CONTRACT OF LEASE OF BUSINESS

Know all men by these presents:

This Agreement made and entered into by and between:

NAPOLEON WATERSPORTS, INC., a domestic corporation duly

organized and exiting in accordance with Philippine Laws, with principal
place of business at Brgy. Balabag, Boracay Island, Malay, Aklan,
Philippines, Philippines, represented herein by its President, evidenced by
a Secretary Certificate herein attached, __________________________, of
legal age, Japanese Citizen and a resident of __________________________,
hereinafter referred to as the LESSOR.

-And-

ZAFIRO T. LAURON and EDGAR JANINE L. PESTANO, both of

legal age, married, Filipinos with postal address at G/F CPBC Bldg.,
Fajardo St., Jaro, Iloilo City, hereinafter referred to as the LESSOR;

WITNESSETH: That

WHEREAS, the LESSOR has a duly existing watersports business

operating in Boracay Island, Malay, Aklan, Philippines, carrying the
business name of “Napoleon Watersports”

WHEREAS, the LESSEE intends to lease out and autonomously

operate the above stated watersports business of the LESSOR for an agreed
rental fee;

NOW, THEREFORE, in view of the foregoing premises and in

consideration of the covenants hereinafter set forth, the Parties hereto have
agreed as follows:

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1. PURPOSE OF THE LEASE.
The LESSOR hereby leases to the LESSEE and the latter hereby accepts the
same, the former’s watersports business under the name Napoleon
Watersports, inclusive of the following:

A. All business rights, membership, equipment, office space, building,

floating platform, engine, boats, boat bodies, ropes, parts, towables,
and all other rights, interest, equipment and materials owns,
inclusive but not limited to the inventory of equipment attached in
this agreement, which it leases, uses and in its possession necessary,
required or incidental to the existence and operation of the
aforestated leased business;
B. All business, membership and intellectual rights of the LESSOR over
the leased businesses;
C. In general all rights and things necessary, required and incidental to
the safe, lawful and peaceful operation of the above stated business
by the LESSEE.

It is construed that the lease of the above listed vessels or equipment

automatically include the right to use and exercise the membership rights
of the LESSOR with the Boracay Watersports Association, Inc. (BWSAI)
and for this purpose the LESSOR hereby grant full authority to the LESSEE
to represent and vote in all matters before the said association.

The LESSOR shall provide for lease of all the above listed in good working
condition, valid, registered and usable in accordance with the laws and
regulations of the Republic of the Philippines and free from any defect or
flaw, whether hidden or shown.

2. RENTAL RATE.
For the lease of the above stated business and all the listed equipment and
rights in the immediately preceding paragraph, the LESSEE agrees to pay
the LESSOR a net rental rate of Five Hundred Thousand Pesos
(Php500,000.00.00) every month and due every 15th day of the month, free
from any deduction of whatever kind. (Rental should be 1,000,000)

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The LESSEE shall pay an advance payment of 12 months rental fee or a
total of Six Million Pesos (Php6,000,000.00) upon signing of this agreement
to be applied on the first 12 months of this agreement. (We ask for 4
months advance and 8 months deposit to be applied at the end of the term.

3. ESCALATION RATE.
Any rent escalation/increase under this Lease shall commence no earlier
than Five (5) years after the date of the commencement of this Lease. The
maximum amount that the rent may be increased starting on the 5th year of
this agreement shall be three 3% over the beginning base rent under this
lease and the latest or prevailing rent the year immediately preceding.
(Should be 5% every 5th year.)

4. EFFECTIVITY AND TERM

This Agreement shall take effect from the date of signing of the parties.

Unless sooner terminated, this Agreement shall be in full force and effect
beginning on the Effectivity Date and shall continue for TWENTY (25)
YEARS counted therefrom. Upon its expiration, this Agreement may be
renewed for another TWENTY FIVE (25) YEARS under such terms and
conditions as may be mutually agreed upon by the parties. A written notice
of intention to renew the Agreement shall be served by either party to the
other not later than three (3) months prior to the expiry date of the period
herein agreed upon.

The parties agree that upon expiration of this agreement and no renewal
thereto will be agreed this agreement will be considered renewed under
the same terms in the principle of implied new lease or tacita reconduccion
on a yearly basis, so as to afford either party to prepare for a subsequent
termination.

