-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Nv86EJTqxKeKYzIRgZ6MlOcv+nk7owyCfj6wtb4Icz6FRW21gvSP2dLRMTaHtczx BmTzFVdvRPNbqHgEdia+Pw== 0000950147-01-500211.txt : 20010205 0000950147-01-500211.hdr.sgml : 20010205 ACCESSION NUMBER: 0000950147-01-500211 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20010119 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TESSERACT GROUP INC CENTRAL INDEX KEY: 0000873601 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EDUCATIONAL SERVICES [8200] IRS NUMBER: 411581297 STATE OF INCORPORATION: MN FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-11111 FILM NUMBER: 1524087 BUSINESS ADDRESS: STREET 1: 3820 E BAY RD STREET 2: NO 2 CITY: PHOENIX STATE: AZ ZIP: 85044 BUSINESS PHONE: 4807062500 MAIL ADDRESS: STREET 1: 3820 E BAY RAOD CITY: PHOENIX STATE: AZ ZIP: 85044 FORMER COMPANY: FORMER CONFORMED NAME: EDUCATION ALTERNATIVES INC/MN DATE OF NAME CHANGE: 19930328 8-K 1 e-6179.txt CURRENT REPORT DATED 1-19-01 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) January 19, 2001 THE TESSERACT GROUP, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Minnesota 1-11111 41-1581297 - ---------------------------- ----------- ------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 4515 E. Muirwood Drive Phoenix, Arizona 85048 - ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (480) 940-6300 -------------------------------------------------------------- (Former name or former address, if changed since last report.) ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. SALE OF PARADISE VALLEY TESSERACT SCHOOL On January 19, 2001, The TesseracT Group, Inc. ("we" or "us") sold certain of our assets to The Paradise Valley Private School Foundation, an Arizona non-profit corporation ("PVPSF"). We made this sale pursuant to the terms of a Purchase and Sale Agreement, dated December 26, 2000, by and between us and PVPSF. In this transaction, we sold certain of our assets including equipment, contracts, personal property, records, files and goodwill related to two properties commonly known as the Paradise Valley TesseracT School and a separate preschool in Phoenix, Arizona. At the same time we assigned certain liabilities related to these properties to PVPSF. In consideration for the sale of these assets we received $50,000, and PVPSF assumed various liabilities. SALE OF AHWATUKEE TESSERACT SCHOOL On January 19, 2001, we sold certain of our assets to TAI, LLC, an Arizona limited liability company ("TAI"). We made this sale pursuant to the terms of a Purchase and Sale Agreement, dated December 24, 2000, by and between us and TAI. In this transaction, we sold certain of our assets including equipment, contracts, property, records, files and goodwill related to a property commonly known as the Ahwatukee TesseracT School. At the same time we assigned certain liabilities related to this property to TAI. As consideration for the sale of assets we received $100,000, in addition to TAI assuming various liabilities. ITEM 5. OTHER EVENTS. As previously disclosed, the registrant and its wholly owned subsidiary, Sunrise Educational Services, Inc. ("Sunrise") filed for reorganization under Chapter 11 of the United States Bankruptcy Code on October 6, 2000. The registrant has not prepared audited or other financial statements since the date of filing for bankruptcy. Therefore, the registrant does not include pro forma financial information reflecting the effect of the asset sales described herein. Monthly Operating Reports for November 2000 as filed with the United States Bankruptcy Court for the District of Arizona for The TesseracT Group, Inc. and Sunrise are attached hereto as Exhibits 99.1 and 99.2. 1 ITEM 7. FINANCIAL INFORMATION; EXHIBITS (b) Pro Forma Financial Information See Item 5 herein. (c) Exhibits Exhibit No. 10.1 Purchase and Sale Agreement by and between The TesseracT Group, Inc. and The Paradise Valley Private School Foundation dated December 26, 2000. 10.2 Purchase and Sale Agreement between The TesseracT Group, Inc. and Foothills Educational Foundation. 99.1 Monthly Operating Report of TesseracT Group, Inc. for November 2000. 99.2 Monthly Operating Report of Sunrise for November 2000. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. THE TESSERACT GROUP, INC. Dated: February 2, 2001 By /s/ Douglass E. Snell ------------------------------------- Douglass E. Snell Controller 2 EX-10.1 2 ex10-1.txt PURCHASE AND SALE AGREEMENT DATED 1-26-00 Exhibit 10.1 PURCHASE AND SALE AGREEMENT (PARADISE VALLEY SCHOOL) This PURCHASE AND SALE AGREEMENT (the "Agreement") is entered into as of the 26th day of December, 2000, by and between THE TESSERACT GROUP, INC., a Minnesota corporation, in its corporate capacity and in its capacity as debtor and debtor-in-possession in its Chapter 11 case pending in the United States Bankruptcy Court for the District of Arizona ("Seller"), and THE PARADISE VALLEY PRIVATE SCHOOL FOUNDATION, an Arizona non-profit corporation ("Buyer"). RECITALS A. Seller operates that certain private school and preschool commonly known as the "Paradise Valley TesseracT School" located at 4800/4834 East Doubletree Ranch Road, Paradise Valley, Arizona and a preschool ("Preschool") located at 4530 E. Gold Dust Avenue, Phoenix, Arizona (collectively referred to as the "School"). B. Seller has filed a voluntary petition for Chapter 11 relief under Title 11 of the United States Code ("Bankruptcy Code"), which is pending before the United States Bankruptcy Court for the District of Arizona (the "Court"). C. Seller desires, subject to the approval of the Court, to sell and Buyer desires to purchase certain assets and assume certain liabilities of Seller in connection with Seller's operations of the School on the terms and conditions set forth in this Agreement and in accordance with Bankruptcy Code ss.ss.363 and 365. D. Buyer and Seller further desire, subject to the approval of the Court, to enter into such other agreements and arrangements that effectuate the orderly transition of the School from Seller to Buyer. E. Buyer has completed its due diligence of the School and all other matters addressed in this Agreement. F. Prior to or contemporaneously with the closing of this transaction, Private School Real Estate LLC ("Private School") intends on purchasing the real property on which the School is situated, and the related improvements and fixtures from EPI (defined below). 1 G. The parties hereto acknowledge that: (I) they intend that the transaction contemplated under this Agreement be an asset purchase and not a sale of the stock of Seller; and (ii) Buyer is not buying the Business of Seller as defined in this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto agree as follows: ARTICLE I DEFINITIONS For purposes of this Agreement, the following capitalized terms, when used in this Agreement, shall have the meanings assigned to them as follows: 1.1 ASSUMED CONTRACTS. The term "Assumed Contracts" shall mean those unexpired leases and other executory contracts, which Buyer will assume hereunder, which are specifically set forth on SCHEDULE 1.1 attached hereto and the Preschool Lease. [SCHEDULE WILL INCLUDE ALL TEACHERS' CONTRACTS AND OTHER CONTRACTS THAT BUYER SPECIFICALLY AGREES TO ASSUME.] 1.2 BUSINESS. The term "Business" shall mean Seller's operations conducted under the name "TesseracT," "The TesseracT Group, Inc.," or "Paradise Valley TesseracT School," at the School and at any other location within or outside the State of Arizona. 1.3 CLAIM. The term "Claim" shall be given the same meaning as provided to such term under Bankruptcy Codess.101(5). 1.4 CLOSING. The term "Closing" shall mean the completed exchange of: (i) Closing documents set forth in Articles XIV and XV below, together with the simultaneous conveyance by Seller to Buyer of the Purchased Assets; (ii) the payment by Buyer to Seller of the Purchase Price due under the terms of this Agreement; and (iii) the assumption by Buyer of the obligations which it has expressly agreed to assume hereunder. 1.5 CLOSING DATE. The term "Closing Date" shall mean the date on which the Closing occurs which shall not be later than January 15, 2001, unless such date is extended in accordance with Article X.2. 2 1.6 EPI. The term "EPI" shall mean Education Property Investors, Inc., a Nevada corporation. 1.7 EQUIPMENT. The term "Equipment" shall mean all furniture, fixtures, office equipment, computers, printers, and other tangible personal property owned by Seller and located at the School on December 10, 2000 as evidenced by SCHEDULE 1.7 attached hereto, the inventory list prepared by Seller. 1.8 LEASE. The term "Lease" shall mean that certain Lease dated as of June 9, 1998 by and between Seller, as lessee, and EPI, as lessor, pursuant to which Seller leases the Real Property and the Paradise Lane Property from EPI. 1.9 PARADISE LANE PROPERTY. The term "Paradise Lane Property" shall mean that certain real property located in Paradise Valley, Arizona, at which Seller operates the charter school commonly referred to as the "Paradise Lane TesseracT Charter School." 1.10 PREPAID TUITION AND DEPOSIT CLAIMS. The term "Prepaid Tuition and Deposit Claims" shall mean all Claims against Seller and its estate for prepaid tuition and deposits provided on behalf of students at the School through the Closing Date; provided, however, that it shall not include the Billings (as defined in Section 7.5 below). 1.11 PRESCHOOL. The term "Preschool" shall mean the preschool presently operated by Seller at the Preschool Facility. 1.12 PRESCHOOL FACILITY. The term "Preschool Facility" shall mean the facility located at 4530 East Gold Dust Avenue, Phoenix Arizona. 1.13 PRESCHOOL LEASE. The term "Preschool Lease" shall mean that certain Agreement to Lease between Seller and the St. George Antiochian Orthodox Church dated March 30, 1998, pursuant to which Seller leases the Preschool Facility. 1.14 REAL PROPERTY PURCHASE AGREEMENT. The term "Real Property Purchase Agreement" shall mean the written agreement between Private School and EPI that provides for EPI's sale, and Private School's purchase, of the Real Property. 1.15 REAL PROPERTY. The term "Real Property" shall mean the real property that is the subject of the Real Property Purchase Agreement, which is commonly known as 4800/4834 East Doubletree Ranch Road, Paradise Valley, Arizona. 1.16 SECTION 363 ORDER. The term "Section 363 Order" shall mean the order entered by the Court pursuant to Bankruptcy Code ss.363 approving Seller's sale of the Purchased Assets (as defined in Section 2.1 below) to Buyer free and clear of any and all liens, encumbrances, claims, security interests, and adverse interests of any kind, the form of which shall be agreed to by the parties hereto. 3 1.17 SECTION 365 ORDER. The term "Section 365 Order" shall mean the Order entered by the Court pursuant to Bankruptcy Code ss.365(a) approving Seller's decision to: (i) reject the Lease as it relates to the Real Property; provided, however, that the Section 365 Order shall not approve Seller's decision to reject the Lease as it relates to the Paradise Lane Property unless Seller, in its sole and absolute discretion which may be unreasonably withheld, hereafter decides to reject the Lease as it relates to the Paradise Lane Property; and (ii) assume the Assumed Contracts, the form of which shall be agreed to by the parties hereto. 1.18 EMPLOYEES' ACCRUED LIABILITIES. The term "Employees' Accrued Liabilities" shall mean the liabilities of Seller for accrued compensation arising under Seller's employment obligations with its employees, including the obligations arising from its contracts with the School's teachers, as of the Closing Date, which are specifically set forth on SCHEDULE 1.18 attached hereto and totals APPROXIMATELY $50,000.00. The Employees' Accrued Liabilities amounts set forth on SCHEDULE 1.18 are effective as of November 30, 2000, and the parties will agree to an amended SCHEDULE 1.18 at the Closing which shall set forth the actual amount of the Employees' Accrued Liabilities on the Closing Date. ARTICLE II PURCHASE AND SALE 2.1 ASSETS TO BE SOLD. Subject to the terms and conditions of this Agreement, on the Closing Date, Seller agrees to sell, assign, transfer and convey, free and clear of any and all liens, encumbrances, claims, security interests, and adverse interests of any kind, the following assets and intangibles to Buyer (collectively, the "Purchased Assets, which the Buyer may use to operate a school: 2.1.1 EQUIPMENT AND THE ASSUMED CONTRACTS. The Equipment and the Assumed Contracts. 2.1.2 OTHER PERSONAL PROPERTY. In addition to the Equipment, any and all other tangible property utilized by Seller in connection with the Business conducted at the School and Preschool located those facilities, including, but not limited to, supplies-on-hand. 4 2.1.3 RECORDS, FILES AND RELATED MATERIALS. Copies of all records, files, invoices, student lists, employee files, accounting records, business records, operating information, any available historical financial data and other data of Seller relating to the School and the Preschool. 2.1.4 GOODWILL. All of Seller's goodwill that relates to the School and the Preschool, including the telephone numbers of the School. 2.2 EXCLUDED ASSETS. Notwithstanding Section 2.1 above, Seller shall not sell, transfer, assign, convey or deliver to Buyer, any asset not specifically addressed in Section 2.1 above, including but not limited to the following assets (collectively the "Excluded Assets"): 2.2.1 CONSIDERATION. The consideration delivered by Buyer to Seller pursuant to this Agreement. 2.2.2 INTELLECTUAL PROPERTY. Except as provided herein, all intellectual property of Seller, including, but not limited to, Sellers' trademarks, trade names, curriculum, and trade secrets. 2.2.3 INSURANCE POLICIES. Seller's insurance policies and rights thereunder, including, but not limited to, general liability and workers' compensation insurance held by Seller. 2.2.4 CORPORATE FRANCHISE. Seller's franchise to be a corporation, its certificate of incorporation, corporate seal, stock books, minute books and other corporate records having exclusively to do with the corporate organization and capitalization of Seller. 2.2.5 PRESCHOOL LICENSE. Seller's license issued by the Arizona Department of Education to operate the Preschool. ARTICLE III ASSUMPTION OF LIABILITIES 3.1 ASSUMED LIABILITIES. At Closing, Seller shall assume, cure and assign, and Buyer shall accept said assignment (collectively, the "Assumed Liabilities"): (i) the Assumed Contracts; provided, however, that Buyer shall only be obligated to pay, perform, or discharge in accordance with their terms such obligations thereunder that arise on or after the Closing Date; (ii) the Employees' Accrued Liabilities, and (iii) the normal and customary obligations relating to the operation of the School. Buyer shall fully and faithfully perform all duties and obligations, due or owing after Closing, of Seller with respect to the Assumed Liabilities. 5 3.2 NO ASSUMPTION OF OTHER LIABILITIES. Except as expressly set forth in this Agreement, Buyer does not by this Agreement, and will not be obligated to, assume any obligation, liability or duty of Seller whether incurred in connection with the Purchased Assets, or otherwise. ARTICLE IV TERMS OF PAYMENT 4.1 PAYMENT DUE AT CLOSING. At Closing, Buyer shall pay to Seller an amount equal to Fifty Thousand Dollars ($50,000) (the "Purchase Price") less the amount of the Deposit delivered by Buyer to Seller in accordance with Section 4.2 below, in immediately available funds. 4.2 DEPOSIT. Contemporaneously with the execution of this Agreement, Buyer shall deliver into escrow a cash deposit in the amount of $25,000.00 (the "Deposit"), which shall be refundable to Buyer unless Buyer refuses to close the transactions contemplated in this Agreement, except that the Deposit shall be refundable to Buyer if Private School's transaction with EPI to purchase the Real Property does not close and such failure to close is not the result of a default by Private School under the Real Property Purchase Agreement. At Closing, the Deposit shall be transferred to Seller as payment for part of the Purchase Price. 4.3 DETERMINATION. At or prior to thirty (30) days after the Closing, Buyer and Seller shall mutually agree to an allocation of the Purchase Price among the Purchased Assets in a reasonable manner, and each party agrees to file all federal, state and local tax returns in conformity with such allocation. ARTICLE V REPRESENTATIONS, WARRANTIES, AND COVENANTS OF SELLER Seller hereby represents, warrants, and covenants to Buyer as follows, and the warranties, representations, and covenants contained in this Article or elsewhere in this Agreement shall be deemed to be made as of the Closing: 5.1 CORPORATE STATUS. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Minnesota and is qualified to do business in the State of Arizona. 5.2 CORPORATE AUTHORITY. Subject only to approval of the Court, Seller has full power and authority to execute and perform this Agreement and all corporate action necessary to confirm such authority has been duly and lawfully taken. Upon execution hereof, this Agreement shall be a valid, legally binding obligation of Seller, enforceable in accordance with its terms subject only to approval by the Court. 6 5.3 TITLE TO PURCHASED ASSETS. Seller has good and marketable title to the Purchased Assets, and has full power and authority to transfer such title to Buyer subject only to approval by the Court. 