PURCHASE AND SALE AGREEMENT
THIS AGREEMENT is made this 30 day of September, 2004, by and between
CENUCO, INC., a Delaware Corporation and Barrington University, Inc., an Alabama
Corporation (collectively "Seller") and Rarefied, LLC, a Georgia limited
liability company ("Buyer").
A. Seller is the owner of a distance educational institution known as
Barrington University offering classes over the Internet whose principal office
is currently located in Mobile, Alabama and certain tangible and intangible
B. Seller is willing to sell and Buyer is willing to buy the assets of
Seller's business known as Barrington University upon the terms and conditions
herein set forth.
NOW, THEREFORE in consideration of the mutual covenants contained herein, the
parties agree as follows:
1. ASSETS SOLD AND PURCHASED. Seller agrees to sell, transfer, convey and assign
to Buyer, and Buyer agrees to buy, accept and receive all of the following
related to Barrington University ("Business"): All furniture (including
classroom furniture), equipment, warranties, computers, computer software,
whether owned or licensed, telecommunications equipment, servers, customer
lists, files, records, other general intangibles of the business, the right to
the name Barrington University, lesson plans, curriculum, domain names,
including www.Barrington.edu all patents, registered or unregistered trademarks,
service marks, logos, fictitious and trade names, registered and common law
copyrights, all telephone numbers, including fax lines, Internet web site,
Barrington University e-mail accounts, customer lists, inventions, discoveries,
techniques, processes, methods, formulae, designs, trade secrets, confidential
information, know-how and ideas used or useful in connection with the Business.
A definitive list of tangible personal property conveyed will be created and
agreed to by the parties prior to closing. As the School is currently housed
within and operates from servers that also contain Seller's other businesses,
Seller shall transfer all software and connections to a separate Server capable
of efficiently supporting all of its intellectual property, and a workstation
containing Buyer's e-mail system within Thirty (30) days after Closing, and both
the Server and workstation shall become property of Buyer.
A. Covenant Not to Compete: Seller and its principals covenant not to
compete with Buyer by participating in an on-line proprietary school business
for five years anyway in the world. The parties specifically acknowledge that
the range is reasonable in that the school being purchased currently operates as
a classroom without walls on a worldwide basis. The parties recognize and
acknowledge that due to the nature of the business, if Seller operated anywhere
within the protected area it could affect Buyer's business opportunity, and
therefore, the covenant is reasonable. A separate Covenant Not to Compete shall
be executed at closing.
B. Receivables: Existing Accounts Receivable ("Receivables") in the
approximate amount of One Million Two Hundred Thousand ($1,250,000) shall be
included in the assets to be conveyed.
D. Bank Account: Seller shall transfer to Buyer the Bank of America
account styled "Virtual Academics dot com d/b/a/ Barrington University."
2. PURCHASE PRICE. The basic consideration to be paid by the Buyer to Seller for
the purchase of the assets of the business shall be One Million ($1,000,000)
Dollars. The Purchase Price shall be reduced by Two Hundred Thousand ($200,000)
Dollars if Buyer does not collect 95% of the Receivables on the books as of the
Closing Date within One (1) year after Closing. The purchase price shall be
allocated among the following categories, and the parties each agree to mutually
determine an acceptable allocation and to file the appropriate IRS form
reflecting this allocation.
Equipment and Tangible Property
Goodwill and Intangibles
Covenant not to Compete
3. PAYMENT TERMS.
A. Seller Financing. Seller Financing. Buyer shall execute a Promissory
Note in the amount of Seven Hundred Thousand ($700,000) Dollars payable as
follows: Twenty (20) equal and consecutive quarterly payments of $29,122.87 each
(amortized on the basis of $500,000), beginning on the first day of the 6th
month following Closing. Interest accrues at rate of Six (6%) percent per annum.
During the first six (6) months, interest will accrue but not be paid. The
$15,000 of interest accrued over the first 6-months shall be paid in 5 equal
monthly installments beginning the 1st day of the 3rd month following Closing.
There shall be a final balloon payment ("Balloon Payment") in the amount of Two
Hundred Thousand ($200,000) Dollars due on the first (1st) day of the Sixth
(6th) year after closing. If the Purchase Price is reduced due to recovery of
Receivables not meeting the threshold described in Paragraph 2 above, the
reduction in Purchase Price shall result in elimination of the Balloon Payment.
The schedule of payments, including the down payment is shown is Exhibit A.