The LESSOR guarantees and grants the LESSEESE the right of first refusal
in case the former decides to offer the leased business for lease or for sale,
after the expiration of the Term of this Contract or the expiration of any
extension thereof. The LESSOR further guarantees that the right of first
refusal granted in this provision shall be under the same terms and

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conditions as those offered or will be offered to third party/ies. (Please
note that if we offer to sell Napoleon, we need to offer it to them first)

5. OWNERSHIP OVER BUSINESS AND EQUIPMENT.

The business, rights and equipment being rented shall remain the
property/ies of the LESSOR.

The LESSEE has the right to introduce and use additional equipment for its
operation of the leased business. All business rights, membership,
equipment, office space, building, floating platform, engine, boats, boat
bodies, ropes, parts, towables, and all other rights, interest, equipment and
materials as may be obtained, used and introduced by the LESSEE for
operating the leased business shall be registered and shall be owned by the
LESSEE.

The LESSEE shall not sell, transfer, mortgage, rent or encumber the leased
business or the equipment listed in the herein attached inventory.

6. MAINTENANCE OF THE LEASED EQUIPMENT AND

COMPENSATION/ASSUMPTION IN CASE OF LOSS OR DAMAGE.
The LESSEE shall maintain the leased vessels or equipment as listed in the
herein attached inventory like a (good) father of a family. (Need to insert
the word – good)

The LESSEE shall compensate the LESSOR for any loss of, or damage to,
the leased vessels or equipment as listed in the herein attached inventory,
sole and exclusively caused by or due to any willful act of the LESSEE.

At the LESSEE’S option, it may take out an insurance policy to cover loss or
damage to said leased vessels or equipment

The LESSEE assumes all risk and damages in relation to the operation of
the leased premises in which the LESSOR has no, direct or indirect,
participation whatsoever.

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7. OPERATION AND MANAGEMENT OF THE BUSINESS.
The LESSEE is vested with the sole and exclusive right of operating,
maintaining and managing the rented business and equipment during the
term of this agreement, including its extension or renewal. All business
income shall belong to the LESSEE, to the exclusion of the LESSOR.

8. UNDERTAKINGS OF THE PARTIES

The following shall be the obligations of the LESSOR:
A. The LESSOR herein represents and warrants that the leased business
and its equipment are all valid, legal and operational, free from liens,
encumbrances or legal impediments, with the exception to the
existing joint venture agreement entered by the LESSOR with
Shingley Watersport which the LESSEE will handle. (Note: They any
contract and agreement with Shingley Watersport will be taken care
of)
B. The LESSOR ensures that the LESSEE can and will operate the leased
business and equipment for the purpose herein described in this
Agreement and in connection with the intention of this agreement
C. With the exception to the joint venture agreement entered by the
LESSOR with Shingley Watersport, the LESSOR undertakes that the
LESSEE may lawfully, peacefully and freely hold occupy, use,
operate, and enjoy the leased business and equipment in order to
fulfill its obligations and exercise its rights under this contract, during
the Term of this Contract, and during any extension thereof, without
disturbance, nuisance, or interference by any third party or
governmental agency.
D. The LESSOR warrants and represents that it has obtained all
approvals from the local government unit of Malay and Aklan,
Maritime Industry Authority and all governmental agencies and
bodies, and has complied with all applicable laws to be able to
lawfully enter into this Contract and to allow operation and use of
the leased business and equipment by the LESSEE.
E. The LESSOR warrants and represents that it is the lawful and sole
owner of the leased equipment and business and that there are no