5.4 ASSUMED CONTRACTS. The Assumed Contracts are valid, binding and in full force and effect; and there exists no default or event that with the giving of notice, the passage of time or both, would constitute a default thereunder that remains uncured as of the Closing Date. ARTICLE VI REPRESENTATIONS, WARRANTIES, AND COVENANTS OF BUYER Buyer hereby represents and warrants to Seller as follows and the warranties and representations contained in this Article or elsewhere in this Agreement shall be deemed to be made as of Closing: 6.1 ORGANIZATION. Buyer is a non-profit corporation duly organized, validly existing and in good standing under the laws of the State of Arizona. 6.2 AUTHORITY. Buyer has full power and authority to execute and perform this Agreement and all action necessary to confirm such authority has been duly and lawfully taken. Upon execution hereof, this shall be a valid and legally binding obligation of Buyer, enforceable against Buyer in accordance with its terms subject only to approval by the Court. 6.3 CONDITION OF ASSETS. Buyer has fully examined the physical condition of the Purchased Assets, and hereby agrees to accept such property AS IS AND WHERE IS. NO REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, IS MADE WITH RESPECT TO THE PURCHASED ASSETS. ARTICLE VII OTHER COVENANTS 7.1 CURRICULUM. Buyer shall have the fully paid up, non-exclusive, perpetual right to use Seller's curriculum in its post-Closing operation of the School and the Preschool, including, without limitation, materials, and instruction techniques of Seller. 7 7.2 TESSERACT NAME. Buyer shall have the non-exclusive, perpetual right to use the trademark and trade name "TesseracT" as part of the full name of the School and the Preschool and any two (2) other facilities in the event that the School and/or the Preschool are closed or relocated. Buyer may prepare for Seller's execution a licensing agreement consistent with the terms herein. 7.3 PRESCHOOL. Buyer shall be responsible for all costs and expenses associated with obtaining a license from the Arizona Department of Education ("ADE") to operate the Preschool (the "Preschool License"), including, but not limited to, any and all facility-related expenses required by ADE. Seller shall reasonably cooperate with Buyer in its efforts to obtain the Preschool License. The sale of the Purchased Assets and assumption of the Assumed Liabilities contemplated in this agreement is not conditioned upon Buyer's obtaining the Preschool License. Buyer agrees to hold harmless, indemnify and defend Seller from and against any and all loss, claim, damage, liability or expense, including but not limited to reasonable attorneys' fees and costs arising out of or occurring as a result of Buyer's inability to obtain a Preschool License. 7.4 FORBEARANCE OF CLAIMS FOR PREPAID TUITION AND DEPOSITS. Buyer agrees that the Buyer, all its officers, directors, trustees, agents and employees shall (i) forebear from taking any action against Seller and its estate to receive payment on the Prepaid Tuition and Deposit Claims and (ii) use their best efforts to seek the forbearance of any holder of a Prepaid Tuition and Deposit Claim to take any action against Seller and its estate to receive payment on the Prepaid Tuition and Deposit Claims. This forbearance obligation and covenant shall expire at the earlier of (i) distribution of such claims pursuant to a Chapter 11 plan in the Sellers bankruptcy case; (ii) distribution by a Chapter 7 trustee in the Sellers bankruptcy case or (iii) June 30, 2001. This forbearance obligation shall terminate without order of the United States Bankruptcy Court for the District of Arizona if the Seller fails to file a plan by March 15, 2001 or the Closing does not occur by the Closing Date. If Seller enters into any other agreement to sell its private or charter school assets to another buyer and that agreement contains a forbearance period more favorable to that other buyer than is offered to Buyer pursuant to 7.4 of this agreement, then Buyer automatically shall be entitled to exercise the more favorable forbearance terms as that of the other buyer. 7.5 BILLINGS. As of the date hereof, Seller estimates that Seller has approximately $161,000 in unearned revenues due on behalf of students at the School which has been billed, but is as of yet uncollected, by Seller for December 2000. These billings and all additional billings hereafter through the Closing Date which are collected and received by Seller (collectively the "Billings") shall be accounted for by the Seller and deposited forthwith into a separately segregated bank account jointly in the Seller's and Creditors Restructuring Officer of the Unsecured Creditors Committee (in the Seller's bankruptcy case) name. On the Closing Date, Seller shall turn the funds in the segregated bank account (the "Segregated Funds") over to Buyer. Buyer may only withdraw Segregated Funds and commingle such cash with its other funds, when Buyer has earned the Segregated Funds by providing the related educational services to the party who paid such funds to Seller (the "Payor"); provided, 8 however, that Buyer shall be required to return the unearned amount of such Segregated Funds to Payor, pursuant to the terms of the agreement wherein the funds were paid by Payor, upon written demand if Payor decides not to do business with Buyer any time after the Closing Date. Buyer acknowledges and agrees that Seller does not in any way guarantee the collectability of any of the Billings. No student shall be disenrolled from School by either party for failure to pay any Billing. 7.6 REJECTION OF LEASE OF REAL PROPERTY. Subject to the definition of Section 365 Order stated herein and subject to the acquisition of the Real Property and closing the Real Property Purchase Agreement by the Private School, the Lease of the Real Property shall be rejected by Seller at the earlier of (i) the Closing or (ii) February 5, 2001. This provision shall be included in the Section 363 Order. ARTICLE VIII EMPLOYEES 8.1 DEFINITION. Seller has provided Buyer with a complete list of all persons regularly employed on either a part-time or full-time basis by Seller in connection with the School. For purposes of this Article, the term "Employees" shall mean all persons on such list. 8.2 EMPLOYMENT OF SELLER'S EMPLOYEES AT THE SCHOOL. Buyer agrees to offer to hire all of Seller's Employees as of the Closing Date (the "Transferred Employees"). From and after the Closing Date, Buyer shall be solely responsible for payment, when and if due, of all claims by or obligations to Transferred Employees including, but not limited to, the Employees' Accrued Liabilities, and any accrued vacation pay, sick leave, or bonuses earned after the Closing Date. 8.3 EMPLOYEE SOLICITATIONS. Buyer shall be entitled to reasonable access to all employees related to the School for purposes of interviewing these individuals. 8.4 WORKERS' COMPENSATION. Seller agrees to assume all responsibility for liability arising from workers' compensation claims, both medical and disability, which have been filed at or prior to the time of Closing or which arose out of incidents that occurred prior to Closing. Buyer shall be responsible for all claims, which arise out of, or are based upon, incidents, which occur subsequent to Closing. 9 ARTICLE IX INDEMNITIES 9.1 SELLER. Seller agrees to hold harmless, indemnify and defend Buyer from and against any and all loss, claim, damage, liability or expense (including, but not limited to, reasonable attorneys' fees and costs) arising out of or occurring as the result of any breach by Seller of any of its covenants, representations or warranties hereunder. Such indemnification shall include any claims pertaining to events or actions occurring prior to the date of Closing. In no event shall the liability of Seller under this Section 9.1 collectively exceed $5,000. 9.2 BUYER. Buyer agrees to hold harmless, indemnify and defend Seller from and against any and all loss, claim, damage, liability or expense (including, but not limited to, reasonable attorneys' fees and costs) arising out of or occurring in connection with any breach by Buyer of any of its covenants, representations or warranties hereunder, or any liability of Buyer. Such indemnification shall include any claims pertaining to events or actions occurring after the date of Closing.. ARTICLE X CLOSING 10.1 CLOSING. Closing shall occur at the law offices of Quarles & Brady Streich Lang, LLP, in Phoenix, Arizona, on a date that is not later than ten (10) business days after the Court enters the Section 363 Order and the Section 365 Order; provided, however, that the Closing must occur concurrently with or subsequent to the closing of the transaction pursuant to which Private School is purchasing the Real Property from EPI and by no later than January 15, 2001. 10.2 TIME IS OF THE ESSENCE. Time is of the essence for the Closing of this transaction and if such Closing does not occur as provided in Section 10.1 above, a new Closing Date shall be set for the next business day thereafter, or as soon as practicable. 10 ARTICLE XI PRORATIONS The following costs and expenses shall be prorated as of the Closing Date: 11.1 Personal property taxes, sales taxes and any other assessments related to the Purchased Assets; 11.2 Charges for utilities servicing the School, including, without limitation, charges or gas, electricity, water, sewer, cable television, and telephone services; and 11.3 Any other reasonable expenses approved in writing by Buyer and prepaid by Seller related to the operation of the School. The amount of any prorations shall be computed by Buyer with the assistance of Seller. At Closing, Buyer shall pay to Seller or Seller shall pay to Buyer, as the case may be, an amount equal to the net proration so determined. ARTICLE XII CONDITIONS PRECEDENT TO BUYER'S DUTY TO CLOSE Buyer shall have no duty to close, and no obligation hereunder, unless and until each and every one of the following conditions precedent have been fully and completely satisfied: 12.1 CONTINUED TRUTH OF WARRANTIES. All of the representations and warranties of Seller contained herein shall continue to be true and correct at Closing. 12.2 PERFORMANCE OF OBLIGATIONS. Seller shall have fully performed or tendered performance of each and every one of its obligations hereunder which by its terms is capable of performance before Closing. 12.3 DELIVERY OF CLOSING DOCUMENTS. Seller shall have tendered delivery to Buyer of all the documents, in form and substance reasonably satisfactory to Buyer, required to be delivered to Buyer by Seller on or before Closing pursuant to this Agreement. 12.4 LITIGATION. No lawsuit, administrative proceedings or other legal action shall have been filed against Seller as of the Closing Date which seeks to restrain or enjoin Buyer's acquisition of the Purchased Assets, or the assumption of the Assumed Contracts. 11 12.5 REAL PROPERTY. Private School has purchased the Real Property from EPI. 12.6 EMPLOYEES' ACCRUED LIABILITIES. Seller pays over to Buyer cash in the amount of the Employees' Accrued Liabilities in the amount as agreed to at the Closing, and as set forth on the amended SCHEDULE 1.18. 12.7 COURT ORDERS. The Court shall have entered the Section 363 Order and the Section 365 Order; provided, however, that Buyer shall not have the right to not close this transaction solely because the Section 365 Order approves Seller's decision to reject the Lease as it relates to the Paradise Lane Property in addition to the Real Property. ARTICLE XIII CONDITIONS PRECEDENT TO SELLER'S DUTY TO CLOSE Seller shall have no duty to close this transaction unless and until each and every one of the following conditions precedent have been fully and completely satisfied: 13.1 CONTINUED TRUTH OF WARRANTIES. All of the representations and warranties of Buyer contained herein shall continue to be true and correct at Closing. 13.2 PERFORMANCE OF OBLIGATIONS. Buyer shall have fully performed or tendered substantial performance of each and every one of its obligations hereunder which by its terms is capable of performance before Closing. 13.3 DELIVERY OF CLOSING DOCUMENTS. Buyer shall have tendered delivery to Seller of all the documents, in form and substance reasonably satisfactory to Buyer, required to be delivered to Seller by Buyer on or before Closing pursuant to this Agreement. 13.4 LITIGATION. No lawsuit, administrative proceedings or legal action other than the Chapter 11 Case shall have been filed by or against Seller as of the Closing Date, which seeks to restrain or enjoin Seller's sale of the Purchased Assets or the assumption of the Assumed Contracts. 13.5 COURT ORDERS. The Court shall have entered the Section 363 Order and the Section 365 Order; provided, however, that Buyer shall not have the right to not close this transaction solely because the Section 365 Order approves Seller's decision to reject the Lease as it relates to the Paradise Lane Property in addition to the Real Property. 12 ARTICLE XIV ITEMS TO BE DELIVERED AT CLOSING BY SELLER At Closing, Seller shall, unless waived in writing by Buyer, deliver to Buyer the following items, each in form and substance reasonably acceptable to Buyer and Buyer's counsel: 14.1 BILL OF SALE. A duly executed bill of sale selling, assigning, transferring, and conveying the Purchased Assets. 14.2 CERTIFIED RESOLUTION. A copy of the resolution of the Board of Directors of Seller authorizing the execution and performance of this Agreement. 14.3 REPRESENTATIONS AND WARRANTIES. A certificate signed by an appropriate representative of Seller to the effect that all the representations and warranties of Seller contained herein are true and correct as of Closing. ARTICLE XV ITEMS TO BE DELIVERED AT CLOSING BY BUYER At Closing, Buyer shall, unless waived in writing by Seller, deliver the following items, each in form and substance reasonably acceptable to Seller and Seller's counsel, to Seller: 15.1 CERTIFIED RESOLUTION. A copy of the resolutions of the Executive Director of Buyer or other appropriate representative(s) authorizing the execution and performance of this Agreement. 15.2 REPRESENTATIONS AND WARRANTIES. A certificate signed by an appropriate representative of Buyer to the effect that all the representations and warranties of Buyer contained herein are true and correct as of Closing. 15.3 THE PURCHASE PRICE. The Purchase Price. ARTICLE XVI MISCELLANEOUS 16.1 RIGHT TO BID. Buyer acknowledges and understands that the Court may consider higher and better offers. Notwithstanding, the parties agree that the Purchased Assets and Assumed Liabilities, collectively, shall be the subject of higher and better offers. 13 16.2 FURTHER ASSURANCES. Each party shall, at any time after Closing, execute and deliver to the other party all such additional instruments of conveyance and assignments, certificates or similar documents and take all such further actions as such other party may reasonably request. 16.3 NO ADMISSIONS. Nothing in this Agreement shall be, or shall be construed to be, an admission of liability by the parties hereto to any other person, party or entity. 16.4 NO OTHER AGREEMENTS. This Agreement, and all agreements delivered as part of the Closing contemplated herein, constitute the entire agreement between the parties with respect to its subject matter. All prior and contemporaneous negotiations, proposals and agreements between the parties are superseded by this Agreement. Any changes to this Agreement must be agreed to in writing signed by both parties. 16.5 WAIVER. Either party may waive the performance of any obligation owed to it by the other party hereunder for the satisfaction of any condition precedent to the waiving party's duty to perform any of its covenants, including its obligations to Close. Any such waiver shall be valid only if contained in a writing signed by the waiving party. 16.6 PUBLIC ANNOUNCEMENTS. Through the Closing, no announcements to the news media of this Agreement shall have been made unless Buyer and Seller shall have mutually agreed on the timing, distribution, and contents of such announcements, except as may be required by law. The parties hereto acknowledge and understand that this Agreement will be filed with the Court promptly upon its execution by the parties hereto. 16.7 NOTICES. Any notices required or allowed in this Agreement shall be effectively given if placed in a sealed envelope, postage prepaid, and deposited in the United States mail, registered or certified, addressed as follows: To Seller: Lucian Spataro, Ph.D. The TesseracT Group, Inc. 4515 East Muirwood Drive Phoenix, Arizona 85048 Copy To: Robert J. Miller, Esq. Quarles & Brady Streich Lang, LLP Two North Central Avenue Phoenix, Arizona 85004 14 To Buyer: Steven Gaynor The Paradise Valley Private School Foundation 8131 N Mohave Road Paradise Valley, Arizona 85253 Copy To: Scott Cohen, Esq. Sacks Tierney P.A. 4250 N Drinkwater Blvd, 4th Floor Scottsdale, Arizona 85251-3900 16.8 BROKER AND FINDERS. Each of the parties hereto represents and warrants to the other that it has not employed or retained any broker or finder in connection with the transactions contemplated by this Agreement nor has it had any dealings with any person which may entitle such person to a fee or commission from any party hereto. Each of the parties shall indemnify and hold the other harmless for, from and against any claim, demand or damage whatsoever by virtue of any arrangement or commitment made by it with or to any person that may entitle such person to any fee or commission from the other party to this Agreement. 