If the Purchase Price is reduced due to recovery of Receivables not meeting the
threshold described in Paragraph 2 above, the reduction in Purchase Price shall
result in elimination of the Balloon Payment.
1. Buyer shall execute a Security Agreement and UCC filing securing
the promissory note with the assets of the business.
2. The loan closing documents will require that Seller will be named
as additional insured on the Buyer's insurance policy. Buyer will
Seller annually with a paid receipt for insurance.
3. There shall be no prepayment penalty.
4. The Principal of Buyer shall execute a Personal Guaranty of the
debt, in the form of Exhibit A, attached hereto.
5. The full amount of the note will be due and payable upon any sale
of the business or its assets.
6. If any student has provided written notice to Barrington
University or Cenuco of a request for a tuition refund prior to
October 1, 2004, or if Seller fails to pay any Trade Payables
where the service was received or committed to prior to Closing
and not paid within sixty (60) days after Closing, Buyer will
have the right to offset the amount from the Seller Financing.
7. The Note shall provide that Buyer shall not transfer the Business
assets or any part thereof to his wife while the Note remains
outstanding, except in the case of death or disability.
B. Cash at Closing. At closing, Buyer shall deliver to Escrow Agent,
Baritz and Colman, a Florida LLP, in cash, cashier's check or certified check,
Three Hundred Thousand ($300,000) Dollars, plus or minus prorations and closing
costs. Escrow Agent shall retain the proceeds in escrow until the State of
Alabama approves the change of ownership, or Forty Five (45) days after Closing,
whichever occurs first. Should the State of Alabama not approve the change of
ownership by the 45th day after Closing, or denies the change of Ownership, the
Buyer at its sole option, shall have the right to rescind the transaction. In
that event, Buyer shall reconvey or cancel the Bill of Sale and any other
document transferring ownership to it, and the debt obligation documents shall
be canceled. In addition, Working Capital equal to that in the accounts
transferred to Buyer on the Closing Date shall be returned to Seller. If any
debt has been incurred or any asset subjected to a lien or encumbrance of any
sort, it must be satisfied by Buyer prior to reconveyance. All profits earned
during the period Buyer has operated the Business would be returned to Seller
upon rescission. If on the fiftieth (50th) day after Closing, the Buyer has not
rescinded the transaction or authorized disbursement of escrow, Seller shall
have the right to rescind the transaction.
4. CONDITIONS PRECEDENT TO CLOSING.
A. Adjustments, Prorations and Deposits. Adjustments and prorations
shall be made as of the date of closing for yellow page and other
advertisements, utilities and related items, if necessary, in order that Seller
shall be responsible for all expenses prior to closing and Buyer for all
expenses thereafter. Buyer will assume the "Future Tuition Income" liability
associated with active students in good standing. The applicable party shall be
credited with the amount by
which the aggregate cash balances and all Accounts Receivable less current
liabilities and unearned tuition is more or less than zero. Buyer shall be
responsible for insuring the assets after closing.
B. Taxes. Seller will pay all income, employment, sales and other
applicable taxes and assessments or has made satisfactory provision for paying
same before closing.
C. Representations of Seller. Seller hereby represents and warrants
that the following matters are true, and will remain true at closing:
1. No asset to be sold is encumbered by a security interest held by
any person or entity or lease. Seller's attorney shall obtain a
search for UCC Financing statements prior to closing and provide
that information to Buyer's counsel. If any item is encumbered,
the UCC must be released as part of closing.
2. Seller shall pay any and all trade debt incurred prior to
closing, and hereby agrees to indemnify and hold Buyer harmless
for any trade debt left unpaid by Seller.
3. No written employment agreements exist with any person.
4. No litigation or threat of litigation exists which affects the
assets or is a threat to the business or assets being conveyed.
D. Salaries and Employee Benefits. Buyer shall pay all salaries and
benefits for all employees directly involved in the operation of the Business
and other direct expenses from the Closing date.
E. Consulting and Assistance. Should Buyer require services from Seller
during the six-month period after Closing, other than the expenses associated
with setting up the servers and workstation, Buyer shall pay for those services
at a rate to be negotiated and Seller shall begin exchanging information
immediately to enable Buyer's system to be set up within thirty (30) days after
Closing. Buyer shall not be responsible for the expense of Seller's computer
tech providers incurred during the first thirty (30) days after Closing.