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 encumbrances, mortgages, liens or security interests thereon, or any
kind of disposition or conveyance, other than those created pursuant
to this contract and accepted by the LESSEE.
F. With the exception to the joint venture agreement entered by the
LESSOR with Shingley Watersport, the LESSOR warrants that the
execution this contract or the performance by the parties of any
provision, condition, covenant or other term thereof will not: (i)
conflict with or violate any Applicable Law, judgment, authorization,
indenture or agreement to which it is a party or by which it or any of
its property is bound; (ii) conflict with its articles of incorporation or
other constitutive documents; (iii) conflict with, or result in the
breach of, any provision of any agreement or instrument to which it
is a party or by which it or any of its properties or assets is bound;
and (iv) constitute a default or an event of default, or an event that,
with the giving of notice or the passing of time, or both, would
constitute a default under any such agreement or instrument.
G. The LESSOR shall ensure that it is free from any liability with any tax
or labor claim upon entering into this agreement. In the event that
any third person will of the file for any tax or labor claim against the
LESSOR based on any circumstance prior to this agreement. The
LESSEE may elect to handle or settle the same and any amount as
may be agreed to be settled shall be treated as advance rental and
may be deducted to the rental fee of the LESSEE.
H. The LESSOR shall extend to the LESSEE such assistance and shall
provide all documents that may be necessary or indispensable for the
continuous and unhampered development, establishment and
operation of leased business and equipment.
I. The LESSOR shall not, in any way, undertake any act or work that
will, directly or in directly, injure, harm or prove adverse to any
initiative or intervention made by the LESSEE for the operation and
success of leased business.
J. The LESSOR is prohibited from negotiating with a third party
regarding the use, lease, sale, or disposition in any other manner, of
the leased business and equipment without the knowledge and
written consent of the LESSEE.
K. The LESSOR shall allow the LESSEE to use or adopt a trade name
and trade mark which the LESSEE may use in operating the leased
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 business. The said trade name and trade mark shall remain to be
owned by the LESSEE.

The following shall be the responsibilities of the LESSEE:

A. The LESSEE shall promptly pay the rental fee under terms and
conditions as agreed in this agreement.
L. The LESSEE enters into this agreement fully knowing that LESSOR
has an existing joint venture agreement with Shingley Watersport.
The LESSEE takes responsibility in handling and rescinding the said
agreement to allow the implementation of this agreement. For this
reason, the LESSEE shall defend and protect the LESSOR, or its
assigns and successors-in-interests, from any claims by or liabilities
with Shingley Watersport. (Note: They any contract and agreement
with Shingley Watersport will be taken care of)

B. The LESSEE shall utilize the leased business and equipment for
activities to carry out the intended purpose herein described or for
such other activities that may be necessary to bring leased business
into fruition and success.
C. The LESSEE undertakes to maintain the leased business and
equipment in good condition at its own risk and expense and to keep
all personnel in compliance with all laws and regulations.
D. The LESSEE undertakes that there will be no illegal or prohibited
matters, objects, substances, materials, product and /or the like will
be allowed to operate within the leased business and equipment.
E. The LESSEE shall return the leased business and equipment upon
termination of this agreement, unless extended, renewed or sold to
the latter.
F. The LESSEE shall give priority to the existing employees of the
LESSOR in hiring employees needed and necessary in the leased
business. Provided, that said employees shall meet all the
qualifications required by the LESSEE.

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9. DEFAULT PAYMENT
The occurrence of any of the following events shall constitute default by
the LESSOR:

A. Termination, or cancellation, by the LESSOR of this Agreement

without valid or justifiable cause;
B. Any misrepresentation or breach of warranty made by the LESSOR
on any material matter that prejudices the LESSEE; and
C. Failure or refusal to perform any material covenant, agreement or
obligation under this Agreement by the LESSOR.

The occurrence of any of the following shall constitute an event of default

for the LESSEE:

A. Failure to perform by the LESSEE of any of its obligation under this

agreement for a cause not attributable to force majeure, and such
failure persists for more than 90 days upon written notice or demand,
which upon written notice or demand, the LESSEE has not
commenced to rectify the same within the same period from notice;
B. Failure without justification by the LESSEE to resume performance
within 30 days after the force majeure that has prevented the LESSEE
from performing any other obligation hereunder has substantially
ceased;
C. Filing of a voluntary or involuntary case or other proceeding by or
against the LESSEE seeking insolvency, bankruptcy, liquidation,
reorganization, dissolution, winding up; and
D. A pattern of continuing or repeated non-compliance, willful
violation, or non-performance of other terms and conditions hereof
including any material breach thereto.