16.9 RISK OF LOSS. The risk of loss, damage, or destruction of the Purchased Assets shall be borne by Seller until Closing. In the event any loss or damage to or taking of any such Purchased Assets is material in the context of this transaction and occurs before Closing, Seller shall immediately notify Buyer of the nature and extent of such loss, damage or taking, and Buyer shall, at its option, by written notice to Seller, either terminate this Agreement without further liability or obligation to Seller, or Buyer may proceed with this transaction on the terms and conditions mutually agreeable to the parties, including any adjustment in the Purchase Price. 16.10 THIRD-PARTY BENEFICIARY. Nothing contained herein shall create or give rise to any third-party beneficiary rights for any individual or entity as a result of the terms and provisions of this Agreement. 16.11 COURT JURISDICTION. Upon the execution hereof, the parties will file this Agreement with the Court. Upon approval thereof, the Court will have continuing jurisdiction to resolve any and all disputes that may arise under this Agreement. 16.12 RELATIONSHIP OF PARTIES. The relationship of Seller and Buyer shall be that of independent entities and neither shall be deemed to be the agent of the other. 16.13 CHOICE OF LAW. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Arizona and, as applicable, the Bankruptcy Code. 15 16.14 PARAGRAPH HEADINGS. The Section, Article and paragraph headings contained herein are for convenience only and shall have no substantive bearing on the interpretation of this Agreement. 16.15 RULES OF INTERPRETATION. The following rules of interpretation shall apply to this Agreement, the Schedules hereto and any certificates, reports or other documents or instruments made or delivered pursuant to or in connection with this Agreement, unless otherwise expressly provided herein or therein and unless the context hereof or thereof clearly requires otherwise: 16.15.1 A reference to any document or agreement shall include such document or agreement as amended, modified or supplemented from time to time in accordance with its terms, and if a term is said to have the meaning assigned to such term in another document or agreement and the meaning of such terms therein is amended, modified or supplemented, then the meaning of such term herein shall be deemed automatically amended, modified or supplemented in a like manner. 16.15.2 References to the plural include the singular, the singular the plural and the part the whole. 16.15.3 The words "include," "includes," and "including" are not limiting. 16.15.4 A reference to any law includes any amendment or modification to such law, which is in effect on the relevant date. 16.15.5 A reference to any person or entity includes its successors, heirs and permitted assigns. 16.15.6 The words "hereof," "herein," "hereunder," and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. 16.15.7 All Schedules to this Agreement constitute material terms of this Agreement and are incorporated fully into the terms of this Agreement. 16.16 TIME IS OF THE ESSENCE. Time is of the essence in the performance and observance of all obligations and duties under this Agreement. 16.17 ATTORNEY FEES. Each party shall bear its own legal fees and costs incurred in the negotiation and closing of this transaction. In the event of a dispute arising between the parties under this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees and costs of suit from the non-prevailing party. 16 16.18 COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of such counterparts shall together constitute but one and the same instrument. Delivery of an executed counterpart of this Agreement by telefacsimile shall be equally as effective as delivery of a manually executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile also shall deliver a manually executed counterpart of this Agreement but the failure to deliver a manually executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. IN WITNESS WHEREOF, the parties hereto have set their hands effective the date set forth above. THE TESSERACT GROUP, INC., a Minnesota corporation By /s/ ------------------------------------- Its ------------------------------------ SELLER THE PARADISE VALLEY PRIVATE SCHOOL FOUNDATION, an Arizona non-profit corporation By /s/ ------------------------------------- Its ------------------------------------ BUYER 17 LIST OF EXHIBITS Schedule 1.1 Assumed Contracts Schedule 1.7 Equipment Schedule 1.18 Employees' Accrued Liabilities SCHEDULE 1.1 (ASSUMED CONTRACTS) (TO BE COMPLETED BY THE PARTIES) EXHIBIT 1.7 (EQUIPMENT) SCHEDULE 1.18 (EMPLOYEES' ACCRUED LIABILITIES) (To Be Completed By The Parties On Or Before The Closing Date) EX-10.2 3 ex10-2.txt PURCHASE AND SALE AGREEMENT Exhibit 10.2 PURCHASE AND SALE AGREEMENT (AHWATUKEE SCHOOL) This PURCHASE AND SALE AGREEMENT (the "Agreement") is entered into as of the ___ day of December, 2000, by and between THE TESSERACT GROUP, INC., a Minnesota corporation, in its corporate capacity and in its capacity as debtor and debtor-in-possession in its Chapter 11 case pending in the United States Bankruptcy Court for the District of Arizona ("Seller"), and TAI, LLC an Arizona limited liability company ("Buyer"). RECITALS A. Seller operates that certain private school ("School") commonly known as the "Ahwatukee TesseracT School" located at 4515 East Muirwood, Phoenix, Arizona. B. Seller has filed a voluntary petition for Chapter 11 relief under Title 11 of the United States Code ("Bankruptcy Code"), which is pending before the United States Bankruptcy Court for the District of Arizona (the "Bankruptcy Court"). C. Seller desires, subject to the approval of the Bankruptcy Court, to sell and Buyer desires to purchase certain assets and assume certain liabilities of Seller in connection with Seller's operations of the School on the terms and conditions set forth in this Agreement and in accordance with Bankruptcy Code ss.ss.363 and 365. D. Buyer and Seller further desire, subject to the approval of the Bankruptcy Court, to enter into such other agreements and arrangements that effectuate the orderly transition of the School from Seller to Buyer. E. Buyer has completed its due diligence of the School and all other matters addressed in this Agreement. F. The parties hereto acknowledge that: (i) they intend that the transaction contemplated under this Agreement be an asset purchase and not a sale of the stock of Seller; and (ii) Buyer is not buying the Business of Seller as defined in this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto agree as follows: 1 ARTICLE I DEFINITIONS For purposes of this Agreement, the following capitalized terms, when used in this Agreement, shall have the meanings assigned to them as follows: 1.1 ASSUMED CONTRACTS. The term "Assumed Contracts" shall mean those unexpired leases and other executory contracts which Buyer will assume hereunder, which are specifically set forth on SCHEDULE 1.1 attached hereto. 1.2 BUSINESS. The term "Business" shall mean Seller's operations conducted under the name "TesseracT,""The TesseracT Group, Inc.," or "Ahwatukee TesseracT School," at the School and at any other location within or outside the State of Arizona. 1.3 CLAIM. The term "Claim" shall be given the same meaning as provided to such term under Bankruptcy Code ss.101(5). 1.4 CLOSING. The term "Closing" shall mean the completed exchange of: (i) Closing documents set forth in Articles XIV and XV below, together with the simultaneous conveyance by Seller to Buyer of the Purchased Assets; (ii) the payment by Buyer to Seller of the Purchase Price due under the terms of this Agreement; and (iii) the assumption by Buyer of the obligations which it has expressly agreed to assume hereunder. 1.5 CLOSING DATE. The term "Closing Date" shall mean the date on which the Closing occurs which shall not be later than January 15, 2001, unless such date is extended as mutually agreed in writing by the parties hereto. 1.6 CORPORATE LEASE. The term "Corporate Lease" shall mean that certain Lease between Buyer and Seller pursuant to which Seller shall lease that portion of the Real Property necessary to operate its corporate office through no later than June 15, 2000. The Corporate Lease shall be in a form that is substantially similar to the form enclosed behind SCHEDULE 1.6. 1.7 COURT. The term "Court" shall mean the United States Bankruptcy Court for the District of Arizona. 1.8 EPI. The term "EPI" shall mean Education Property Investors, Inc., a Nevada corporation. 2 1.9 EQUIPMENT. The term "Equipment" shall mean all furniture, fixtures, office equipment, computers, printers, and other tangible personal property owned by Seller as specifically set forth on SCHEDULE 1.9 attached hereto. 1.10 LEASE. The term "Lease" shall mean that certain Lease dated as of December 27, 1999 by and between Seller, as lessee, and EPI, as lessor, pursuant to which Seller leases the Real Property and the North Scottsdale Property from EPI. 1.11 NORTH SCOTTSDALE PROPERTY. The term "North Scottsdale Property" shall mean that certain real property located in Scottsdale, Arizona, at which Seller operates the private school commonly referred to as the "North Scottsdale TesseracT School." 1.12 PREPAID TUITION AND DEPOSIT LIABILITIES. The term "Prepaid Tuition and Deposit Liabilities" shall mean the liabilities of Seller for any and all unearned, prepaid tuition and deposits of students at the School collected by Seller as of the Closing Date, which total approximately $51,931. By no later than the Closing Date, the parties will agree to the form of a SCHEDULE 1.12, which will set forth the exact amount of the Prepaid Tuition and Deposit Liabilities as of the actual Closing Date. 1.13 PRESCHOOL. The term "Preschool" shall mean the preschool presently operated by Seller at the Real Property. 1.14 REAL PROPERTY PURCHASE AGREEMENT. The term "Real Property Purchase Agreement" shall mean the written agreement between Buyer and EPI that provides for EPI's sale, and Buyer's purchase, of the Real Property. 1.15 REAL PROPERTY. The term "Real Property" shall mean the real property that is the subject of the Real Property Purchase Agreement, which also is the real property on which the Seller operates the School. 1.16 SECTION 363 ORDER. The term "Section 363 Order" shall mean the order entered by the Court pursuant to Bankruptcy Code ss.363 approving Seller's sale of the Purchased Assets (as defined in Section 2.1 below) to Buyer free and clear of any and all liens, security interests, and adverse interests of any kind, the form of which shall be agreed to by the parties hereto. 1.17 SECTION 365 ORDER. The term "Section 365 Order" shall mean the Order entered by the Court pursuant to Bankruptcy Code ss.365(a) approving Seller's decision to: (i) reject the Lease as it relates to the Real Property; provided, however, that the Section 365 Order shall not provide for the rejection of the Lease as it relates to the North Scottsdale Property unless Seller, in its sole and absolute discretion, hereafter decides to reject the Lease as it relates to the North Scottsdale Property; and (ii) assume the Assumed Contracts, the form of which shall be agreed to by the parties hereto. 3 1.18 TEACHERS' ACCRUED LIABILITIES. The term "Teachers' Accrued Liabilities" shall mean the liabilities of Seller for accrued compensation arising under Seller's employment contracts with the School's teachers as of the Closing Date, which are specifically set forth on SCHEDULE 1.19 attached hereto and totals $18,395. The Teachers' Accrued Liabilities amounts set forth on SCHEDULE 1.19 assume that this transaction closes on January 15, 2000, and at the Closing the parties will agree to an amended SCHEDULE 1.19 which sets forth the amount of the Teachers' Accrued Liabilities based upon the actual Closing Date. The Teachers' Accrued Liabilities is based upon that portion of teachers' compensation that has accrued, but has not yet been paid, as of the Closing Date because teachers at the School work ten (10) months, but are paid over twelve (12) months, under their employment contracts with Seller. 1.19 ADMINISTRATIVE LEASE CLAIM. The term "Administrative Lease Claim" shall mean the Claim entitled to administrative priority pursuant to Bankruptcy Code ss.503(b) arising under the Lease with respect to the Real Property and the North Scottsdale Property for the period of October 6, 2000 through October 31, 2000. The parties hereto agree the amount of the Administrative Lease Claim is $137,903.00. ARTICLE II PURCHASE AND SALE 2.1 ASSETS TO BE SOLD. Subject to the terms and conditions of this Agreement, on the Closing Date, Seller agrees to sell, assign, transfer and convey the following assets to Buyer (collectively, the "Purchased Assets"): 2.1.1 EQUIPMENT AND THE ASSUMED CONTRACTS. The Equipment and the Assumed Contracts. 2.1.2 OTHER PROPERTY. In addition to the Equipment, any and all other tangible property, inventory, and ancillary assets utilized by Seller in connection with the Business conducted at the School and located at the School, including, but not limited to, supplies-on-hand at the School. 2.1.3 RECORDS, FILES AND RELATED MATERIALS. Copies of all records, files, invoices, student lists, customer data (including telephone numbers), accounting records, business records, operating data and other data of Seller relating to the School. 4 2.1.4 CERTAIN RIGHTS. All rights under or pursuant to all warranties, representations and guarantees made by suppliers in connection with the Purchased Assets or services furnished to Seller pertaining to the School or affecting the Purchased Assets, to the extent such warranties, representations and guarantees: (i) are not required by Seller to fulfill its obligations under this Agreement; and (ii) are assignable. 2.1.5 GOODWILL. All of Seller's goodwill that relates to the School. 2.2 EXCLUDED ASSETS. Notwithstanding Section 2.1 above, Seller shall not sell, transfer, assign, convey or deliver to Buyer, any asset not specifically addressed in Section 2.1 above, including but not limited to the following assets (collectively the "Excluded Assets"): 2.2.1 CONSIDERATION. The consideration delivered by Buyer to Seller pursuant to this Agreement. 2.2.2 INTELLECTUAL PROPERTY. All intellectual property of Seller, including, but not limited to, Sellers' trademarks, trade names, curriculum, and trade secrets. 2.2.3 INSURANCE POLICIES. Seller's insurance policies and rights thereunder, including, but not limited to, general liability and workers' compensation insurance held by Seller. 2.2.4 CORPORATE FRANCHISE . Seller's franchise to be a corporation, its certificate of incorporation, corporate seal, stock books, minute books and other corporate records having exclusively to do with the corporate organization and capitalization of Seller. 2.2.5 PRESCHOOL LICENSE. Seller's license issued by the Arizona Department of Education to operate the Preschool. 2.3 SELLER'S BUSINESS. The parties expressly acknowledge and agree that this Agreement is not entered into for the sale of the stock of Seller or the sale of Seller's Business. The Agreement addresses only those assets located on the School's premises, or used by Seller solely in connection with the School, and which are defined herein as the Purchased Assets. ARTICLE III ASSUMPTION OF LIABILITIES 3.1 ASSUMED LIABILITIES . At Closing, Seller shall assign, and Buyer shall assume (collectively, the "Assumed Liabilities"): (i) the Assumed Contracts; provided, however, that: (a) Seller shall be solely responsible to cure the Assumed Contracts effective as of the Closing Date; and (b) Buyer shall only be obligated to pay, perform, or discharge in accordance with their terms such 5 obligations thereunder that first become performable on or after the Closing Date; (ii) the Teachers' Accrued Liabilities; and (iii) the Prepaid Tuition and Deposit Liabilities only to the extent such funds are turned over to Buyer pursuant to Section 7.6 below. Buyer shall fully and faithfully perform all duties and obligations, due or owing after Closing, of Seller with respect to the Assumed Liabilities. 3.2 NO ASSUMPTION OF OTHER LIABILITIES. Except as expressly set forth in this Agreement, Buyer does not by this Agreement, and will not be obligated to, assume any obligation, liability or duty of Seller whether incurred in connection with the Purchased Assets, whether known or unknown as of the Closing Date, discovered or undiscovered as of the Closing Date, or otherwise. Unless otherwise provided herein, Buyer shall not deemed by anything contained herein to have assumed any of Seller's liabilities, including, but not limited to: (i) any obligation or liability of Seller arising from any tort claims made by a third party arising from actions or failures to act by the Seller or otherwise relating to the School prior to the Closing; or (ii) any obligation or liability of Seller relating to employees or independent contractors accruing on or prior to the Closing Date, including, but not limited to, accrued salaries, other compensation or benefits, severance payments, accrued vacations, pensions, retirement plans, distributions or bonuses accruing on or prior to 3:00 p.m. on the Closing Date; it being understood that, at or prior to the Closing, any employment agreements between Seller and any employees relating to the operation of the School will be terminated on or before the Closing Date and none of the same will prevent any of such employees from becoming employees of Buyer after the Closing. 