F. Leased Space. Seller will provide facilities and services
(telephone, copies, fax, etc., either or both of which the buyer may cancel with
10 days written notice, at the Boca Raton offices of Cenuco, Inc. The rent of
$500/month and the service fee of actual expenses shall start 30 days after
G. Assistance with obtaining Licenses. Seller agrees to assist Buyer
with all state and local regulations, including transfer of licenses and permits
H. Authorization by Buyer's and Seller's Boards. The Board of Directors
(and any other body required by the Corporate documents to approve a transfer)
must issue Certificates, Minutes or other appropriate document authorizing the
Buyer and Seller to enter into the transaction.
I. Public Announcement. Buyer shall not make a public announcement
until 10 days after closing or immediately after Cenuco's public announcement,
whichever comes first. The Parties shall consult with and obtain consent from
each other on the desirability, timing and substance of any press release or
public announcement, publicity statement or other public disclosure relating to
the transaction. The Seller and Buyer each agree not to make any such public
disclosures without the prior written consent of the other Party as to the
content and timing of such disclosure; provided, however, that either Party may
make such disclosures as required to comply with applicable law, regulations or
stock exchange requirements. The Parties agree that no announcement may be made
and the agreement and transaction shall remain confidential in the event the
transaction is rescinded.
M. Corporate Name Change. Seller shall dissolve the corporation known
as Barrington University Inc., or change the name within ninety (90) days after
N. Employees. Buyer agrees to offer employment to the two (2) full-time
Barrington University employees located in Alabama and two (2) full-time
Barrington University employees located in the Boca Raton office immediately
after closing. In addition, these employees will be immediately eligible for a
medical plan (no waiting period). The Buyer and Seller will discuss the status
of those employees who work part-time for Barrington University and decide on
their status by the end of business on the 1st Monday after Closing.
5. CLOSING DATE AND COSTS.
A. The closing date shall be at a mutually agreeable time on or before
October 1, 2004. The closing shall take place at the Seller's corporate office,
although Buyer's attorney will deliver documents and confer, but will not attend
B. Each Party shall pay its own legal fees. Buyer is responsible to its
attorney for preparation of this Contract. Costs shall be allocated based on
local custom. The fees of the Escrow Agent shall be paid by the Seller.
6. INSTRUMENTS OF CONVEYANCE.
A. Seller shall execute a Bill of Sale in the form attached hereto as
Exhibit B stating that it has good title to the assets, free of liens, superior
to the interests of any other person or entity, that it has not conveyed or
agreed to convey the assets to any other person or entity, that there are no
outstanding fines, taxes of any sort or other obligations affecting the
property, that there is no judgment or pending lawsuit involving the Seller or
the business assets, and that Seller will defend the title against any persons
B. Each party agrees to execute such other documents at or after
closing as may be reasonably required to carry out the terms of this Agreement.
7. RISK OF LOSS. The risk of loss or damage of the assets being conveyed shall
be upon Seller at all times prior to the closing date. In the event of any loss
or damage to the assets being conveyed, Seller shall repair, replace or restore
any of such property to good working condition prior to the closing date. In the
event any such loss or damage is material and would substantially affect the
transaction contemplated hereunder, Seller shall give prompt written notice
thereof to Buyer. If Seller cannot restore the assets to good working condition
so that normal operation of the business can be resumed before five (5) days
prior to closing, Buyer may elect to either terminate this Agreement and receive
a return of Buyer's deposit, receive an agreeable reduction in purchase price
and close, or elect to postpone the dosing date to a mutually agreeable date and
time. If the property cannot be restored and the normal operation of the
business resumed before five (5) days prior to any extended closing date, the
Buyer may exercise the same options.
8. BROKER FEES. Seller has contracted with Abacus Mergers and Acquisitions in
the purchase and sale of the Business and agreed to pay a commission.
9. AMENDMENT / FINAL AGREEMENT. This Agreement constitutes the entire Agreement
between the parties. There are no other agreements other than those set forth
10. TIME OF THE ESSENCE. The parties agree that time is of the essence in all
matters regarding this agreement.
11. DISPUTE RESOLUTION / ATTORNEYS' FEES. In any dispute arising as a result of
this Agreement or the transaction, the parties agree that the matter will be
submitted to mediation at the joint expense of the parties. If the parties are
unable to resolve the matter through mediation, either party may submit the
matter to arbitration with a mutually agreeable arbitrator. If the Parties are
unable to agree on an arbitrator or the arbitration process, either Party may
file an appropriate civil action, and the prevailing party shall be awarded
attorney's fees and costs, including those incurred on any appeals.