10. FORCE MAJEURE

A “Force Majeure Event” means any event, condition, or circumstance and
the effects thereof not within the reasonable control, directly or indirectly,
of the Party affected, but only if and to the extent that:

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 A. Such event, condition, or circumstance is not the direct or indirect
result of the breach by such Party of any of its obligations under this
Agreement or the fault or negligence of such Party, its Affiliates, or
any person under the Party’s or its Affiliates’ reasonable control;
B. Despite the exercise of reasonable diligence, such event, condition, or
circumstance cannot be prevented, avoided, or removed by such
Party; and
C. Such event, condition, or circumstance has a material adverse effect
on the ability of such Party to perform all or a material portion of any
of its obligations under this Agreement, and such Party has taken all
reasonable precautions, due care, and alternative measures in order
to avoid or mitigate the effects of such event on such Party’s ability to
perform its obligations under this Agreement;
D. Acts of God, such as but is not limited to government issued closure
or rehabilitation, fires, explosions, earthquakes; War, invasion, act of
foreign enemies; Rebellion, revolution, insurrection or military or
usurped power, or civil war; Contamination by radio-activity from
any nuclear fuel, or from any nuclear, waste from the combustion of
nuclear fuel, radio-active toxic explosive, or other hazardous
properties of any explosive nuclear assembly or nuclear component
of such assembly; Riots, commotions, strikes, lock outs; Acts or
threats of terrorism.

A party invoking Force Majeure shall:

A. Notify the other party in writing by any means of communication as

soon as reasonably possible of the date of commencement of such
Force Majeure Event, the nature and expected duration thereof, and
the actions to be taken to prevent or reduce the effects of such event.
The notice shall be sent by such Party not later than 30 calendar days
after the date on which such Party first gains knowledge of such
Force Majeure Event. If it fails to deliver such notice in accordance
with this provision, such Party shall not be entitled to invoke the
benefits of this Section;
B. Continue performance of its obligations that are not affected by the
occurrence of the Force Majeure; and

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 C. Resume performance of affected obligations after the Force Majeure
or after the effects of Force Majeure no longer exists, whichever is
earlier, and shall formally notify the other party of such resumption.

11. COSTS, TAXES AND PERMITS

All costs for the development, establishment and operation of the leased
business and equipment shall be for the sole account of the LESSEE.

All taxes arising from this Agreement shall be for the sole account of the
LESSE, with the exception of income tax of the LESSOR over the rental fee,
which shall be paid and shouldered by the LESSOR.

All taxes arising from the operation and management of leased business
shall be for the sole account of the LESSEE.

During the existence of this agreement, all expenses for the issuance of
permits for the operation of the leased business shall be paid and obtained
by the LESSEE, provided that the LESSOR shall extend such assistance and
provide all documents that may be necessary for the continuous and
unhampered operation of the leased business.

12. REPRESENTATIONS AND WARRANTIES

Each party represents and warrants that on the Effectivity Date of this
Agreement:

A. The LESSOR is a corporation duly organized, validly existing and in

good standing under the laws of the Philippines and it is qualified
and authorized to transact the business in which it is engaged or
proposes to be engaged.
B. The signatory in behalf of the LESSOR is duly authorized by its
corporation to bind and enter its company into this agreement.
C. The parties have the power to execute, deliver and perform its
obligations under the terms of this Agreement.
D. All applicable governmental and corporate approvals have been
obtained and are in full force and effect upon or will be obtained and
be in full force and effect during the affectivity of the Agreement

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 E. It has complied in all material respects with all legal requirements
applicable to it and necessary at such time for the implementation of
this Agreement.
F. The execution of this Agreement will not constitute a default or
breach under any material agreement to which it is a Party or will
constitute a violation of applicable law with the exception to that,
with the exception of the joint venture agreement entered by the
LESSOR with Shingley Watersports.

13. TERMINATION AND CONSEQUENCES OF TERMINATION

This lease shall be terminated at the expiration of this Lease, in the event
that the same will not be extended or renewed.

Upon the termination of this Agreement, the LESSEE shall transfer and
return the leased business and equipment.

The LESSEE shall have the right to retain any and all equipment or trade
name/mark, which are not listed in the herein attached inventory of
equipment, which it may have purchased or acquired during the operation
of the leased business.