3.3 ALLOCATIONS. At the Closing Date and/or within a reasonable period of time after the Closing Date, as the case may be, and effective as of 3:00 p.m. local time on the Closing Date, to the extent not otherwise provided for by any other provision of this Agreement, Buyer and Seller shall allocate any obligations or liabilities relating to the School (such as equipment and other operating lease payments, real estate and personal property tax payments, and the like) consistent with the terms of this Agreement. ARTICLE IV TERMS OF PAYMENT 4.1 PAYMENT DUE AT CLOSING. At Closing, Buyer shall provide, and Seller shall receive consideration equal to $100,000 (the "Purchase Price") LESS the amount of the Deposit delivered by Buyer to Seller in accordance with Section 4.2 below. The Purchase Price is composed of: (i) Buyer's release and waiver of the Administrative Lease Claim (see Section 6.3 below) (the "Waived Administrative Claim"); (ii) Buyer's assumption of the Teachers' Accrued Liabilities; (iii) $12,653.50 in cash paid by certified funds or wire transfer on the Closing Date (the "Cash Payment"); and (iv) the Corporate Lease. 6 4.2 DEPOSIT. Contemporaneously with the execution of this Agreement, Buyer shall deliver and the Seller shall accept a cash deposit in the amount of $10,000.00 (the "Deposit"), which shall not be refundable to Buyer unless: (i) the transactions contemplated in this Agreement do not close due to Seller's failure to meet all of the conditions precedent set forth in Article XIV of this Agreement; or (ii) Seller otherwise refuses to close the transactions contemplated in this Agreement. If the Closing does not occur on or before January 15, 2001, due to any event described in the immediately preceding (i) and (ii), then Seller shall immediately transfer the Deposit to Buyer. 4.3 DETERMINATION. At or prior to thirty (30) days after the Closing, Buyer and Seller shall mutually agree to an allocation of the Purchase Price among the Purchased Assets in a reasonable manner that is in accordance with the requirements of Section 1060 of the Internal Revenue Code of 1986, as amended, and any applicable Treasury Regulations promulgated thereunder. Each party agrees to file, at its own expense, all federal, state and local tax returns in conformity with such allocation. ARTICLE V REPRESENTATIONS, WARRANTIES, AND COVENANTS OF SELLER Seller hereby represents, warrants, and covenants to Buyer as follows, and the warranties, representations, and covenants contained in this Article or elsewhere in this Agreement shall be deemed to be made as of the Closing: 5.1 CORPORATE STATUS. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Minnesota and is qualified to do business in the State of Arizona. 5.2 CORPORATE AUTHORITY. Subject only to approval of the Court, Seller has full power and authority to execute and perform this Agreement and all corporate action necessary to confirm such authority has been duly and lawfully taken. Upon execution hereof, this Agreement shall be a valid, legally binding obligation of Seller, enforceable in accordance with its terms subject only to approval by the Court. 5.3 TITLE TO PURCHASED ASSETS. Seller has good and marketable title to the Purchased Assets, and has full power and authority to transfer such title to Buyer subject only to approval by the Court. 5.4 ASSUMED CONTRACTS. The Assumed Contracts are valid, binding and in full force and effect; and there exists no default or event that with the giving of notice, the passage of time or both, would constitute a default thereunder that remains uncured as of the Closing Date. 7 5.5 CONDITION OF THE PURCHASED ASSETS. The equipment, fixtures, furniture, furnishings, office equipment and all other tangible personal assets and properties of Seller (including the Purchased Assets) presently used in, or necessary to the operation of, the School, are in good operating condition and have been maintained in accordance with normal industry practice. There are no material defects in the physical condition of the Purchased Assets, including, but not limited to, structural elements, mechanical systems, roofs or parking and loading areas. All water, sewer, gas, electric, telephone, drainage and other utilities required by law or necessary for the operation of the Purchased Assets have been connected pursuant to valid permits and are sufficient to service the School. 5.6 COMPLIANCE WITH LAW AND OTHER REGULATIONS. Seller has operated the School in compliance with all requirements (including, those relating to environmental matters) of federal, state and local law, and all requirements of all governmental bodies and agencies having jurisdiction over it with respect to the School, the operation of the School, the use of the Purchased Assets, and all premises occupied by Seller with respect to the School. Seller is not aware of any charge, complaint, action, suit, proceeding, hearing, investigation, claim, demand, or notice has been filed or commenced against Seller or the School alleging any failure to comply with any such law or regulation. 5.7 STATEMENTS AND OTHER DOCUMENTS NOT MISLEADING. Neither this Agreement, nor any schedule or exhibit hereto, contains any untrue statement of material fact with respect to Seller or the School or omits to state a material fact with respect to Seller or the School required to be stated in order to make such statement, document or other instrument not misleading. 5.8 LABOR RELATIONS. No employee of Seller at any of the School is represented by a labor union, and no petition has been filed or proceedings instituted by any employee or group of employees with any labor relations board seeking recognition of a bargaining representative. There are no matters pending before the National Labor Relations Board or any similar state or local labor agency with respect to the employees at the School, and Seller is not engaged in or subject to any penalties or enforcement action in respect of any unfair labor practices with respect to the employees at the School. Seller is not delinquent in payments to any of its employees for any wages, salaries, commissions, bonuses or other direct compensation for any services performed for it to the date hereof or amounts required to be reimbursed to such employees. Seller is in compliance with all applicable laws and regulations respecting labor, employment, fair employment practices, work place safety and health, terms and conditions of employment, and wages and hours. There are no charges of employment discrimination or unfair labor practices, nor are there any strikes, slowdowns, stoppages of work, or any other concerted interference with normal operations existing, pending or threatened against or involving Seller. 5.9 ENVIRONMENTAL MATTERS. Seller has not received notice of violation of any Environmental Law (as defined in this Section 5.9) or land use laws applicable to the School. For purposes of this Agreement, the term 8 "Environmental Law" shall mean any current statute or regulation pertaining to: (i) the protection of health, safety and outdoor environment; (ii) the protection or use of surface water and groundwater; (iii) the management, manufacture, possession, presence, use, generation, transportation, treatment, storage, disposal, release, threatened release, abatement, removal, remediation or handling of, or exposure to, any solid waste or "Hazardous Material" (as defined in this Section 5.9); or (iv) pollution (including any release to air, land, surface water, and groundwater), and includes, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act ("CERCLA"), 42 USC 9601 et seq., the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984 ("RCRA"), 42 USC 6901 et seq., the Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33 USC 1251 et seq., the Clean Air Act of 1966, as amended, 42 USC 7401 et seq., the Toxic Substances Control Act of 1976, 15 USC 2601 et seq., the Hazardous Materials Transportation Act, 49 USC App. 1801 et seq., the Oil Pollution Act of 1990, 33 USC 2701 et seq., the Emergency Planning and Community Right to Know Act of 1986, 42 USC 11001 et seq., the National Environmental Policy Act of 1969, 42 USC 4321 et seq., the Safe Drinking Water Act of 1974, as amended, 42 USC 300(f) et seq., any similar implementing law, and any current amendment, rule, regulation or order issued thereunder. For purposes of this Agreement, the term "Hazardous Material" shall mean any substance that is hazardous or toxic and includes, without limitation: (a) asbestos, polychlorinated biphenyls, and petroleum (including crude oil or any fraction thereof); and (b) any such material classified or regulated as "hazardous" or "toxic" pursuant to any Environmental Law. 5.10 LICENSES. Seller has all approvals, authorizations, consents, licenses, and permits (collectively, "Licenses") of any governmental or regulatory agency, whether federal, state, local or foreign, required to permit it to carry on the business as presently conducted at the School, all of which are in full force and effect, except where the failure to possess any such Licenses would not have a material adverse effect on the operation of the School or ownership of the Purchased Assets. A valid certificate of occupancy has been issued with respect to the School, and Seller lawfully occupies the School premises under said certificate of occupancy. ARTICLE VI REPRESENTATIONS, WARRANTIES, AND COVENANTS OF BUYER Buyer hereby represents and warrants to Seller as follows and the warranties and representations contained in this Article or elsewhere in this Agreement shall be deemed to be made as of Closing: 6.1 ORGANIZATION. Buyer is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Arizona. 9 6.2 AUTHORITY. Buyer has full power and authority to execute and perform this Agreement and all action necessary to confirm such authority has been duly and lawfully taken. Upon execution hereof, this shall be a valid and legally binding obligation of Buyer, enforceable against Buyer in accordance with its terms subject only to approval by the Court. 6.3 ADMINISTRATIVE LEASE CLAIM. As of the Closing Date: (i) Buyer owns a fifty percent (50%) undivided interest in the Administrative Lease Claim (the "Administrative Lease Claim"); (ii) Buyer shall not have previously sold, assigned, or transferred the Administrative Lease Claim; and (iii) the amount of the Administrative Lease Claim shall be not less than $68,951.50. ARTICLE VII OTHER COVENANTS 7.1 CURRICULUM. Buyer shall have the fully paid up, non-exclusive right to use Seller's curriculum in its post-Closing operation of the School at the Real Property, including, without limitation, materials and instruction techniques. 7.2 PRESCHOOL. If Buyer has not obtained a license from the Arizona Department of Education to operate the Preschool at the Real Property (the "Preschool License") as of the Closing Date, then Seller shall continue to manage and operate the Preschool for Buyer until such time as Buyer obtains the Preschool License; provided, however, that: (i) Seller shall be entitled to be reimbursed from Buyer, and Buyer shall pay Seller, for all reasonable costs and expenses associated with Seller's management and operation of the Preschool under this Section 7.2 if Buyer has not received the Preschool License within sixty (60) days of the Closing Date; and (ii) Buyer will use its best efforts to obtain the Preschool License from and after the date hereof, and will keep Seller regularly apprised of the status of its licensure efforts until the Preschool License is issued to Buyer; and (iii) Seller's obligation to manage and operate the Preschool pursuant to this Section 7.2 shall terminate the later of: (i) the date the Arizona Department of Education issues the Preschool License to Buyer; and (ii) June 30, 2001, unless otherwise agreed to in writing by Seller. All debts and liabilities to third persons incurred by Seller pursuant to this Section 7.2, in the course of its operation and management of the Preschool shall be the debts and liabilities of Buyer only, and Seller shall not be liable for (and is shall be indemnified in respect of) any such debts or liabilities. If ADE objects to the management and operation procedures set forth in this Section 7.2, then the parties will mutually cooperate to arrive at an alternative arrangement that provides one another with the benefit of their bargain hereunder. 7.3 SCHOOL OPERATIONS UNTIL THE CLOSING. Between the date of this Agreement and the Closing Date, Seller shall operate the School only in the regular, ordinary, and usual course and manner of Seller's general business practices, maintain its existing insurance (or similar coverage) covering the 10 Purchased Assets and maintain its liability insurance coverage with respect to the School and the operations conducted therein, maintain the level of supplies, inventory and consumables customarily maintained by Seller in its ordinary course of business at the School, maintain, replace when required to continue the regular operations of the School, and keep in repair and regular working order, except for ordinary wear and tear, the Purchased Assets, use its commercially reasonable best efforts to keep available the services of its current employees at the School, use its commercially reasonable best efforts to maintain and preserve the good will of the suppliers, customers, employees, and other having business relations with the School, and comply with all of its agreements, licenses, permits and authorizations. 7.4 ACCESS. Seller shall provide to Buyer access to or copies of such additional books, contracts, documents, and records related to the operation of the School as Buyer may reasonably request to enable it to complete its review of the School's operations. In addition, Buyer shall permit Seller to physically inspect the School, complete a physical inventory of the items located at the School and interview and consult with any employees who render services with respect to the School. 7.5 TRANSITION. Buyer and Seller will mutually cooperate with one another to provide for an orderly transition of the School to minimize to the extent reasonably possible disruption to the students at the School. Buyer anticipates closing its transaction with EPI for the purchase of the Real Property prior to the Closing Date. To the extent that Seller surrenders possession of the School to Buyer, as owner of the Real Property, prior to the Closing Date, the parties agree that Buyer's right to an administrative claim under the Lease shall cease to accrue effective as of the date of such surrender. 7.6 PREPAID TUITION AND DEPOSIT LIABILITIES. On the Closing Date, Seller shall turn over to Buyer cash equal to the amount of the Prepaid Tuition and Deposit Liabilities set forth on SCHEDULE 1.12 and such post-Closing funds which are Prepaid Tuition and Deposit Liabilities received by Seller (the "Prepaid Cash"). The Prepaid Cash shall be a liability of Buyer to the party who paid such cash to Seller ("Payor") until such time as Buyer has earned the Prepaid Cash by providing the related educational services to Payor; provided, however, that Buyer shall be required to return the unearned amount of such Prepaid Cash to Payor upon written demand if Payor decides not to do business with Buyer any time after the Closing Date. ARTICLE VIII EMPLOYEES 8.1 DEFINITION. Seller has provided Buyer with a complete list of all persons regularly employed on either a part-time or full-time basis by Seller in connection with the School ("Employees"), a copy of which is attached hereto as SCHEDULE 8.1. 11 8.2 EMPLOYMENT OF SELLER'S EMPLOYEES AT THE SCHOOL. Simultaneously with the Closing, Seller shall terminate all employees employed at the School by Seller, excluding any employees whose employment responsibilities extend to schools owned or operated by Seller other than the School. Buyer agrees to offer to hire all of Seller's Employees as of the Closing Date set forth on SCHEDULE 8.1 (the "Continuing Employees") and such offers of employment to the Continuing Employees shall be on substantially equivalent terms as existed with Seller as of the date hereof; provided, however, that nothing in this Agreement or otherwise shall (i) constitute an agreement by Buyer to assume any of Seller's liabilities with respect to such Continuing Employees for vacation, or such pay, bonuses or the like, or (ii) prevent Buyer from terminating the employment of any Continuing Employee after the Closing Date. Seller hereby agrees to indemnify, defend and hold Buyer harmless from and against any liabilities, claims, losses, fines or liabilities with respect to, and against the claims of any persons alleging violations of any pension, retirement, profit sharing, compensation, fringe benefit, health or other insurance, or any other employee benefit plans, including any "employee benefit plan" as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended, arising with respect to such persons' employment at the School on or before 3:00 p.m. local time on the Closing Date, and no facts or circumstances exist that would cause Buyer to be liable to any person in connection with any such plans of Seller. From and after the Closing Date, Buyer shall be solely responsible for payment of: (i) the Teachers' Accrued Liabilities when and if due; and (ii) when and if due, all claims by or obligations to Transferred Employees arising after the Closing Date, including, but not limited to, any accrued vacation pay, sick leave, or bonuses, arising after the Closing Date. 8.3 EMPLOYEE SOLICITATIONS. Buyer shall be entitled to reasonable access to all employees related to the School for purposes of interviewing these individuals; provided, however, that all such access shall be coordinated through the Chief Executive Officer of Seller. 