12. RIGHT OF BUYER TO PERFORM DUE DILIGENCE INVESTIGATION. Buyer has performed
preliminary due diligence prior to contract, including a review of all financial
information and documentation about the business, and the condition of all
assets being conveyed. Buyer is granted until September 30, 2004 to review and
approve any other information not previously provided, including current roster
and accounts in related to current, future and immediately past tuition,
employee roster that includes age, gender number of dependents, pre-existing
medical problems and years of service, reports for workers compensation and
liability for the past 3 years. The condition of the equipment, including
computer hardware, software, networking and communication device must be in good
working order and sufficient to conduct business. Buyer may also continue
reviewing any and all financial data, financial aid data, regulatory matters,
advertising, marketing, contracts and all
other information regarding the Business that Buyer, in its sole discretion,
believes pertinent. After Closing, Buyer has no right to any information of
Cenuco that does not pertain to Barrington University.
13. ASSIGNABILITY. Buyer may not assign the contract without consent of Seller.
A. The headings of the paragraphs in the Agreement are for convenience
or reference only and do not form a part hereof, and in no way modify, interpret
or construe the understandings of the parties hereto.
B. This Agreement shall be construed and governed in accordance with
the laws of the State of Florida.
C. Any exhibits referred to herein are intended to be attached hereto
and made a part hereof.
D. The covenants, warranties and obligations of the parties shall
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
and year first above written.
SELLER: CENUCO, INC.
By: /s/ Steven BettingerSTEVEN BETTINGER, President
BUYER: RAREFIED, LLC.
By: /s/ Akber MithaniAKBER MITHANI, President
FORM OF PERSONAL GUARANTY - EXHIBIT A PERSONAL GUARANTY
This PERSONAL GUARANTY (this "Guaranty"), dated September 30, 2004, is
made by Akber Mithani ("Guarantor"), for good and valuable consideration, to
CENUCO, INC. ("Cenuco"), as security for the obligations set forth in the
Purchase and Sale Agreement (the "Purchase Agreement") and Secured Promissory
Note entered into by and between Cenuco, Barrington University, Inc. and
Rarefied, LLC ("Rarefied") on September 30, 2004.
1. Nature of Guaranty. Guarantor's liability under this Guaranty shall be open
and continuous for so long as this Guaranty shall be in force. Guarantor intends
to guarantee at all times the performance and prompt payment of all amounts owed
by Rarefied as set forth in the Purchase Agreement, whether due on any date
specified in the Agreement or earlier, by acceleration.
2. Duration of Guaranty. This Guaranty will take effect immediately upon
execution thereof, and will continue in full force until all amounts due and
owing pursuant to the Purchase Agreement have been fully and finally paid. Any
extensions, modifications, or alterations in the Agreement shall not in any
manner release or discharge Guarantor from this Guaranty.
3. Representations and Warranties. In addition to all other agreements set forth
in this Guaranty, Guarantor expressly represents and warrants to Cenuco that:
(A) no representations or agreements of any kind have been made to
Guarantor that would limit or qualify in any way the terms of this Guaranty;
(B) Guarantor has the full power, right, and authority to enter into
(C) the provisions contained in this Guaranty do not conflict with or
result in a default under any agreement or other instrument binding upon
Guarantor, and do not result in a violation of any law, regulation, decree, or
order applicable to Guarantor;
(D) Guarantor has read the Purchase Agreement, to which this Guaranty
is attached an integral part thereof, and fully understands his obligations
(E) Guarantor absolutely and unconditionally guarantees to Cenuco the
full and complete payment of all amounts due to Cenuco under the terms of the
(F) if the Purchase Agreement is breached, upon Cenuco's written
demand, Guarantor shall pay to Cenuco, with certified funds, the entire unpaid
principal balance due and owing under the Purchase Agreement. Payment shall be
delivered to Cenuco within twenty (20) days of receipt of its written demand;
(G) Guarantor waives the right to presentment, protest, demand, or
notice of any kind;
FORM OF PERSONAL GUARANTY - EXHIBIT A
(H) the terms and provisions of this Guaranty shall be binding upon
Guarantor and his successors, heirs, and assigns and shall inure to the benefit
of, and be enforceable by, Cenuco and its successors, parents, officers,
directors, heirs, and assigns. In the event of Guarantor's death, this Guaranty
shall become a liability of his estate.
