BE BOUND
BY ITS TERMS AND CONDITIONS.
Executed this 28th day of June 2001
▇▇▇▇▇▇.▇▇▇, Inc. a Delaware Bentley House Furniture Company, a
Corporation with offices at 1600 Philippine corporation, with
Broadway, Suite 2400, Denver, offices at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Ave, Makati City MM,
Philippines,
Lessee Lessor
By:______________________________ By:______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Lessor's Representative Lessee's Representative
SCHEDULE A
The schedule of equipment is expected to be available following certain tests
and procedures to verify its accuracy and completeness as of the date hereof.