8.4 WORKERS' COMPENSATION. Seller agrees to assume all responsibility for liability arising from workers' compensation claims, both medical and disability, which have been filed at or prior to the time of Closing or which arose out of incidents that occurred prior to Closing. Buyer shall be responsible for all claims which arise out of, or are based upon, incidents which occur subsequent to Closing. ARTICLE IX INDEMNITIES 9.1 SELLER. Seller agrees to hold harmless, indemnify and defend Buyer from and against any and all loss, claim, damage, liability or expense (including, but not limited to, reasonable attroneys' fees and costs) arising out of or occurring as the result of any breach by Seller of any of its covenants, representations or warranties hereunder. Such indemnification shall 12 include any claims pertaining to events or actions occurring prior to the date of Closing. In no event shall the liability of Seller under this Section 9.1 collectively exceed $5,000. 9.2 BUYER. Buyer agrees to hold harmless, indemnify and defend Seller from and against any and all loss, claim, damage, liability or expense (including, but not limited to, reasonable attorneys' fees and costs) arising out of or occurring in connection with any breach by Buyer of any of its covenants, representations or warranties hereunder, or any liability of Buyer. Such indemnification shall include any claims pertaining to events or actions occurring after the date of Closing. ARTICLE X CLOSING 10.1 CLOSING. Closing shall occur at the law offices of Quarles & Brady Streich Lang, LLP, in Phoenix, Arizona, on a date that is not later than ten (10) business days after the Court enters the Section 363 Order and the Section 365 Order; provided, however, that the Closing must occur by no later than January 15, 2001. 10.2 TIME IS OF THE ESSENCE. Time is of the essence for the Closing of this transaction and if such Closing does not occur as provided in Section 10.1 above, a new Closing Date may be set if, and only if, mutually agreed upon in a writing signed by both parties. If a new Closing Date is not so set, then neither Seller nor Buyer shall have any further obligation under this Agreement. ARTICLE XI CONDITIONS PRECEDENT TO BUYER'S DUTY TO CLOSE Buyer shall have no duty to close, and no obligation hereunder, unless and until each and every one of the following conditions precedent have been fully and completely satisfied: 11.1 CONTINUED TRUTH OF WARRANTIES. All of the representations and warranties of Seller contained herein shall continue to be true and correct at Closing. 11.2 PERFORMANCE OF OBLIGATIONS. Seller shall have fully performed or tendered performance of each and every one of its obligations hereunder which by its terms is capable of performance before Closing. 11.3 DELIVERY OF CLOSING DOCUMENTS. Seller shall have tendered delivery to Buyer of all the documents, in form and substance reasonably satisfactory to Buyer, required to be delivered to Buyer by Seller on or before Closing pursuant to this Agreement. 13 11.4 LITIGATION. No lawsuit, administrative proceedings or other legal action shall have been filed against Seller as of the Closing Date which seeks to restrain or enjoin Buyer's acquisition of the Purchased Assets, or the assumption of the Assumed Contracts. 11.5 NO MATERIAL ADVERSE CHANGE. The School shall not have suffered any material adverse change since the date of this Agreement. 11.6 COURT ORDERS. The Court shall have entered the Section 363 Order and the Section 365 Order; provided, however, that Buyer shall not have the right to not close this transaction solely because the Section 365 Order approves Seller's decision to reject the Lease as it relates to the North Scottsdale Property in addition to the Real Property. ARTICLE XII CONDITIONS PRECEDENT TO SELLER'S DUTY TO CLOSE Seller shall have no duty to close this transaction unless and until each and every one of the following conditions precedent have been fully and completely satisfied: 12.1 CONTINUED TRUTH OF WARRANTIES. All of the representations and warranties of Buyer contained herein shall continue to be true and correct at Closing. 12.2 PERFORMANCE OF OBLIGATIONS. Buyer shall have fully performed or tendered substantial performance of each and every one of its obligations hereunder which by its terms is capable of performance before Closing. 12.3 DELIVERY OF CLOSING DOCUMENTS. Buyer shall have tendered delivery to Seller of all the documents, in form and substance reasonably satisfactory to Buyer, required to be delivered to Seller by Buyer on or before Closing pursuant to this Agreement. 12.4 LITIGATION. No lawsuit, administrative proceedings or legal action other than the Chapter 11 Case shall have been filed by or against Seller as of the Closing Date which seeks to restrain or enjoin Seller's sale of the Purchased Assets or the assumption of the Assumed Contracts. 12.5 COURT ORDERS. The Court shall have entered the Section 363 Order and the Section 365 Order; provided, however, that Buyer shall not have the right to not close this transaction solely because the Section 365 Order approves Seller's decision to reject the Lease as it relates to the North Scottsdale Property in addition to the Real Property. 14 ARTICLE XIII ITEMS TO BE DELIVERED AT CLOSING BY SELLER At Closing, Seller shall, unless waived in writing by Buyer, deliver to Buyer the following items, each in form and substance reasonably acceptable to Buyer and Buyer's counsel: 13.1 BILL OF SALE. A duly executed bill of sale selling, assigning, transferring, and conveying the Purchased Assets. 13.2 CERTIFIED RESOLUTION. A copy of the resolution of the Board of Directors of Seller, certified by the Secretary of Seller, authorizing the execution and performance of this Agreement. 13.3 REPRESENTATIONS AND WARRANTIES. A certificate signed by an appropriate representative of Seller to the effect that all the representations and warranties of Seller contained herein are true and correct as of Closing. ARTICLE XIV ITEMS TO BE DELIVERED AT CLOSING BY BUYER At Closing, Buyer shall, unless waived in writing by Seller, deliver the following items, each in form and substance reasonably acceptable to Seller and Seller's counsel, to Seller: 14.1 CERTIFIED RESOLUTION. A copy of the resolutions appropriate representative(s) of Buyer authorizing the execution and performance of this Agreement. 14.2 THE CORPORATE LEASE. The Corporate Lease. 14.3 THE ADMINISTRATIVE LEASE CLAIM. Buyer's written release and waiver of the Administrative Claim. 14.4 REPRESENTATIONS AND WARRANTIES. A certificate signed by an appropriate representative of Buyer to the effect that all the representations and warranties of Buyer contained herein are true and correct as of Closing. 14.5 THE PURCHASE PRICE. The Purchase Price. 15 ARTICLE XV MISCELLANEOUS 15.1 RIGHT TO BID. Buyer acknowledges and understands that the Court may consider higher and better offers for the Purchased Assets. Notwithstanding any other language to the contrary herein, Buyer acknowledges and agrees that, even if Buyer is outbid for the Purchased Assets, Seller will remain entitled to all of the benefits and consideration provided by Buyer to Seller under this Agreement other than the Deposit, the Waived Administrative Claim and the Cash Payment. 15.2 FURTHER ASSURANCES. Each party shall, at any time after Closing, execute and deliver to the other party all such additional instruments of conveyance and assignments, certificates or similar documents and take all such further actions as such other party may reasonably request. 15.3 NO OTHER AGREEMENTS. This Agreement, and all agreements delivered as part of the Closing contemplated herein, constitute the entire agreement between the parties with respect to its subject matter. All prior and contemporaneous negotiations, proposals and agreements between the parties are superseded by this Agreement. Any changes to this Agreement must be agreed to in writing signed by both parties. 15.4 WAIVER. Either party may waive the performance of any obligation owed to it by the other party hereunder for the satisfaction of any condition precedent to the waiving party's duty to perform any of its covenants, including its obligations to Close. Any such waiver shall be valid only if contained in a writing signed by the waiving party. 15.5 PUBLIC ANNOUNCEMENTS. Through the Closing, no public announcements of this Agreement shall have been made unless Buyer and Seller shall have mutually agreed on the timing, distribution, and contents of such announcements, except as may be required by law. The parties hereto acknowledge and understand that this Agreement will be filed with the Court promptly upon its execution by the parties hereto. 15.6 NOTICES. Any notices required or allowed in this Agreement shall be effectively given if placed in a sealed envelope, postage prepaid, and deposited in the United States mail, registered or certified, addressed as follows: To Seller: Lucian Spataro, Ph.D. The TesseracT Group, Inc. 4515 East Muirwood Drive Phoenix, Arizona 85048 16 Copy To: Robert J. Miller, Esq. Quarles & Brady Streich Lang, LLP Two North Central Avenue Phoenix, Arizona 85004 To Buyer: TAI, LLC c/o Squire, Sanders & Dempsey L.L.P. 40 North Central Avenue, Suite 2700 Phoenix, Arizona 85004 Attention: Craig Hansen, Esq. R.J. Carlson, Esq. 15.7 BROKER AND FINDERS. Each of the parties hereto represents and warrants to the other that it has not employed or retained any broker or finder in connection with the transactions contemplated by this Agreement nor has it had any dealings with any person which may entitle such person to a fee or commission from any party hereto. Each of the parties shall indemnify and hold the other harmless for, from and against any claim, demand or damage whatsoever by virtue of any arrangement or commitment made by it with or to any person that may entitle such person to any fee or commission from the other party to this Agreement. 15.8 RISK OF LOSS. The risk of loss, damage, or destruction of the Purchased Assets shall be borne by Seller until Closing. In the event any loss or damage to or taking of any such Purchased Assets is material in the context of this transaction and occurs before Closing, Seller shall immediately notify Buyer of the nature and extent of such loss, damage or taking, and Buyer shall, at its option, by written notice to Seller, either terminate this Agreement without further liability or obligation to Seller and Seller shall return the Deposit, or Buyer may proceed with this transaction on the terms and conditions mutually agreeable to the parties, including any adjustment in the Purchase Price. 15.9 THIRD-PARTY BENEFICIARY. Nothing contained herein shall create or give rise to any third-party beneficiary rights for any individual or entity as a result of the terms and provisions of this Agreement. 15.10 RELATIONSHIP OF PARTIES. The relationship of Seller and Buyer shall be that of independent entities and neither shall be deemed to be the agent of the other. 15.11 CHOICE OF LAW. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Arizona and, as applicable, the Bankruptcy Code. 17 15.12 PARAGRAPH HEADINGS. The Section, Article and paragraph headings contained herein are for convenience only and shall have no substantive bearing on the interpretation of this Agreement. 15.13 RULES OF INTERPRETATION . The following rules of interpretation shall apply to this Agreement, the Schedules hereto and any certificates, reports or other documents or instruments made or delivered pursuant to or in connection with this Agreement, unless otherwise expressly provided herein or therein and unless the context hereof or thereof clearly requires otherwise: 15.13.1 A reference to any document or agreement shall include such document or agreement as amended, modified or supplemented from time to time in accordance with its terms, and if a term is said to have the meaning assigned to such term in another document or agreement and the meaning of such terms therein is amended, modified or supplemented, then the meaning of such term herein shall be deemed automatically amended, modified or supplemented in a like manner. 15.13.2 References to the plural include the singular, the singular the plural and the part the whole. 15.13.3 The words "include," "includes," and "including" are not limiting. 15.13.4 A reference to any law includes any amendment or modification to such law which is in effect on the relevant date. 15.13.5 A reference to any person or entity includes its successors, heirs and permitted assigns. 15.13.6 The words "hereof," "herein," "hereunder," and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. 15.13.7 All Schedules to this Agreement constitute material terms of this Agreement and are incorporated fully into the terms of this Agreement. 15.14 TIME IS OF THE ESSENCE. Time is of the essence in the performance and observance of all obligations and duties under this Agreement. 15.15 ATTORNEY FEES. Each party shall bear its own legal fees and costs incurred in the negotiation and closing of this transaction. In the event of a dispute arising between the parties under this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees and costs of suit from the non-prevailing party. 18 15.16 COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of such counterparts shall together constitute but one and the same instrument. Delivery of an executed counterpart of this Agreement by telefacsimile shall be equally as effective as delivery of a manually executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile also shall deliver a manually executed counterpart of this Agreement but the failure to deliver a manually executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. IN WITNESS WHEREOF, the parties hereto have set their hands effective the date set forth above. THE TESSERACT GROUP, INC., a Minnesota corporation By ------------------------------------- Its ------------------------------------ SELLER TAI, LLC, an Arizona limited liability company By ------------------------------------- Its ------------------------------------ BUYER 19 ================================================================================ PURCHASE AND SALE AGREEMENT BETWEEN THE TESSERACT GROUP, INC., A MINNESOTA CORPORATION AND FOOTHILLS EDUCATIONAL FOUNDATION, AN ARIZONA NON-PROFIT CORPORATION DECEMBER ___, 2000 ================================================================================ TABLE OF CONTENTS Page ---- ARTICLE I DEFINITIONS ................................................. 1 1.1 Business .................................................... 1 1.2 Closing ..................................................... 1 1.3 Closing Date ................................................ 2 1.4 Assumed Contracts ........................................... 2 1.5 Deposit ..................................................... 2 1.6 Equipment ................................................... 2 1.7 Lease ....................................................... 2 1.8 Other Liabilities ........................................... 2 1.9 Purchase Price .............................................. 2 1.10 Purchased Assets ............................................ 2 1.11 Termination Date ............................................ 2 ARTICLE II PURCHASE AND SALE ........................................... 2 2.1 Assets to be Sold ........................................... 2 2.2 School Name ................................................. 3 2.3 TesseracT's Curriculum ...................................... 3 2.4 Seller's Business ........................................... 3 ARTICLE III ASSUMPTION OF LIABILITIES ................................... 3 3.1 Contracts ................................................... 3 3.2 No Assumption of Other Liabilities .......................... 3 ARTICLE IV TERMS OF PAYMENT ............................................ 3 4.1 Payment of Purchase Price ................................... 3 4.2 Determination ............................................... 4 ARTICLE V REPRESENTATIONS, WARRANTIES, AND COVENANTS OF SELLER ........ 4 5.1 Corporate Status ............................................ 4 5.2 Corporate Authority ......................................... 4 5.3 Title to Purchased Assets ................................... 4 5.4 Contracts ................................................... 4 ARTICLE VI REPRESENTATIONS, WARRANTIES, AND COVENANTS OF BUYER ......... 4 6.1 Organization ................................................ 4 6.2 Authority ................................................... 4 i Page ---- ARTICLE VII EMPLOYEES ................................................... 5 7.1 Definition .................................................. 5 7.2 Termination ................................................. 5 7.3 Employment .................................................. 5 7.4 Workers' Compensation ....................................... 5 ARTICLE VIII PROPERTY .................................................... 5 8.1 Fee Simple .................................................. 5 ARTICLE IX INDEMNITIES ................................................. 6 9.1 Seller ...................................................... 6 9.2 Buyer ....................................................... 6 ARTICLE X CLOSING ..................................................... 6 10.1 Closing ..................................................... 6 10.2 Time is of the Essence ...................................... 6 ARTICLE XI PRORATIONS .................................................. 6 11.1 Costs: Advance Payments ..................................... 6 11.2 Prorations .................................................. 7 11.3 Transfer Taxes .............................................. 7 ARTICLE XII CONDITIONS PRECEDENT TO BUYER'S DUTY TO CLOSE ............... 7 12.1 Continued Truth of Warranties ............................... 7 12.2 Performance of Obligations .................................. 7 12.3 Delivery of Closing Documents ............................... 