4. General Provisions. Guarantor agrees that:
(A) Guarantor has an ongoing obligation during the duration of this
Guaranty to promptly notify Cenuco in writing, at the address below, in the
event that his residential address, as identified below, changes:
(i) Akber Mithani
WITH A COPY TO:
(ii) Cenuco, Inc.
6421 Congress Avenue
Boca Raton, Florida 33287
(B) if this Guaranty is breached and/or if any Party is required to
bring an action to interpret any of the provisions of this Guaranty, the
non-breaching/prevailing Party is entitled to payment of all costs and expenses,
including reasonable attorney's fees, incurred in the preparation, prosecution,
or appeal thereof;
(C) this Guaranty shall be governed and construed in accordance with
the laws of the State of Florida. The Parties agree that for all disputes,
differences, or questions relating to or arising under this Guaranty,
jurisdiction shall be exclusively in the State of Florida, and venue shall lie
in either Florida Circuit Court or the United States District Court for the
Southern District of Florida;
(D) in computing any period of time relating to this Agreement, if the
last day upon which to comply with a provision is a Saturday, Sunday, or legal
holiday, the period of time runs until the end of the next day that is not a
Saturday, Sunday, or legal holiday;
(E) in the event that any provision of this Guaranty shall be held
invalid or unenforceable, such determination shall not affect the enforceability
of the remaining provisions.
FORM OF PERSONAL GUARANTY - EXHIBIT A
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed
as of the date first written above.
Social Security Number:_________________
SUBSCRIBED AND SWORN to before me this ___ day of September 30, 2004 by
Akber Mithani, known to me or who has produced ________________________ to me as
(SEAL) Notary Public
My Commission Expires: _________________
FORM OF BILL OF SALE - EXHIBIT BBILL OF SALE
This BILL OF SALE is made and delivered on September 30, 2004, by
CENUCO, INC., a Delaware corporation and Barrington University, Inc., an Alabama
corporation (collectively, "Seller"), to and for the benefit of RAREFIED, LLC.,
a Georgia Limited Liability Corporation ("Buyer"). This Bill of Sale is made and
delivered pursuant to and in furtherance of a Purchase and Sale Agreement dated
as of September 30, 2004 (the "Purchase Agreement") by and between Seller and
Buyer. Capitalized terms used herein without definition have the respective
meanings given to them in the Purchase Agreement.
1. For good and valuable consideration in hand paid to the Seller,
receipt of which is hereby acknowledged, Seller does by this Bill of Sale grant,
bargain, transfer, sell, assign, set over, convey ownership of and deliver to
Buyer, its successors and assigns forever, all of their right, title and
interest, legal and equitable, in and to such assets as are more particularly
detailed in the Purchase Agreement, wheresoever situate, free and clear of all
liens, charges and encumbrances and otherwise in accordance with and subject to
the terms of the Purchase Agreement and this Bill of Sale.
2. Seller hereby covenants that it is the sole and lawful owner of such
assets conveyed and assigned pursuant hereto. Seller further covenants and
agrees that it shall, without further consideration, at any time and from time
to time after the date hereof, upon the reasonable request and at the reasonable
expense of Buyer or its successors or assigns, do, execute, acknowledge, deliver
or file, or shall cause to be done, executed, acknowledged, delivered or filed,
all such further acts, deeds, transfers, conveyances, assignments, notices,
releases, acquittances or assurances as Buyer or its successors or assigns may
reasonably request in order to more effectively consummate the transfer to Buyer
of all such right, title and interest of Seller in and to the assets hereby
3. Nothing contained in this Bill of Sale, express or implied, is
intended or shall be construed to confer upon, or give to, any person, firm or
corporation other than Buyer and its successors and assigns, any remedy or claim
under or by reason of this Bill of Sale or any terms, covenants or conditions
hereof, and all the terms, covenants and conditions, promises and agreements
contained herein shall be for the sole and exclusive benefit of the Buyer, its
successors and assigns. Notwithstanding the foregoing, any lender providing
financing in connection with Buyer's purchase of the assets and consummation of
the transactions contemplated by the Purchase Agreement shall be entitled to
rely upon this Bill of Sale.
IN WITNESS WHEREOF, Seller has caused this Bill of Sale to be duly executed and
delivered by its officer thereunto duly authorized on the date first above
CENUCO, INC., a Delaware corporation
By: /s/ Steve Bettinger
Name: Steve Bettinger
BARRINGTON UNIVERSITY, INC., an Alabama corporation
By: /s/ Steve Bettinger
Name: Steve Bettinger
Dates Referenced Herein and Documents Incorporated by Reference