The LESSEE shall have the option to remove any improvement found in
the office or equipment which it has introduced provided that such
removal shall not materially alter the nature of the office or equipment on
which the improvements are found.

After the turnover, the LESSE shall be under no liability whatsoever to the
LESSOR with respect to the operation and management of leased business.
The LESSOR shall render the LESSEE free from any liability to third parties
in operating the leased business and equipment after the turnover,
provided however that the.

14. DISPUTE RESOLUTION

The Parties agree to exert serious and earnest efforts to amicably resolve all
disputes in an equitable manner by written notice to the other. This attempt
shall involve discussions between the authorized representatives duly

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designated by each Party for this purpose. The representatives shall
promptly meet in good faith and exert all efforts to resolve the dispute.

If the dispute remains unresolved, the matter shall be elevated and

submitted to the proper courts of Kalibo, Aklan.

15. JUDICIAL RELIEF

Should any one of the parties herein be compelled to seek judicial relief
against the other, the losing party shall pay an amount of One Hundred
(100) % of the amount claimed in the complaint as attorney's fees which
shall in no case be less than PHP 50,000.00 pesos in addition to other cost
and damages which the said party may be entitled to under the law.

16. PARTIAL INVALIDITY

If any term of this Contract shall be invalid or unenforceable, the
remainder shall be valid as written to the fullest extent permitted by law.

17. GOVERNING LAW

This Contract shall be interpreted and governed by the laws of the
Philippines.

18. ENTIRE AGREEMENT

This document contains the entire agreement of the parties and supersedes
all previous communications, representation and agreement, whether oral
or written, with respect to the Site. This Contract may not be modified
except in writing signed and acknowledged by both parties.

19. LANGUAGE
This Contract and any amendments to it shall be executed in 10 original
copies, in the English language. All notices required herein shall be written
in the English language.

20. NO WAIVERS.
No failure or delay on the part of a party to exercise any right, power or
privilege hereunder, or to enforce at any time or for any period of time any
provision hereof, shall be construed to be a waiver of such right, power,

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privilege or provision or of the right of the party thereafter to exercise such
right, power of privilege, or enforce such provision.

21. NON-ASSIGNMENT AND EXCLUSIVITY:

The parties herein cannot assign its rights and responsibilities in this
Agreement without the other party’s written consent. The LESSOR shall
not, during the term of this Agreement, on its own, operate or allow third
parties to operate similar activity to that of the LESSEE, or engage in
similar endeavor as would otherwise compete with the business operation
of the LESSEE.

22. CONFIDENTIALITY. Neither Party will use, copy, adapt, alter or part
with possession of any information of the other which is disclosed or
otherwise comes into its possession under or in relation to this Agreement
and which is of a confidential nature and unique or necessary to its
business. This obligation will apply to all information, technique,
technology and/or any information necessary for the operation of their
respective businesses which the either party may have obtained during
negotiation, execution and/or termination of this contract.

23. FINAL ASSURANCE.

Each party assures and undertakes to the other party that it will faithfully
comply and perform in good faith with all the obligations and
undertakings as provided in this agreement for the fulfillment of the
purpose of this agreement.

IN WITNESS WHEREOF, parties herein affixed their signatures on the

date and place above written.

For the LESSOR:

NAPOLEON WATERSPORTS, INC.

Represented by:

_______________________

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For the LESSEE:

ZAFIRO T. LAURON EDGAR JANINE L. PESTANO

Signed in the presence of:

1. _____________________ 2. _____________________

ACKNOWLEDGEMENT

Republic of the Philippines)

_________________________) S.S

BEFORE ME, personally appeared:

Name Identification Date/Place Issued

ZAFIRO T. LAURON
EDGAR J. PESTANO

Known to me and to me known to be the same persons who executed the

foregoing instrument and acknowledged to me that the same is their free
and voluntary act and deed.

This instrument consisting of _____ page/s, including the page on which

this acknowledgement is written, has been signed on each and every page
thereof by the concerned parties and their witnesses, and sealed with my
notarial seal.

WITNESS MY HAND AND SEAL, on the date and place first above
written.

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 Notary Public

Doc. No.______;
Page No. ______;
Book No.______;
Series of 20___.

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