7 12.4 Litigation .................................................. 8 12.5 No Material Adverse Change .................................. 8 12.6 The Lease ................................................... 8 12.7 License ..................................................... 8 12.8 No Defaults ................................................. 8 ARTICLE XIII CONDITIONS PRECEDENT TO SELLER'S DUTY TO CLOSE .............. 8 13.1 Continued Truth of Warranties ............................... 8 13.2 Performance of Obligations .................................. 8 13.3 Delivery of Closing Documents ............................... 8 13.4 Litigation .................................................. 8 13.5 License ..................................................... 9 ii Page ---- ARTICLE XIV ITEMS TO BE DELIVERED AT CLOSING BY SELLER .................. 9 14.1 Bill of Sale ................................................ 9 14.2 Assignment Of Contracts ..................................... 9 14.3 Certified Resolution ........................................ 9 ARTICLE XV ITEMS TO BE DELIVERED AT CLOSING BY BUYER ................... 9 15.1 Assumption Of Contracts ..................................... 9 15.2 Certified Resolution ........................................ 9 15.3 Representations and Warranties .............................. 9 15.4 The Purchase Price .......................................... 9 15.5 Corporate Documents. ........................................ 9 ARTICLE XVI MISCELLANEOUS ............................................... 10 16.1 Further Assurances .......................................... 10 16.2 No Other Agreements ......................................... 10 16.3 Waiver ...................................................... 10 16.4 Public Announcements ........................................ 10 16.5 Notices ..................................................... 10 16.6 Broker and Finders .......................................... 11 16.7 Books and Records ........................................... 11 16.8 Risk of Loss ................................................ 11 16.9 Third-Party Beneficiary ..................................... 11 16.10 Relationship of Parties ..................................... 11 16.11 Choice of Law ............................................... 11 16.12 Paragraph Headings .......................................... 11 16.13 Rules of Interpretation ..................................... 12 16.14 Time is of the Essence ...................................... 12 16.15 Attorney Fees ............................................... 12 16.16 Arbitration ................................................. 12 16.17 Counterparts; Facsimile Signatures .......................... 13 iii LIST OF EXHIBITS Schedule 1.1 Assumed Contracts Schedule 1.6 Corporate Lease Schedule 1.9 Equipment Schedule 1.12 Prepaid Tuition and Deposit Liabilities Schedule 1.19 Teachers' Accrued Liabilities Schedule 8.1 Employees SCHEDULE 1.1 (ASSUMED CONTRACTS) SCHEDULE 1.6 (CORPORATE LEASE) EXHIBIT 1.9 (EQUIPMENT) SCHEDULE 1.12 (PREPAID TUITION AND DEPOSIT LIABILITIES) SCHEDULE 1.19 (TEACHERS' ACCRUED LIABILITIES) SCHEDULE 8.1 (EMPLOYEES) EX-99.1 4 ex99-1.txt MONTHLY OPERATING REPORT OF TESSERACT Exhibit 99.1 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ARIZONA In re: ) CASE NO. B-00-10938-ECF-RTB ) THE TESSERACT GROUP, INC. ) BUSINESS AND INDUSTRY ) MONTHLY OPERATING REPORT ) ) MONTH OF NOVEMBER ) Debtor(s) ) DATE PETITION FILED: October 6, 2000 ) ) TAX PAYER ID NO. 4101581297 Nature of Debtor's Business: For Profit Educational Services DATE DISCLOSURE STATEMENT: FILED Not Yet Filed TO BE FILED To Be Determined ------------- ---------------- DATE PLAN OF REORGANIZATION: FILED Not Yet Filed TO BE FILED To Be Determined ------------- ---------------- I CERTIFY UNDER PENALTY OF PERJURY THAT THE FOLLOWING MONTHLY OPERATING REPORT AND THE ACCOMPANYING ATTACHMENTS ARE TRUE AND CORRECT TO THE BEST OF MY KNOWLEDGE. RESPONSIBLE PARTY: /s/ Lucian P. Spataro CEO - ---------------------------------------- ---------- ORIGINAL SIGNATURE OF RESPONSIBLE PARTY TITLE Lucian P. Spataro - ---------------------------------------- ---------- PRINTED NAME OF RESPONSIBLE PARTY DATE PREPARER: /s/ Douglass E. Snell Controller - ---------------------------------------- ---------- ORIGINAL SIGNATURE OF PREPARER TITLE Douglass E. Snell - ---------------------------------------- ---------- PRINTED NAME OF PREPARER DATE PERSON TO CONTACT REGARDING THIS REPORT: Douglass E. Snell --------------------------------------- PHONE NUMBER: 480-783-4317 --------------------------------------- ADDRESS: 4515 E. Muirwood Dr. Phoenix, AZ 85048 --------------------------------------- ORIGINAL OF REPORT IS FILED WITH THE COURT, COPY IS FILED WITH U.S. TRUSTEE'S OFFICE THE TESSERACT GROUP, INC. B-00-10938-ECF-RTB MONTH: NOVEMBER 2000 RECEIPTS AND DISBURSEMENTS
BANK ACCOUNTS AMOUNTS REPORTED SHOULD BE ------------------------------------------------------------------------------ PER THE DEBTOR'S BOOKS, NATIONAL GROUP GROUP GROUP TESSERACT GROUP NOT PER THE BANK STATEMENT DEPOSITORY DEPOSITORY MEDICAL PAYROLL OPERATING #944-010-7759 #022-922-6741 #022-922-6576 #022-922-6576 #022-922-6808 ------------- ------------- ------------- ------------- ------------- ACCOUNT BALANCE - BEGINNING OF MONTH -- 193,399.02 -- -- -- RECEIPTS STUDENT FEES 1,638,940.94 204,855.77 CHARTER SCHOOL REVENUE ACCOUNTS RECEIVABLE 604,421.14 INTEREST 2,294.61 SALE OF ASSETS TRANSFERS IN FROM OTHER ACCOUNTS 2,223,842.84 46,173.83 1,121,964.94 627,329.42 OTHER (ATTACH LIST) TOTAL RECEIPTS 2,243,362.08 2,430,993.22 46,173.83 1,121,964.94 627,329.42 DISBURSEMENTS BUSINESS - ORDINARY OPERATIONS 19,519.24 46,173.83 636,154.80 513,250.31 CAPITAL IMPROVEMENTS PRE-PETITION DEBT TRANSFERS TO OTHER DIP ACCOUNTS 2,223,842.84 1,795,468.19 PAYMENTS MADE FOR SUNRISE EDU 516,570.09 485,810.14 114,079.11 OTHER (ATTACH LIST) REORGANIZATION EXPENSES: ATTORNEY FEES ACCOUNTANT FEES OTHER PROFESSIONAL FEES U.S. TRUSTEE QUARTERLY FEE COURT COSTS TOTAL DISBURSEMENTS 2,243,362.08 2,312,036.28 46,173.83 1,121,964.94 627,329.42 ACCOUNT BALANCE - END OF MONTH -- 312,353.96 -- -- -- BANK ACCOUNTS AMOUNTS REPORTED SHOULD BE -------------------------------------------------------------------------------- PER THE DEBTOR'S BOOKS, TESSERACT CHARTER FIRST FEDERAL PETTY CASH NOT PER THE BANK STATEMENT CHARTER EXTRACURRICULAR CREDIT UNION EAGAN MINNESOTA ##022-922-6808 #022-922-7442 #4002-0270-922 #1-801-9204-8049 TOTAL -------------- ------------- -------------- ---------------- ------------ ACCOUNT BALANCE - BEGINNING OF MONTH (10/6/2000) 451,696.88 14,214.27 7,169.42 500.00 666,969.59 RECEIPTS STUDENT FEES 1,843,796.71 CHARTER SCHOOL REVENUE 165,165.35 165,165.35 ACCOUNTS RECEIVABLE 604,421.14 INTEREST 4,336.53 6,631.14 SALE OF ASSETS -- TRANSFERS IN FROM OTHER ACCOUNTS 486.00 4,019,797.03 OTHER (ATTACH LIST) -- TOTAL RECEIPTS 165,651.35 -- 4,336.53 -- 6,639,811.37 DISBURSEMENTS BUSINESS - ORDINARY OPERATIONS 53,882.12 1,268,980.30 CAPITAL IMPROVEMENTS -- PRE-PETITION DEBT -- TRANSFERS TO OTHER DIP ACCOUNTS 486.00 4,019,797.03 PAYMENTS MADE FOR SUNRISE EDU 1,116,459.34 OTHER (ATTACH LIST) -- REORGANIZATION EXPENSES: ATTORNEY FEES -- ACCOUNTANT FEES -- OTHER PROFESSIONAL FEES -- U.S. TRUSTEE QUARTERLY FEE -- COURT COSTS -- TOTAL DISBURSEMENTS 53,882.12 486.00 -- -- 6,405,236.67 ACCOUNT BALANCE - END OF MONTH 563,456.11 13,728.27 11,505.95 500.00 901,544.29 THE FOLLOWING SECTION MUST BE FILLED OUT DISBURSEMENTS FOR CALCULATING QUARTERLY FEES: TOTAL DISBURSEMENTS FROM ABOVE 6,405,236.67 LESS: TRANSFERS OUT TO OTHER DIP ACCOUNTS (4,019,797.03) LESS: PAYMENTS MADE FOR SUNRISE EDUCATIONAL SERVICES, INC. (1,116,459.34) PLUS: ESTATE DISBURSEMENTS MADE BY OUTSIDE SOURCES (i.e. PAYMENTS FROM ESCROW OR 2-PARTY CHECKS) TOTAL DISBURSEMENTS FOR CALCULATING QUARTERLY FEES: 1,268,980.30
The Tesseract Group (excl. Sunrise) Statement of Operations For the Month Ending November 30, 2000 REVENUE Tuition and Fees Revenue $1,024,404.42 Charter Revenue 225,896.27 Transportation Revenue 1,500.53 Food Revenue 16,153.75 Discounts (8,284.89) ------------- Total Revenue 1,259,670.08 ------------- OPERATIONAL COSTS Salaries and Wages 645,987.16 Taxes and Benefits 54,165.47 Classroom Expenses 39,146.79 Food Programs Expense 21,812.92 Transportation Expenses 1,953.72 Maintenance Expense 40,158.76 Internet Expense 3,607.57 Rent Expense 241,870.65 Security Services Expense 170.02 Real Property Tax Expense 29,652.73 Utilities Expense 19,832.11 ------------- Total Operational Costs 1,098,357.90 ------------- GENERAL & ADMINISTRATIVE COSTS Advertising, Mktg, Promo Exp 6,878.40 Bad Debt Expense (6,210.26) Bank Charges/Processing Fees-A 4,826.93 Computer/Technology Expense 5,231.00 Consultant Fees Expense 2,540.98 Licenses & Fees Expense 1,438.50 Office/School Supplies Expense 745.31 Penalties & Late Fees Expense 203.70 Postage and Printing Expense 2,111.00 Pre-Employment Expense 226.00 Telephone Expense 13,765.49 Travel Expense 295.36 Corporate Overhead 250,033.96 Corporate Overhead Allocated to Sunrise (125,016.98) Other Expenses 298.89 ------------- Total General and Administrative Expenses 152,319.08 ------------- Other Income 492,761.18 Interest Expense (3,603.07) ------------- Net Interest and Other Income (Expense) 489,158.11 ------------- Depreciation Expense 69,387.74 ------------- Total Depreciation and Amortization 69,387.74 ------------- REORGANIZATION EXPENSES Professional Fees 8,784.16 Professional Fees Allocated to Sunrise (4,392.08) ------------- Total Reorganization Expenses 4,392.08 ------------- Net Income $ 424,371.39 ============= The Tesseract Group (excl. Sunrise) Balance Sheet November 30, 2000 ASSETS Current Assets Cash and Cash Equivalents $ 2,862,058.65 Accounts Receivable, net 332,353.73 Note Receivable from Nobel 2,944,888.22 Prepaid Rent 265,552.70 Other Prepaid Expenses 538,520.58 -------------- Total Current Assets 6,943,373.88 Investment in Sunrise 18,971,824.26 Property and Equipment, net 5,726,904.25 Deposits and Other Assets 1,624,852.88 -------------- Total Assets $33,266,955.27 ============== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts Payable $ 194,550.13 Accrued Payroll and Benefits 1,162,352.81 Accrued Payroll Taxes -- Deferred Revenue and Tuition Deposits 2,447,848.40 -------------- Total Current Liabilities 3,804,751.34 -------------- Pre-Petition Liabilities Line of Credit 5,848,822.65 Accounts Payable 3,916,379.96 Other Unsecured Notes Payable 865,500.00 Other Current Liabilities 3,543,187.05 Long-Term Debt 3,162,373.99 -------------- Total Pre-Petition Liabilities 17,336,263.65 -------------- Due to Sunrise 737,281.94 Reserve for Closed Schools 504,099.10 Other Long-Term Obligations 13,999.76 -------------- Total Long-Term Liabilities 1,255,380.80 -------------- Total Liabilities 22,396,395.79 -------------- Shareholders' Equity Pre-Petition Shareholders' Equity 10,511,857.76 Post Petition Retained Deficit 358,701.72 -------------- Total Shareholders' Equity 10,870,559.48 -------------- Total Liabilities and Shareholders' Equity $33,266,955.27 ============== CASE NUMBER: B-00-10938-ECF-RTB STATUS OF ASSETS
0-30 31-60 60+ ACCOUNTS RECEIVABLE TOTAL DAYS DAYS DAYS ---------- ---------- ---------- ---------- TOTAL ACCOUNTS RECEIVABLE 332,354 304,419 13,555 14,380 LESS: AMOUNT CONSIDERED UNCOLLECTIBLE ---------- ---------- ---------- ---------- ACCOUNTS RECEIVABLE (NET) 332,354 304,419 13,555 14,380 ========== ========== ========== ========== SCHEDULED CURRENT FIXED ASSETS AMOUNT ADDITIONS DELETIONS AMOUNT ---------- ---------- ---------- ---------- REAL PROPERTY 1,867,408 1,867,408 ========== ========== ========== ========== BUILDING IMPROVEMENTS/PLANT 846,395 18,450 864,845 ACCUMULATED DEPRECIATION (136,823) (9,984) (146,807) ---------- ---------- ---------- ---------- NET BUILDINGS/PLANT 709,573 8,466 -- 718,038 ========== ========== ========== ========== EQUIPMENT 5,466,149 5,466,149 ACCUMULATED DEPRECIATION (2,404,930) (188,093) (2,593,024) ---------- ---------- ---------- ---------- NET EQUIPMENT 3,061,218 (188,093) -- 2,873,125 ========== ========== ========== ========== AUTOS & VEHICLES 557,586 557,586 ACCUMULATED DEPRECIATION (259,791) (29,462) (289,253) ---------- ---------- ---------- ---------- NET AUTOS & VEHICLES 297,795 (29,462) -- 268,333 ========== ========== ========== ==========
CASE NUMBER: B-00-10938-ECF-RTB STATUS OF LIABILITIES AND SENSITIVE PAYMENTS
POSTPETITION UNPAID OBLIGATIONS TOTAL 0-30 31-60 61-90 91+ ------------------ ---------- ---------- ---------- ---------- ---------- ACCOUNTS PAYABLE 194,550 159,453 35,097 TAXES PAYABLE -- -- ACCRUED SALARIES AND BENEFITS 1,162,353 1,162,353 PREPAID TUITION AND DEPOSITS 2,447,848 2,447,848 SECURED DEBT OTHER (ATTACH LIST) ---------- ---------- ---------- ---------- ---------- TOTAL POST-PETITION LIABILITIES 3,804,751 3,769,654 35,097 -- -- ========== ========== ========== ========== ==========
PAYMENTS TO INSIDERS AND PROFESSIONALS INSIDERS AMOUNT PD TOTAL PD NAME REASON FOR PAYMENT THIS MONTH TO DATE - ---- ------------------ ---------- --------- Lucian Spataro Wages and Exp. Reimbursement 20,012.40 40,198.76 Ernie Recsetar Wages 10,000.00 20,000.00 Michael Lynch Wages and Exp. Reimbursement 14,072.04 22,020.25 Gary Lilyquist Wages and Exp. Reimbursement 14,490.28 14,490.28 --------- --------- TOTAL PAYMENTS TO INSIDERS 58,574.72 96,709.29 ========= ========= PROFESSIONALS DATE OF COURT TOTAL ORDER AUTHORIZING AMOUNT AMOUNT TOTAL PAID INCURRED NAME PAYMENT APPROVED PAID TO DATE & UNPAID - ---- ------- -------- ---- ------- -------- NONE CASE NUMBER: B-00-10938-ECF-RTB CASE STATUS QUESTIONNAIRE YES NO ---- ---- HAVE ANY FUNDS BEEN DISBURSED FROM ANY ACCOUNT OTHER THAN A DEBTOR IN POSSESSION ACCOUNT? NO ARE ANY POSTPETITION RECEIVABLES (ACCOUNTS, NOTES, OR LOANS) DUE FROM RELATED PARTIES? NO ARE ANY WAGE PAYMENTS PAST DUE? NO ARE ANY U.S. TRUSTEE QUARTERLY FEES DELINQUENT? NO CURRENT NUMBER OF EMPLOYEES: 311 INSURANCE CARRIER AND PERIOD EXPIRATION PAYMENT AMOUNT TYPE OF POLICY POLICY NUMBER COVERED DATE & FREQUENCY - -------------- ------------- ------- ---- ----------- Gen Liability CLI0018811 3/1/00 3/1/01 39,208.72 /month Auto Liability BAP0708409 5/1/00 3/1/01 Included above Excess Liability UMI0000552 3/1/00 3/1/01 Included above Workers Comp 307512-4 12/1/00 11/30/01 Pd Monthly as % of PR Non-Owned Auto 59UUNGG2042 3/1/00 3/1/01 Included above WHAT STEPS HAVE BEEN TAKEN TO REMEDY ANY OF THE PROBLEMS THAT BROUGHT ABOUT THE CHAPTER 11 FILING? Purchasing of new schools has ceased, and administrative expenses have been reduced. Other restructuring measures are being considered. LIST ANY MATTERS THAT ARE DELAYING THE FILING OF A PLAN OF REORGANIZATION? Corporate Company VENDOR CHECK REGISTER REPORT Payables Management
Ranges: From: To: From: To: Check Number First Last Check Date 11/01/2000 11/30/2000 Vendor ID First Last Checkbook ID First Last Vendor Name First Last Sorted By: Check Number * Voided Checks Check Number Vendor ID Vendor Check Name Check Date Checkbook ID Audit Trail Code Amount - ------------ --------- ----------------- ---------- ------------ ---------------- ----------- 800050151 AT&T78522-B AT&T - 78522 11/1/00 OPERATING PMCHK00000020 $53.74 800050152 COPPRI000-B COPYFAST PRINTING CENTER 11/1/00 OPERATING PMCHK00000020 $201.84 800050153 KP0LIM000-B KP LIMITED INC 11/1/00 OPERATING PMCHK00000020 $1,627.62 800050154 PACALA000-B PACIFIC ALARMS COMPANY 11/1/00 OPERATING PMCHK00000020 $36.00 800050155 SCHJAC000-B SCHMIDT, JACKIE 11/1/00 OPERATING PMCHK00000020 $500.00 800050156 SIEHEA000-B SIERRA HEARING CENTER 11/1/00 OPERATING PMCHK00000020 $262.50 800050157 U0CWIN000-B U-C WINDOW CLEANING 11/1/00 OPERATING PMCHK00000020 $243.80 800050158 US0BAN000-B US BANK NATIONAL ASSOCIAT-401K 11/1/00 OPERATING PMCHK00000020 $414.42 800050159 WOL000000-B WOLF,MICHAEL 11/1/00 OPERATING PMCHK00000020 $500.00 800050160 ATHIN0000-B ATHLETES IN TRAINING 11/2/00 OPERATING PMCHK00000021 $3,600.00 800050161 ATHTRA001-B ATHLETES IN TRAINING-SOUTHERN 11/2/00 OPERATING PMCHK00000021 $1,320.00 800050162 ARIREP000-B ARIZONA REPUBLIC 11/8/00 OPERATING PMCHK00000022 $182.00 800050163 AUTDAT000-B AUTOMATIC DATA PROCESSING ADP 11/8/00 OPERATING PMCHK00000022 $209.88 800050164 AVACOM000-B AVAYA COMMUNICATION 11/8/00 OPERATING PMCHK00000022 $195.00 800050165 CITPHO296-B CITY OF PHOENIX 29690 11/8/00 OPERATING PMCHK00000022 $4.88 800050166 CLS000000-B CLS/CLEANWAY 11/8/00 OPERATING PMCHK00000022 $483.39 800050167 COCLOC000-B COCHISE LOCK & SAFE 11/8/00 OPERATING PMCHK00000022 $53.00 800050168 EARCOM000-B EARLTCHILDHOOD.COM 11/8/00 OPERATING PMCHK00000022 $450.78 800050169 HUGCAL000-B HUGHES-CALIHAN 11/8/00 OPERATING PMCHK00000022 $117.70 800050170 IMBBAR000-B BARBARA IMBRIE 11/8/00 OPERATING PMCHK00000022 $24.80 800050171 KP0LIM000-B KP LIMITED INC 11/8/00 OPERATING PMCHK00000022 $550.42 800050172 LYNHEA000-B HEATHER LYNDE 11/8/00 OPERATING PMCHK00000022 $19.84 800050173 SCHJAC000-B SCHMIDT, JACKIE 11/8/00 OPERATING PMCHK00000022 $14.83 800050174 STUBON000-B BONNI STUTZ 11/8/00 OPERATING PMCHK00000022 $35.96 800050175 US0BAN000-B US BANK NATIONAL ASSOCIAT-401K 11/8/00 OPERATING PMCHK00000022 $393.12 800050176 US0WES003-B US WEST COMMUNICATIONS-29060 11/8/00 OPERATING PMCHK00000022 $416.75 800050177 WESINN000-B WESTERN INNOVATIONS INC 11/8/00 OPERATING PMCHK00000022 $1,050.00 800050178 US0BAN000-B US BANK NATIONAL ASSOCIAT-401K 11/15/00 OPERATING PMTRX00000041 $521.00 800050179 JL0HAM000-B JL HAMMETT CO- NO 11/16/00 OPERATING PMTRX00000042 $1,051.80 800050180 HOUMIF001-B HOUGHTON MIFFLIN COMPANY CA 11/17/00 OPERATING PMTRX00000043 $462.44 800050181 DESOUT000-B DESERT OUTDOOR CENTER 11/21/00 OPERATING PMCHK00000023 $486.00 800050182 TPA000000-B TPA 11/21/00 OPERATING PMCHK00000023 $2,539.71 800050183 GENTEC000-B GENESIS TECHNOLOGIES 11/27/00 OPERATING PMTRX00000047 $431.00 800050184 AVACOM000-B AVAYA COMMUNICATION 11/27/00 OPERATING PMCHK00000024 $195.00 800050186 NEG000000-B NEGRETTI,MARILYN 11/27/00 OPERATING PMCHK00000024 $66.96 800050187 PEAEDU000-B PEARSON EDUCATION-70632 11/27/00 OPERATING PMCHK00000024 $996.89 800050188 THEREH000-B THERAPY REHABILITATION SERVICE 11/27/00 OPERATING PMCHK00000024 $2,580.00 800050189 APS200000-B APS - 2907 11/27/00 OPERATING PMCHK00000025 $1,907.68 800050199 ATHIN0000-B ATHLETES IN TRAINING 11/27/00 OPERATING PMCHK00000026 $4,920.00 800050200 HUNLIL000-B HUNT, LILLIAN 11/27/00 OPERATING PMCHK00000026 $24.80 800050201 PACALA000-B PACIFIC ALARMS COMPANY 11/27/00 OPERATING PMCHK00000026 $18.00 800050202 SCHJAC000-B SCHMIDT, JACKIE 11/27/00 OPERATING PMCHK00000026 $25.00 800050203 SOUGAS000-B SOUTHWEST GAS CORPORATION 11/27/00 OPERATING PMCHK00000026 $26.30 800050204 SRP000000-B SRP 11/27/00 OPERATING PMCHK00000026 $1,080.00 800050205 TEASQU000-B TEACHERS SQUARE 11/27/00 OPERATING PMCHK00000026 $59.79 800050206 WOL000000-B WOLF,MICHAEL 11/27/00 OPERATING PMCHK00000026 $114.70 800050207 CITPHO296 CITY OF PHOENIX 29663 11/27/00 OPERATING PMCHK00000027 $57.44 800050208 CITPHO296 CITY OF PHOENIX 29663 11/27/00 OPERATING PMCHK00000027 $129.78 800050209 CITPHO296 CITY OF PHOENIX 29663 11/27/00 OPERATING PMCHK00000027 $469.19 800050210 US0BAN000-B US BANK NATIONAL ASSOCIAT-401K 11/28/00 OPERATING PMTRX00000048 $352.74 800050211 FIRWES000-B FIRST WEST PROPERTIES 11/29/00 OPERATING PMCHK00000028 $16,054.21 800050212 RUR&0R001-B RURAL & RAY LLC (CORONA DEL) 11/29/00 OPERATING PMCHK00000028 $6,349.42 REMIT000000000000001 LEXLAW000-B LEXIS LAW PUBLISHING 11/1/00 PMCHK00000020 $0.00 ---------- Total Checks: 53 Total Amount of Checks: $53,882.12 ==========
