Item 1.01 Entry into a Material Definitive Agreement.
On January 5, 2023, Cuentas, Inc. ("Cuentas") signed a Binding Letter of Intent
with Core Development Holdings Corporation ("Core"), a Florida corporation that
holds approximately 29.3% of 4280 Lakewood Road Manager, LLC ("Lakewood
Manager"), which in turn owns 86.45% of the membership interests in 4280
Lakewood Road, LLC ("4280 Project"), an affordable multi-family real estate
project located in Lake Worth, Florida.
Core has agreed to sell a portion of its interest in the Lakewood Manager to
Cuentas. and Cuentas has agreed to issue to Core a number of Cuentas common
shares to acquire $2 million of equity in the Lakewood Manager . Cuentas has
agreed to issue to Core a number of Cuentas common shares (the "Number of
Cuentas Shares") equal to 33.3% of the total number of post- issuance,
authorized, issued and outstanding shares on a fully diluted basis measured on a
going forward basis to account for the exercise in the future of any currently
issued and outstanding warrants and options as of the date of this Agreement, of
Cuentas (CUEN) common stock free and clear of any liens, claims or encumbrances
anticipated to equal 10 million of a total of 30 million shares of Cuentas
common stock then outstanding ("33.3% Ownership Percentage"") which the parties
stipulate has a value equal to TWO MILLION DOLLARS ($2,000,000) (the "Purchase
Price"). If for any reason, Cuentas is unable to issue sufficient shares to
satisfy the 33.3% Ownership Percentage or as a result of the exercise and issue
of any stock warrants or options outstanding as of the date of the Agreement,
the Percentage Membership Interest to be issued by Core to Cuentas pursuant to
the Letter of Intentshall be reduced by the same percentage that the actual
post-issuance ownership percentage falls below the 33.3% Ownership Ratio. By way
of example only, if post-issuance, Core owns only 30.0% of the total issued and
outstanding shares of Cuentas common stock, the Percentage Membership Interest
sold to Cuentas shall be reduced by 3.3%.
a. The Percentage of Membership Interest Acquired will be determined by
selection of two competent valuation professionals, one by each Party, to
prepare a written opinion of the fair market value of Core's Interest in
Lakewood Managers as of the Closing Date provided that, the difference between
two appraisals does not exceed 15%, then the average of the fair market value of
the two appraisals shall represent the "Appraised Value Denominator" for
purposes of determining the Percentage Membership Interest to be transferred by
Core to Cuentas. If the difference between two appraisals is more than 15%, then
the Parties shall mutually select a third competent valuation expert who shall
prepare a third opinion of the fair market value of Core's Interest in Lakewood
Manager, and the average of the three opinions of the fair market value of
Core's Interest in Lakewood Manager shall be the Appraised Value Denominator.
The Percentage Membership Interest to be assigned and transferred shall equal
the Purchase Price divided by the Appraised Value Denominator. Core's transfer
of the Percentage Membership Interest is subject to approval by Lakewood
Manager. Cuentas agrees to be bound by the rights and obligations of the current
Operating Agreement and other agreements of Lakewood Manager and Core shall have
the right continue to exercise its management and other decision making rights
at Lakewood Manager and will provide customary rights afforded minority interest
holders in limited liability companies provided under Florida law. Cuentas'
obligation to consummate and enter into a definitive purchase and sale agreement
is contingent on board of director and shareholder approval.
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The Parties shall negotiate in good faith and enter into the definitive
membership purchase and sale agreement with customary terms and conditions
including representations and warranties on or before fifteen days from
execution of this Agreement and shall close on the contemplated purchase and
sale on or before thirty days from execution of this Agreement (the "Closing
Date"). These deadlines may be extended by a writing signed by each Party.
Individually, Cuentas and Core shall have the right to conduct a thorough and
full due diligence of the other party including, without limitation, from a
financial, operational, legal and regulatory perspective. If either Party
decides at its sole discretion and option that it is not satisfied with the
results and outcome of the Due Diligence, then the Party shall notify the other
Party of its decision not to continue with definitive agreements, and this
Agreement shall be null and void and no longer be binding on the Parties except
for the confidentiality provisions herein.
The Parties have included a Confidentiality provision in this agreement which
will survive the Agreement if a definitive Agreement is not reached.
Cuentas on behalf of itself, its affiliates, assignees, transferees hereby
acknowledge that Core, Lakewood Manager an affiliate of RENCo USA, Inc., is
constructing the 4280 Lakewood Project with RENCO Structural Building System, a
proprietary composite structural system distributed by RENCo USA, Inc. Cuentas
on behalf of itself, its affiliates, assignees, transferees hereby waives and
releases any and all claims against RENCo USA, Inc., Renco World Corporation,
Lakewood Manager, Core Development Holdings Corporation, 1019 Interests, LLC,
and their respective affiliates, managers, officers, directors, employees
relating to any and all losses, claims and actions arising out of the design and
construction of the RENCO Structural Building System in connection with the 4280
Lakewood Project.
The Parties agree that any and all disputes of whatever kind and nature
regarding this Agreement, including the Parties' inability to agree on a
valuation expert, the Per Share Factor, the Appraised Value Denominator, or any
other term essential to consummation of the contemplated transaction, or the
terms and conditions of the definitive purchase and sale agreement shall be
settled through expedited binding arbitration according to the rules of the
American Arbitration Association (the "AAA") conducted in Miami, Florida by the
AAA.
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Item 9.01. Financial Statements and Exhibits
10.1 Binding Letter of Intent
104 Cover Page Interactive Data File (the cover page XBRL tags are embedded
within the inline XBRL document)
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