Owned Charters VENDOR CHECK REGISTER REPORT Payables Management
Ranges: From: To: From: To: Check Number First Last Check Date 11/01/2000 11/30/2000 Vendor ID First Last Checkbook ID First Last Vendor Name First Last Sorted By: Check Number * Voided Checks Check Number Vendor ID Vendor Check Name Check Date Checkbook ID Audit Trail Code Amount - ------------ --------- ----------------- ---------- ------------ ---------------- ----------- 200011339 ALLFOO001-B ALLIANT FOODSERVICE - AZ 11/1/00 OPERATING PMCHK00000106 $1,301.12 200011340 AMEPRI000-B AMERIPRIDE LINEN AND APPAREL 11/1/00 OPERATING PMCHK00000106 $22.49 200011341 CRESTA000-B CREATION STATION 11/1/00 OPERATING PMCHK00000106 $104.00 200011342 ADAROA000-B ADAM ROACH 11/1/00 OPERATING PMCHK00000106 $1,840.00 200011343 AGNJOH000-B AGNETAA JOHNSON 11/1/00 OPERATING PMCHK00000106 $750.00 200011344 AMAKHO000-B AMAL KHOURI 11/1/00 OPERATING PMCHK00000106 $176.66 200011345 BARSMI000-B BARRY SMITH 11/1/00 OPERATING PMCHK00000106 $2,380.50 200011346 BREMOE000-B BRENDA MOESER 11/1/00 OPERATING PMCHK00000106 $175.00 200011347 CHADAW000-B DAWN CHAPMAN 11/1/00 OPERATING PMCHK00000106 $136.00 200011348 CHRPFO000-B CHRIS PFOHL 11/1/00 OPERATING PMCHK00000106 $173.33 200011349 CITPHO296-B CITY OF PHOENIX 29663 11/1/00 OPERATING PMCHK00000106 $16.20 200011350 CITSCOTAX-B CITY OF SCOTTSDALE - TAX 11/1/00 OPERATING PMCHK00000106 $360.30 200011351 CITSCOUTI-B CITY OF SCOTTSDALE-UTILITIES 11/1/00 OPERATING PMCHK00000106 $1,522.59 200011352 CITTEMKIW-B CITY OF TEMPE-KIWANIS PARK REC 11/1/00 OPERATING PMCHK00000106 $500.00 200011353 CLAPLO000-B CLAYTON W PLOTKIN 11/1/00 OPERATING PMCHK00000106 $210.00 200011354 CRODAV000-B DAVID CROHN 11/1/00 OPERATING PMCHK00000106 $1,656.08 200011355 DANKID000-B DANCERCISE KIDS 11/1/00 OPERATING PMCHK00000106 $230.75 200011356 DAVSOB000-B DAVE SOBESKI 11/1/00 OPERATING PMCHK00000106 $355.00 200011357 ELWSTE000-B STEVE ELWELL 11/1/00 OPERATING PMCHK00000106 $30.00 200011358 FASCOM000-B FASTQ COMMUNICATIONS 11/1/00 OPERATING PMCHK00000106 $600.00 200011359 FIO000000-B FIORESI,AL 11/1/00 OPERATING PMCHK00000106 $767.23 200011360 FRA000000-B FRANCIS,TIFFANY 11/1/00 OPERATING PMCHK00000106 $280.00 200011361 HARBRA001-B HARCOURT BRACE FL 11/1/00 OPERATING PMCHK00000106 $335.61 200011362 HELKOM000-B HELEN KOMAROVSKY 11/1/00 OPERATING PMCHK00000106 $390.00 200011363 HOUMIF003-B HOUGHTON MIFFLIN COMPANY IL 11/1/00 OPERATING PMCHK00000106 $308.91 200011364 IGHDAW000-B IGHODARO, DAWN 11/1/00 OPERATING PMCHK00000106 $16.14 200011365 JL0HAM000-B JL HAMMETT CO- NO 11/1/00 OPERATING PMCHK00000106 $286.14 200011366 KES000000-B KESSLER,JILL 11/1/00 OPERATING PMCHK00000106 $426.55 200011367 KEVBUN000-B KEVIN BUNYAN KARATE 11/1/00 OPERATING PMCHK00000106 $900.00 200011368 KP0LIM000-B KP LIMITED INC 11/1/00 OPERATING PMCHK00000106 $14,734.49 200011369 LEOGRO000-B LEON GROSS 11/1/00 OPERATING PMCHK00000106 $210.00 200011371 MARROB000-B ROBERT MARCH 11/1/00 OPERATING PMCHK00000106 $435.00 200011372 MOOSEO000-B MOOI SEOW 11/1/00 OPERATING PMCHK00000106 $250.00 200011373 NES000000-B NESTER,ELAINE 11/1/00 OPERATING PMCHK00000106 $100.42 200011374 PAIPHE000-B PAIGE PHELPS-CASTRO 11/1/00 OPERATING PMCHK00000106 $137.50 200011375 PCADV000-B PC ADVENTURES 11/1/00 OPERATING PMCHK00000106 $126.00 200011376 PIELIV000-B PIERCE LIVING TRUST 11/1/00 OPERATING PMCHK00000106 $1,394.32 200011377 SCHCLU000-B SCHOLASTIC - CLUB DE LECTURA 11/1/00 OPERATING PMCHK00000106 $33.60 200011378 SCIKIT000-B SCIENCE KIT & BOREAL LABORATOR 11/1/00 OPERATING PMCHK00000106 $1,837.21 200011379 SHAFOO000-B SHAMROCK FOODS COMPANY 11/1/00 OPERATING PMCHK00000106 $141.41 200011381 SPOINT001-B SPORTIME INTERNA 11/1/00 OPERATING PMCHK00000106 $660.23 200011382 STAMNN000-B STATE OF MINN DEPT OF HUMAN 11/1/00 OPERATING PMCHK00000106 $447.50 200011383 TWIACR000-B TWIN ACRES SCHOOL OF RIDING 11/1/00 OPERATING PMCHK00000106 $900.00 200011384 U0CWIN000-B U-C WINDOW CLEANING 11/1/00 OPERATING PMCHK00000106 $598.76 200011385 US0BAN000-B US BANK NATIONAL ASSOCIAT-401K 11/1/00 OPERATING PMCHK00000106 $7,523.85 200011386 US0WES003-B US WEST COMMUNICATIONS-29060 11/1/00 OPERATING PMCHK00000106 $706.93 200011387 US0WES004-B US WEST COMMUNICATIONS-1301 11/1/00 OPERATING PMCHK00000106 $782.84 200011388 US0WES008-B US WEST INTERPRISE-3400 11/1/00 OPERATING PMCHK00000106 $351.29 200011390 LYN000000-B LYNCH,MICHAEL 11/2/00 OPERATING PMCHK00000107 $136.73 200011391 MARCNT000-B MARICOPA CNTY ENVIROMENTAL SER 11/2/00 OPERATING PMCHK00000107 $520.00 200011392 MARCNT000-B MARICOPA CNTY ENVIROMENTAL SER 11/2/00 OPERATING PMCHK00000107 $75.00 200011393 REE000000-B REEVES,LARRY 11/2/00 OPERATING PMCHK00000107 $500.00 200011394 REE000000-B REEVES,LARRY 11/2/00 OPERATING PMCHK00000107 $1,000.00 200011395 SHUSTO000-B SHURGARD STORAGE 11/2/00 OPERATING PMCHK00000107 $611.82 200011397 TES000000-B TESCH,AARON 11/2/00 OPERATING PMTRX00000202 $2,400.00 200011398 ANNBOO000-B ANNIES BOOK STOP 11/3/00 OPERATING PMCHK00000108 $3,774.93 200011399 CHEFIN000-B CHESTERFIELD FINANCIAL CORP. 11/3/00 OPERATING PMCHK00000108 $810.96 200011400 CHEFIN000-B CHESTERFIELD FINANCIAL CORP. 11/3/00 OPERATING PMCHK00000108 $405.43 200011401 FIREQU000-B FIRSTAR EQUIPMENT FINANCE 11/3/00 OPERATING PMCHK00000108 $6,673.00 200011402 JONKEM000-B JONATHAN KEMPIAK 11/3/00 OPERATING PMCHK00000109 $940.00 200011403 KUP000000-B KUPPER,KATHLEEN 11/3/00 OPERATING PMCHK00000109 $3,588.00 200011404 PHOKAR000-B PHOENIX KARATE FOR KIDS 11/6/00 OPERATING PMCHK00000110 $300.00 200011405 IKON00-B IKON 11/6/00 OPERATING PMCHK00000111 $6,250.00 200011406 IKON00-B IKON 11/6/00 OPERATING PMCHK00000111 $12,500.00 200011407 ARC000000-B ARC 11/7/00 OPERATING PMCHK00000112 $880.75 200011408 AUTDAT000-B AUTOMATIC DATA PROCESSING ADP 11/7/00 OPERATING PMCHK00000112 $473.09 200011409 BANONE004-B BANK ONE ARIZONA NA 11/7/00 OPERATING PMCHK00000112 $206.32
Owned Charters VENDOR CHECK REGISTER REPORT Payables Management
Ranges: From: To: From: To: Check Number First Last Check Date 11/01/2000 11/30/2000 Vendor ID First Last Checkbook ID First Last Vendor Name First Last Sorted By: Check Number * Voided Checks Check Number Vendor ID Vendor Check Name Check Date Checkbook ID Audit Trail Code Amount - ------------ --------- ----------------- ---------- ------------ ---------------- ----------- 200011410 FEDEXP000-B FEDERAL EXPRESS 11/7/00 OPERATING PMCHK00000112 $394.32 200011411 GREPLA000-B GREAT PLAINS 11/7/00 OPERATING PMCHK00000112 $144.29 200011412 IKOOFF003-B IKON OFFICE SOLUTIONS (CA) 11/7/00 OPERATING PMCHK00000112 $98.57 200011413 NOP000000-B NOPPENBERG,KAREN 11/7/00 OPERATING PMCHK00000112 $35.88 200011414 OFFCRE000-B OFFICEMAX CREDIT PLAN 11/7/00 OPERATING PMCHK00000112 $36.10 200011415 PITBOW001-B PITNEY BOWES-85390 11/7/00 OPERATING PMCHK00000112 $50.00 200011416 REE000000-B REEVES,LARRY 11/7/00 OPERATING PMCHK00000112 $244.92 200011417 RSMMCG000-B RSM MCGLADREY 11/7/00 OPERATING PMCHK00000112 $1,755.00 200011418 SECSHR000-B SECURITY SHREDDING 11/7/00 OPERATING PMCHK00000112 $125.00 200011419 SPEINC000-B SPECTERA, INC. 11/7/00 OPERATING PMCHK00000112 $5,332.50 200011420 TPA000000-B TPA 11/7/00 OPERATING PMCHK00000112 $20,029.96 200011421 US0BAN000-B US BANK NATIONAL ASSOCIAT-401K 11/7/00 OPERATING PMCHK00000112 $4,828.58 200011422 LILJ.0000-B LILYQUIST, J. GARY 11/8/00 OPERATING PMCHK00000113 $169.40 200011423 LOYESK000-B LOYD ESKILDSON 11/8/00 OPERATING PMCHK00000113 $129.25 200011424 QWES000-B QWEST DEX INC. 11/8/00 OPERATING PMCHK00000113 $5,383.20 200011425 CHIINC000-B CHILDSPLAY INC 11/8/00 OPERATING PMTRX00000208 $265.00 200011426 ALLFOO008-B ALLIANT FOODSERVICE - AZ 11/10/00 OPERATING PMCHK00000114 $291.79 200011427 ALLFOO009-B ALLIANT FOODSERVICE - MN 11/10/00 OPERATING PMCHK00000114 $542.06 200011428 AMEPRI000-B AMERIPRIDE LINEN AND APPAREL 11/10/00 OPERATING PMCHK00000114 $74.25 200011429 AMESTU000-B AMERICAN STUDENT TRANSPORTATIO 11/10/00 OPERATING PMCHK00000114 $466.25 200011430 APS200000-B APS - 2907 11/10/00 OPERATING PMCHK00000114 $7,778.37 200011431 ARC000000-B ARC 11/10/00 OPERATING PMCHK00000114 $195.00 200011432 AT&T00000-B AT&T 11/10/00 OPERATING PMCHK00000114 $2,896.10 200011433 BENARI000-B BEN-DOR, ARIELA 11/10/00 OPERATING PMCHK00000114 $3,424.00 200011434 BEYBAG000-B BEYOND BAGELS 11/10/00 OPERATING PMCHK00000114 $148.89 200011435 BUGBUS000-B BUG BUSTERS, INC. 11/10/00 OPERATING PMCHK00000114 $58.58 200011436 CHEEMP000-B CHESS EMPORIUM 11/10/00 OPERATING PMCHK00000114 $2,156.00 200011437 CITPHO296-B CITY OF PHOENIX 29663 11/10/00 OPERATING PMCHK00000114 $373.36 200011438 COMDOR000-B COMMERCIAL DOOR STSTEMS 11/10/00 OPERATING PMCHK00000114 $71.50 200011439 CONSAF000-B CONNEY SAFETY PRODUCTS 11/10/00 OPERATING PMCHK00000114 $158.25 200011440 DEPOFPUSA-B DEPARTMENT OF PUBLIC SAFETY - 11/10/00 OPERATING PMCHK00000114 $176.00 200011441 EBSSUB000-B EBSCO SUBSCRIPTION SERVICES 11/10/00 OPERATING PMCHK00000114 $307.10 200011442 HALSOL000-B SOLANA YUKO HALADA 11/10/00 OPERATING PMCHK00000114 $128.00 200011443 HODBAD000-B HODGES BADGE COMPANY 11/10/00 OPERATING PMCHK00000114 $65.00 200011444 IOSCAP000-B IOS CAPITAL-TEXAS 11/10/00 OPERATING PMCHK00000114 $4,719.01 200011445 JL0HAM000-B JL HAMMETT CO- NO 11/10/00 OPERATING PMCHK00000114 $523.72 200011446 KEVBUN000-B KEVIN BUNYAN KARATE 11/10/00 OPERATING PMCHK00000114 $90.00 200011447 KP0LIM000-B KP LIMITED INC 11/10/00 OPERATING PMCHK00000114 $1,769.86 200011448 LYNMUS000-B LYONS MUSIC 11/10/00 OPERATING PMCHK00000114 $26.50 200011449 MCGHIL0004-B McGRAW HILL/MacMILLAN 11/10/00 OPERATING PMCHK00000114 $287.54 200011450 NASMOD000-B NASCO-MODESTO 11/10/00 OPERATING PMCHK00000114 $32.87 200011451 NATCOU0003-B NATIONAL COUNCIL/TEACHERS MATH 11/10/00 OPERATING PMCHK00000114 $86.40 200011452 NES000000-B NESTER,ELAINE 11/10/00 OPERATING PMCHK00000114 $77.44 200011453 NORSTA000-B NORTHERN STATES POWER 11/10/00 OPERATING PMCHK00000114 $1,511.02 200011454 OWERON000-B OWENS, RONDA 11/10/00 OPERATING PMCHK00000114 $226.55 200011455 PARWAS000-B PARADISE WASTE SERVICES 11/10/00 OPERATING PMCHK00000114 $168.71 200011456 PEONAT000-B PEOPLES NATURAL GAS 11/10/00 OPERATING PMCHK00000114 $8.42 200011457 PITBOW001-B PITNEY BOWES-85390 11/10/00 OPERATING PMCHK00000114 $388.00 200011458 PROONE000-B PROTECTION ONE - AZ 11/10/00 OPERATING PMCHK00000114 $136.74 200011460 SHAFOO000-B SHAMROCK FOODS COMPANY 11/10/00 OPERATING PMCHK00000114 $467.73 200011461 SNEFIT000-B SNEAKERTIME FITNESS FOR KIDS 11/10/00 OPERATING PMCHK00000114 $891.00 200011462 SOUGAS000-B SOUTHWEST GAS CORPORATION 11/10/00 OPERATING PMCHK00000114 $52.77 200011463 SPA000000-B SPATARO,LUCIAN 11/10/00 OPERATING PMCHK00000114 $188.36 200011464 SRP000000-B SRP 11/10/00 OPERATING PMCHK00000114 $8,120.00 200011465 TRIARO000-B TRIARO 11/10/00 OPERATING PMCHK00000114 $1,007.77 200011466 US0WES003-B US WEST COMMUNICATIONS-29060 11/10/00 OPERATING PMCHK00000114 $2,604.65 200011467 VANPAP000-B VAN PAPER COMPANY 11/10/00 OPERATING PMCHK00000114 $758.17 200011468 WASMAN002-B WASTE MANAGEMENT-SAVAGE MN 11/10/00 OPERATING PMCHK00000114 $476.77 200011469 WESINN000-B WESTERN INNOVATIONS INC 11/10/00 OPERATING PMCHK00000114 $4,200.00 200011470 WESMUS000-B WEST MUSIC COMPANY 11/10/00 OPERATING PMCHK00000114 $84.00 200011471 CHIINC000-B CHILDSPLAY INC 11/10/00 OPERATING PMTRX00000211 $40.00 200011472 RSVP0000 RSVP 11/13/00 OPERATING PMTRX00000212 $1,809.00 200011473 AMEHEA000-B AMERICAN HEART ASSOC 11/14/00 OPERATING PMTRX00000213 $166.00 200011474 LYN000000-B LYNCH,MICHAEL 11/15/00 OPERATING PMTRX00000215 $689.10 200012001 PREAIR000-B PRECISION AIR 11/16/00 OPERATING PMTRX00000217 $1,227.77 200012002 HARBRA001-B HARCOURT BRACE FL 11/16/00 OPERATING PMCHK00000115 $295.49 200012003 JL0HAM000-B JL HAMMETT CO- NO 11/16/00 OPERATING PMCHK00000115 $766.92 200012004 MCGHIL003-B McGRAW HILL/GLENCOE DIV. 11/16/00 OPERATING PMCHK00000115 $60.66 200012005 US0BAN000-B US BANK NATIONAL ASSOCIAT-401K 11/16/00 OPERATING PMCHK00000115 $2,637.67 200012006 US0BAN000-B US BANK NATIONAL ASSOCIAT-401K 11/16/00 OPERATING PMCHK00000115 $1,800.01 200012007 ALLFOO001-B ALLIANT FOODSERVICE - AZ 11/17/00 OPERATING2 PMCHK00000116 $1,734.18 200012008 LYN000000-B LYNCH,MICHAEL 11/17/00 OPERATING2 PMCHK00000116 $85.10 200012009 DOCTEC000-B DOCUMENT TECHNOLOGIES 11/17/00 OPERATING2 PMCHK00000116 $4,256.31 200012010 ALLFOO001-B ALLIANT FOODSERVICE - AZ 11/17/00 OPERATING2 PMCHK00000117 $5,000.00
Owned Charters VENDOR CHECK REGISTER REPORT Payables Management
Ranges: From: To: From: To: Check Number First Last Check Date 11/01/2000 11/30/2000 Vendor ID First Last Checkbook ID First Last Vendor Name First Last Sorted By: Check Number * Voided Checks Check Number Vendor ID Vendor Check Name Check Date Checkbook ID Audit Trail Code Amount - ------------ --------- ----------------- ---------- ------------ ---------------- ----------- 200012011 NOBSCH000-B NOBEL SCHOOL MGMT SVC 11/17/00 OPERATING2 PMCHK00000118 $11,100.00 200012012 MCGHIL0004-B McGRAW HILL/MacMILLAN 11/17/00 OPERATING2 PMCHK00000118 $2,220.58 200012013 ARC000000-B ARC 11/17/00 OPERATING2 PMCHK00000118 $555.00 200012014 WICPIL000-B WICK PILCHER INSURANCE, INC. 11/20/00 OPERATING PMTRX00000224 $18,700.00 200012015 BORBOO000-B BORDERS BOOKS AND MUSIC 11/21/00 OPERATING2 PMTRX00000227 $482.76 200012016 ADAROA000-B ADAM ROACH 11/21/00 OPERATING2 PMCHK00000119 $1,095.00 200012017 ALLFOO009-B ALLIANT FOODSERVICE - MN 11/21/00 OPERATING2 PMCHK00000119 $873.80 200012018 AMEPRI000-B AMERIPRIDE LINEN AND APPAREL 11/21/00 OPERATING2 PMCHK00000119 $45.53 200012019 APS200000-B APS - 2907 11/21/00 OPERATING2 PMCHK00000119 $6,410.21 200012020 AQUPER000-B AQUA PERFECT OF ARIZONA 11/21/00 OPERATING2 PMCHK00000119 $345.06 200012021 AT&T78522-B AT&T - 78522 11/21/00 OPERATING2 PMCHK00000119 $36.68 200012022 AZCON0000-B AZ CONSTRUCTION AND MAINTENANC 11/21/00 OPERATING2 PMCHK00000119 $427.41 200012023 BANOCC000-B BANNER OCCUPATIONAL HEALTH 11/21/00 OPERATING2 PMCHK00000119 $10.00 200012024 CHEUSA000-B CHEVRON USA INC 11/21/00 OPERATING2 PMCHK00000119 $1,407.13 200012025 CITEAG001-B CITY OF EAGAN 11/21/00 OPERATING2 PMCHK00000119 $498.96 200012026 CITPHO296-B CITY OF PHOENIX 29663 11/21/00 OPERATING2 PMCHK00000119 $676.17 200012027 COVOF0000-B COVERALL OF THE TWIN CITIES, I 11/21/00 OPERATING2 PMCHK00000119 $3,661.47 200012028 CRESTA000-B CREATION STATION 11/21/00 OPERATING2 PMCHK00000119 $181.00 200012029 DANKID000-B DANCERCISE KIDS 11/21/00 OPERATING2 PMCHK00000119 $460.00 200012030 FASCOM000-B FASTQ COMMUNICATIONS 11/21/00 OPERATING2 PMCHK00000119 $300.00 200012031 GAIRAN000-B GAINEY RANCH TENNIS 11/21/00 OPERATING2 PMCHK00000119 $1,310.00 200012032 HALSOL000-B SOLANA YUKO HALADA 11/21/00 OPERATING2 PMCHK00000119 $96.00 200012033 JL0HAM000-B JL HAMMETT CO- NO 11/21/00 OPERATING2 PMCHK00000119 $22.09 200012034 JONKEM000-B JONATHAN KEMPIAK 11/21/00 OPERATING2 PMCHK00000119 $720.00 200012035 LAKLEA000-B LAKESHORE LEARNING MATERIALS 11/21/00 OPERATING2 PMCHK00000119 $60.21 200012036 METJAS000-B JASON P. METZ 11/21/00 OPERATING2 PMCHK00000119 $768.00 200012037 MINMOT000-B MINNESOTA MOTOR VEHICLE 11/21/00 OPERATING2 PMCHK00000119 $123.50 200012038 NASMOD000-B NASCO-MODESTO 11/21/00 OPERATING2 PMCHK00000119 $165.63 200012039 SHAFOO000-B SHAMROCK FOODS COMPANY 11/21/00 OPERATING2 PMCHK00000119 $32.63 200012040 SIE000000-B SIEMENS 11/21/00 OPERATING2 PMCHK00000119 $1,328.00 200012041 SMIMIC000-B SMITH MICRO TECHNOLOGIES INC. 11/21/00 OPERATING2 PMCHK00000119 $99.50 200012042 UNIMAR000-B UNITED MARTIAL ARTS OF PHOENIX 11/21/00 OPERATING2 PMCHK00000119 $442.00 200012043 US0WES007-B US WEST DEX-334 11/21/00 OPERATING2 PMCHK00000119 $970.00 200012044 WAMCHA000-B CHANDA WAMPLER 11/21/00 OPERATING2 PMCHK00000119 $21.84 200012045 MARCNT000-B MARICOPA CNTY ENVIROMENTAL SER 11/21/00 OPERATING2 PMCHK00000119 $260.00 200012046 MARCNT000-B MARICOPA CNTY ENVIROMENTAL SER 11/21/00 OPERATING2 PMCHK00000119 $75.00 200012047 MARCNT000-B MARICOPA CNTY ENVIROMENTAL SER 11/21/00 OPERATING2 PMCHK00000119 $190.00 200012048 ADAROA000-B ADAM ROACH 11/21/00 OPERATING2 PMCHK00000119 $795.00 200012049 NES000000-B NESTER,ELAINE 11/21/00 OPERATING2 PMCHK00000119 $430.27 200012050 PEOPUB000-B PEOPLES PUBLISHING GROUP 11/21/00 OPERATING2 PMCHK00000119 $57.00 200012051 PHOBLA000-B PHOENIX BLACK BELT ACADEMY 11/21/00 OPERATING2 PMCHK00000119 $682.50 200012052 RAMMIR000-B MIRIAM RAMOS 11/21/00 OPERATING2 PMCHK00000119 $100.00 200012053 ROMAMY000-B ROMINE, AMY 11/21/00 OPERATING2 PMCHK00000119 $22.76 200012054 SHAFOO000-B SHAMROCK FOODS COMPANY 11/21/00 OPERATING2 PMCHK00000119 $250.19 200012055 SPOINT001-B SPORTIME INTERNA 11/21/00 OPERATING2 PMCHK00000119 $492.40 200012056 U0CWIN000-B U-C WINDOW CLEANING 11/21/00 OPERATING2 PMCHK00000119 $762.54 200012057 UNIMAR000-B UNITED MARTIAL ARTS OF PHOENIX 11/21/00 OPERATING2 PMCHK00000119 $612.00 200012058 US0WES003-B US WEST COMMUNICATIONS-29060 11/21/00 OPERATING2 PMCHK00000119 $2,494.11 200012059 WASMAN001-B WASTE MANAGEMENT OF ARIZONA 11/21/00 OPERATING2 PMCHK00000119 $527.24 200012060 ADMRES000-B ADMINISTRATIVE RESOURCES & CON 11/21/00 OPERATING2 PMCHK00000120 $912.39 200012061 US0BAN000-B US BANK NATIONAL ASSOCIAT-401K 11/21/00 OPERATING2 PMCHK00000120 $3,577.89 200012062 ADMRES000-B ADMINISTRATIVE RESOURCES & CON 11/21/00 OPERATING2 PMCHK00000120 $2,539.38 200012063 AUTDAT000-B AUTOMATIC DATA PROCESSING ADP 11/21/00 OPERATING2 PMCHK00000120 $191.75 200012064 TPA000000-B TPA 11/21/00 OPERATING2 PMCHK00000120 $10,531.75 200012065 ALLFOO008-B ALLIANT FOODSERVICE - AZ 11/21/00 OPERATING2 PMCHK00000121 $1,794.21 200012066 AICRED000-B A.I. CREDIT CORP. 11/28/00 OPERATING2 PMCHK00000122 $39,208.72 200012067 AT&TWIR06-B AT&T WIRELESS SERVICES-PHOENIX 11/28/00 OPERATING2 PMCHK00000122 $7,244.80 200012068 CMRSPB000-B CMRS-PB 11/28/00 OPERATING2 PMCHK00000122 $1,000.00 200012069 FEDEXP000-B FEDERAL EXPRESS 11/28/00 OPERATING2 PMCHK00000122 $803.80 200012070 IROMOU000-B IRON MOUNTAIN 11/28/00 OPERATING2 PMCHK00000122 $82.50 200012071 NOP000000-B NOPPENBERG,KAREN 11/28/00 OPERATING2 PMCHK00000122 $9.13 200012072 PITBOW001-B PITNEY BOWES-85390 11/28/00 OPERATING2 PMCHK00000122 $401.09 200012073 SHUAHW000-B SHRGARD OF AHWATUKEE 11/28/00 OPERATING2 PMCHK00000122 $593.82 200012074 US0WES003-B US WEST COMMUNICATIONS-29060 11/28/00 OPERATING2 PMCHK00000122 $3,387.95 200012075 AUTDAT000-B AUTOMATIC DATA PROCESSING ADP 11/28/00 OPERATING2 PMCHK00000123 $209.88 200012076 LILJ.0000-B LILYQUIST, J. GARY 11/28/00 OPERATING2 PMCHK00000124 $763.39 200012077 SPA000000-B SPATARO,LUCIAN 11/28/00 OPERATING2 PMCHK00000124 $309.94 200012078 BELSHEOOO-B SHERRY BELL 11/29/00 OPERATING2 PMCHK00000125 $37.83 200012079 TOPCUT000-B TOP CUT SEASONAL CARE CO 11/29/00 OPERATING2 PMCHK00000125 $3,254.53 200012080 US0BAN000-B US BANK NATIONAL ASSOCIAT-401K 11/29/00 OPERATING2 PMCHK00000125 $4,547.45 200012081 WELBAN000-B WELLS FARGO BANK 11/29/00 OPERATING2 PMCHK00000125 $3,449.90 200012082 WELBAN000-B WELLS FARGO BANK 11/29/00 OPERATING2 PMCHK00000125 $1,200.00 200012086 EDUCOR000-B EDUCORP PROPERTIES, INC 11/29/00 OPERATING2 PMCHK00000126 $212,027.78 200012087 ST.GEO000-B ST. GEORGE FELLOWSHIP HALL 11/29/00 OPERATING2 PMCHK00000126 $3,182.70
Owned Charters VENDOR CHECK REGISTER REPORT Payables Management
Ranges: From: To: From: To: Check Number First Last Check Date 11/01/2000 11/30/2000 Vendor ID First Last Checkbook ID First Last Vendor Name First Last Sorted By: Check Number * Voided Checks Check Number Vendor ID Vendor Check Name Check Date Checkbook ID Audit Trail Code Amount - ------------ --------- ----------------- ---------- ------------ ---------------- ----------- 20001288 LYN000000-B LYNCH,MICHAEL 11/30/00 OPERATING2 PMTRX00000239 $197.01 REMIT000000000000102 AICRED000 AI CREDIT CORP 11/10/00 PMCHK00000114 $0.00 REMIT000000000000103 ARC000000 ARC 11/10/00 PMCHK00000114 $0.00 REMIT000000000000104 LAKLEA000 LAKESHORE LEARNING MATERIALS 11/10/00 PMCHK00000114 $0.00 REMIT000000000000105 STAGRO000 STANTON GROUP 11/10/00 PMCHK00000114 $0.00 REMIT000000000000106 TPA000000 TPA 11/10/00 PMCHK00000114 $0.00 REMIT000000000000107 US0BAN000 US BANK NATIONAL ASSOCIAT-401K 11/10/00 PMCHK00000114 $0.00 WIRE TRANS.560102212 SILGOL000-B SILVER GOLUB & TEITELL 11/09/00 OPERATING2 PMCHK00000012 $65,000.00 ----------- Total Checks: 223 Total Amount of Checks: $627,329.42 ===========
THE TESSERACT GROUP, INC. CASH FLOW ANALYSIS B-00-10938-ECF-RTB BEGINNING FUNDS AVAILABLE: $ 652,574.51 ------------- Cash In: Credit Card Deposit (Private) 170,372.82 Credit Card Deposit (Charter) 1,790.00 Regular Deposits (Private) 465,549.73 Regular Deposits (Charter) 19,969.25 Regular Deposits (Corporate) 604,421.14 Other Deposit (Charter) 165,165.35 Interest 6,631.14 ------------- Daily Cash In: $1,433,899.43 ============= Cash Out: Charter A/P 53,882.12 Private A/P 399,171.20 Corporate A/P 228,158.22 Corporate A/P (allocated to Sunrise) (114,079.11) TesseracT Payroll 520,990.64 Charter Payroll 115,164.16 Medical Claims 46,173.83 Banking Fees 19,519.24 ------------- Daily Cash Out: $1,268,980.30 ============= Net Cash In/Out: $ 164,919.13 ------------- ENDING FUNDS AVAILABLE: $ 817,493.64 ============= THE TESSERACT GROUP, INC. CONSOLIDATED CASH FLOW ANALYSIS Total For November 2000 ------------- BEGINNING FUNDS AVAILABLE: $ 666,969.59 ------------- Cash In: Telecheck $ 204,855.77 Credit Card Deposit (Preschools) 514,388.09 Credit Card Deposit (Private) 170,372.82 Credit Card Deposit (Charter) 1,790.00 Regular Deposits (Preschools) 466,871.05 Regular Deposits (Private) 465,549.73 Regular Deposits (Charter) 19,969.25 Regular Deposits (Corporate) 604,421.14 Other Deposit (Charter) 165,165.35 Interest 2,294.61 Interest on LTC Acct 4,336.53 Voids 507.45 ------------- Daily Cash In: $2,620,521.79 ============= Cash Out: Preschool A/P $ 516,570.09 Charter A/P 53,882.12 Private A/P 399,171.20 Corporate A/P 228,158.22 TesseracT Payroll 520,685.64 Preschool Payroll 485,810.14 Charter Payroll 115,164.16 College PR 305.00 Preschool NSF 5,320.57 Medical Claims 46,173.83 Banking Fees 19,519.24 LTC Payment -- LTC Fees -- ------------- Daily Cash Out: $2,390,760.21 ============= Net Cash In/Out: $ 229,761.58 ------------- ENDING FUNDS AVAILABLE: $ 896,731.17 ============= EX-99.2 5 ex99-2.txt MONTHLY OPERATING REPORT OF SUNRISE Exhibit 99.2 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ARIZONA In re: ) CASE NO. B-00-10939-ECF-RTB ) SUNRISE EDUCATIONAL SERVICES ) BUSINESS AND INDUSTRY ) MONTHLY OPERATING REPORT ) ) MONTH OF NOVEMBER ) Debtor(s) ) DATE PETITION FILED: October 6, 2000 ) ) TAX PAYER ID NO. 4101581297 Nature of Debtor's Business: For Profit Educational Services DATE DISCLOSURE STATEMENT: FILED Not Yet Filed TO BE FILED To Be Determined ------------- ---------------- DATE PLAN OF REORGANIZATION: FILED Not Yet Filed TO BE FILED To Be Determined ------------- ---------------- I CERTIFY UNDER PENALTY OF PERJURY THAT THE FOLLOWING MONTHLY OPERATING REPORT AND THE ACCOMPANYING ATTACHMENTS ARE TRUE AND CORRECT TO THE BEST OF MY KNOWLEDGE. RESPONSIBLE PARTY: /s/ Lusican P. Spataro CEO - --------------------------------------- ---------- ORIGINAL SIGNATURE OF RESPONSIBLE PARTY TITLE Lucian P. Spataro - --------------------------------------- ---------- PRINTED NAME OF RESPONSIBLE PARTY DATE PREPARER: /s/ Douglass E. Snell Controller - --------------------------------------- ---------- ORIGINAL SIGNATURE OF PREPARER TITLE Douglass E. Snell - --------------------------------------- ---------- PRINTED NAME OF PREPARER DATE PERSON TO CONTACT REGARDING THIS REPORT: Douglass E. Snell --------------------------------------- PHONE NUMBER: 480-783-4317 --------------------------------------- ADDRESS: 4515 E. Muirwood Dr. Phoenix, AZ 85048 --------------------------------------- ORIGINAL OF REPORT IS FILED WITH THE COURT, COPY IS FILED WITH U.S. TRUSTEE'S OFFICE SUNRISE EDUCATIONAL SERVICES, INC. B-00-10939-ECF-RTB MONTH: NOVEMBER RECEIPTS AND DISBURSEMENTS BANK ACCOUNTS AMOUNTS REPORTED SHOULD BE ------------------------------------------- PER THE DEBTOR'S BOOKS, SUNRISE SUNRISE PMTS not per the bank statement OPERATING MADE BY #052-978-7889 TESSERACT TOTAL ------------- --------- ------------ ACCOUNT BALANCE - BEGINNING OF MONTH -- -- RECEIPTS STUDENT FEES -- CHARTER SCHOOL REVENUE -- ACCOUNTS RECEIVABLE -- LOANS AND ADVANCES -- SALE OF ASSETS -- TRANSFERS IN FROM OTHER ACCOUNTS 516,570.09 599,889.25 1,116,459.34 OTHER (ATTACH LIST) -- TOTAL RECEIPTS 516,570.09 599,889.25 1,116,459.34 DISBURSEMENTS BUSINESS - ORDINARY OPERATIONS 516,570.09 516,570.09 CAPITAL IMPROVEMENTS -- PRE-PETITION DEBT -- TRANSFERS TO OTHER DIP ACCOUNTS -- PAYMENTS MADE FOR SUNRISE EDU. 599,889.25 599,889.25 OTHER (ATTACH LIST) -- REORGANIZATION EXPENSES: ATTORNEY FEES -- ACCOUNTANT FEES -- OTHER PROFESSIONAL FEES -- U.S. TRUSTEE QUARTERLY FEE -- COURT COSTS -- TOTAL DISBURSEMENTS 516,570.09 599,889.25 1,116,459.34 ACCOUNT BALANCE - END OF MONTH -- -- -- THE FOLLOWING SECTION MUST BE FILLED OUT DISBURSEMENTS FOR CALCULATING QUARTERLY FEES: TOTAL DISBURSEMENTS FROM ABOVE 1,116,459.34 LESS: TRANSFERS OUT TO OTHER DIP ACCOUNTS -- PLUS: ESTATE DISBURSEMENTS MADE BY OUTSIDE SOURCES TOTAL DISBURSEMENTS FOR CALCULATING QUARTERLY FEES: 1,116,459.34 Sunrise Educational Services, Inc. Statement of Operations For the Month Ending November 30, 2000 REVENUE Tuition and Fees Revenue $1,339,960.22 Government Revenue 71,934.95 Food Revenue 3,682.70 Discounts (163,409.90) Refunds/Returns (77.88) ------------- Total Revenue 1,252,090.09 ------------- OPERATIONAL COSTS Salaries and Wages 514,179.06 Taxes and Benefits 50,712.37 Classroom Expenses 15,889.16 Food Programs Expense 104,749.90 Transportation Expenses 22,464.83 Maintenance Expense 61,925.37 Insurance Expense (14,625.74) Rent Expense 248,703.97 Security Services Expense 2,571.38 Personal Property Tax Expense 11,719.27 Real Propert Tax Expense 27,077.94 Utilities Expense 27,222.70 ------------- Total Operational Costs 1,072,590.21 ------------- GENERAL & ADMINISTRATIVE COSTS Advertising, Mktg, Promo Exp 10,740.31 Bad Debt Expense 5,074.93 Bank Charges/Processing Fees-A 17,246.05 Consultant Fees Expense 170.00 Licenses & Fees Expense 1,764.88 Office/School Supplies Expense 2,545.65 Postage and Printing Expense 143.16 Pre-Employment Expense 1,705.00 Telephone Expense 16,373.32 Travel Expense 464.58 Allocated Corporate Overhead 125,016.98 Other Expenses 13,324.16 ------------- Total General and Administrative Expenses 194,569.02 ------------- Other Income 723.44 ------------- Net Interest and Other Income (Expense) 723.44 ------------- Depreciation Expense 43,244.04 ------------- Total Depreciation and Amortization 43,244.04 ------------- REORGANIZATION EXPENSES Professional Fees Allocated 4,392.08 ------------- Total Reorganization Expenses 4,392.08 ------------- Net Income $ (61,981.82) ============= Sunrise Educational Services, Inc. Balance Sheet October 31, 2000 ASSETS Current Assets Cash and Cash Equivalents $ 9,700.00 Accounts Receivable, net 643,284.77 Prepaid Rent 245,696.85 Other Current Assets 21,562.25 ------------- Total Current Assets 920,243.87 Due From Tesseract 737,281.94 Property and Equipment, net 1,135,034.96 Deposits and Other Assets 155,747.88 ------------- Total Assets $2,948,308.65 ============= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts Payable $ 163,492.71 Checks in Process of Collection 33,256.57 Payroll and Related Accruals 364,596.33 Deferred Revenue and Tuition Deposits 105,968.83 ------------- Total Current Liabilities 667,314.44 ------------- Pre-Petition Liabilities Accounts Payable 671,639.72 Other Current Liabilities 118,018.51 Long-Term Debt 239,635.26 ------------- Total Pre-Petition Liabilities 1,029,293.49 ------------- Reserve for Closed Schools 143,661.34 Other Long-Term Obligations 201,885.17 ------------- Total Long-Term Liabilities 345,546.51 ------------- Total Liabilities 2,042,154.44 ------------- Shareholders' Equity Pre-Petition Shareholders' Equity 1,125,117.90 Post Petition Retained Deficit (218,963.69) ------------- Total Shareholders' Equity 906,154.21 ------------- Total Liabilities and Shareholders' Equity $2,948,308.65 ============= CASE NUMBER: B-00-10939-ECF-RTB STATUS OF ASSETS
0-30 31-60 60+ ACCOUNTS RECEIVABLE TOTAL DAYS DAYS DAYS ---------- ---------- ---------- ---------- TOTAL ACCOUNTS RECEIVABLE 643,285 549,346 43,726 50,213 LESS: AMOUNT CONSIDERED UNCOLLECTIBLE ACCOUNTS RECEIVABLE (NET) 643,285 549,346 43,726 50,213 SCHEDULED CURRENT FIXED ASSETS AMOUNT ADDITIONS DELETIONS AMOUNT ---------- ---------- ---------- ---------- REAL PROPERTY BUILDING IMPROVEMENTS/PLANT 1,020,140 13,467 1,033,607 ACCUMULATED DEPRECIATION (413,993) (34,986) (448,979) NET BUILDINGS/PLANT 606,147 (21,520) -- 584,628 EQUIPMENT 755,300 203 755,504 ACCUMULATED DEPRECIATION (511,115) (30,317) (541,432) NET EQUIPMENT 244,186 (30,114) -- 214,072 AUTOS & VEHICLES 953,839 953,839 ACCUMULATED DEPRECIATION (625,670) (19,600) (645,270) NET AUTOS & VEHICLES 328,170 (19,600) -- 308,570
CASE NUMBER: B-00-10939-ECF-RTB STATUS OF LIABILITIES AND SENSITIVE PAYMENTS POSTPETITION UNPAID OBLIGATIONS TOTAL 0-30 31-60 61-90 91+ ------------------ ------- ------- ------- ------- ------- ACCOUNTS PAYABLE 163,492 122,404 41,088 TAXES PAYABLE 43 43 ACCRUED PAYROLL AND BENEFITS 364,553 364,553 PREPAID TUITION 105,969 105,969 SECURED DEBT OUTSTANDING A/P CHECKS 33,257 33,257 OTHER (ATTACH LIST) ------- ------- ------- ------- ------- TOTAL POST-PETITION LIABILITIES 667,314 626,226 41,088 -- -- ======= ======= ======= ======= ======= PAYMENTS TO INSIDERS AND PROFESSIONALS INSIDERS AMOUNT PD TOTAL PD NAME REASON FOR PAYMENT THIS MONTH TO DATE - ---- ------------------ ---------- ------- NONE -------- -------- ------- TOTAL PAYMENTS TO INSIDERS -- -- ======== ======== ======= PROFESSIONALS DATE OF COURT TOTAL ORDER AUTHORIZING AMOUNT AMOUNT TOTAL PAID INCURRED NAME PAYMENT APPROVED PAID TO DATE & UNPAID - ---- ------- -------- ---- ------- -------- NONE CASE NUMBER: B-00-10939-ECF-RTB CASE STATUS QUESTIONNAIRE YES NO ---- ---- HAVE ANY FUNDS BEEN DISBURSED FROM ANY ACCOUNT OTHER THAN A DEBTOR IN POSSESSION ACCOUNT? NO ARE ANY POSTPETITION RECEIVABLES (ACCOUNTS, NOTES, OR LOANS) DUE FROM RELATED PARTIES? NO ARE ANY WAGE PAYMENTS PAST DUE? NO ARE ANY U.S. TRUSTEE QUARTERLY FEES DELINQUENT? NO CURRENT NUMBER OF EMPLOYEES: 479 INSURANCE CARRIER AND PERIOD EXPIRATION PAYMENT AMOUNT TYPE OF POLICY POLICY NUMBER COVERED DATE & FREQUENCY - -------------- ------------- ------- ---- ----------- Gen Liability CLI0018811 3/1/00 3/1/01 39,208.72 /month Auto Liability BAP0708409 5/1/00 3/1/01 Included above Excess Liability UMI0000552 3/1/00 3/1/01 Included above Workers Comp 307512-4 12/1/00 11/30/01 Monthy as a % of PR Gen Liability CLI0018810 3/1/00 3/1/01 Included above Blanket Contents 59UUNGG2042 5/1/00 3/1/01 Included above WHAT STEPS HAVE BEEN TAKEN TO REMEDY ANY OF THE PROBLEMS THAT BROUGHT ABOUT THE CHAPTER 11 FILING? Purchasing of new schools has ceased, and administrative expenses have been reduced. Other restructuring measures are being considered. LIST ANY MATTERS THAT ARE DELAYING THE FILING OF A PLAN OF REORGANIZATION? Sunrise Preschools, Inc. VENDOR CHECK REGISTER REPORT Payables Management
Ranges: From: To: From: To: Check Number First Last Check Date 11/01/2000 11/30/2000 Vendor ID First Last Checkbook ID First Last Vendor Name First Last Sorted By: Check Number * Voided Checks Check Number Vendor ID Vendor Check Name Check Date Checkbook ID Audit Trail Code Amount - ------------ --------- ----------------- ---------- ------------ ---------------- ----------- 100012037 AFTCOU000 AFTERMATH COURIER SERVICE 11/1/00 OPERATING PMCHK00000004 $152.00 100012038 AKEUNS000 UNSUK AKERS 11/1/00 OPERATING PMCHK00000004 $352.00 100012039 ALEBRE000 BRENDA ALEXANDER 11/1/00 OPERATING PMCHK00000004 $10.00 100012040 APS200000 APS - 2907 11/1/00 OPERATING PMCHK00000004 $230.48 100012041 ARIPEN000 ARIZONA PENNYSAVER 11/1/00 OPERATING PMCHK00000004 $672.00 100012042 COODEB000 DEBIANNE COOPRIDER 11/1/00 OPERATING PMCHK00000004 $23.87 100012043 COPENT000 COPPERTREE ENTERPRISES LLC 11/1/00 OPERATING PMCHK00000004 $300.00 100012044 COUBRI000 BRIAN COUSINS 11/1/00 OPERATING PMCHK00000004 $50.00 100012045 CROBAN000 CROWN BANK LEASING 11/1/00 OPERATING PMCHK00000004 $738.95 100012046 DATNAN000 NANDA DATTA 11/1/00 OPERATING PMCHK00000004 $134.55 100012047 DEPOFPUSA DEPARTMENT OF PUBLIC SAFETY - 11/1/00 OPERATING PMCHK00000004 $572.00 100012048 ELLKAT000 KATHY ELLIS 11/1/00 OPERATING PMCHK00000004 $50.00 100012049 FAMTIM000 FAMILY TIMES, INC. 11/1/00 OPERATING PMCHK00000004 $645.00 100012050 FINNIC000 NICOLE FINCH 11/1/00 OPERATING PMCHK00000004 $10.00 100012051 GLADOC000 GLASS DOCTOR 11/1/00 OPERATING PMCHK00000004 $590.40 100012052 HENADR000 ADRIANNE HENRY 11/1/00 OPERATING PMCHK00000004 $10.00 100012053 HOSCAM000 CAMBRIDGE HOSSIFELD 11/1/00 OPERATING PMCHK00000004 $18.60 100012054 KRATER000 TERRILYNN KRAMER 11/1/00 OPERATING PMCHK00000004 $10.00 100012055 MONROX000 MONTANEZ, ROXANN 11/1/00 OPERATING PMCHK00000004 $89.59 100012056 MOTVEH000 MOTOR VEHICLE DIVISION 11/1/00 OPERATING PMCHK00000004 $230.50 100012057 NEWLYN000 LYNNETTE NEWCOMB 11/1/00 OPERATING PMCHK00000004 $10.00 100012058 ORIDIA000 DIANE ORICK 11/1/00 OPERATING PMCHK00000004 $10.00 100012059 PACALA000 PACIFIC ALARMS COMPANY 11/1/00 OPERATING PMCHK00000004 $324.00 100012060 PETSTA000 STACEY PETO 11/1/00 OPERATING PMCHK00000004 $60.95 100012061 PROUSA000 PROFORCE USA 11/1/00 OPERATING PMCHK00000004 $11,284.94 100012062 ROAFIR000 ROADRUNNER FIRE & SAFETY 11/1/00 OPERATING PMCHK00000004 $133.37 100012063 SULSPR000 SULPHUR SPRINGS ELECTRIC 11/1/00 OPERATING PMCHK00000004 $85.60 100012064 THORAE000 THOMAS, RAE ANN 11/1/00 OPERATING PMCHK00000004 $53.97 100012065 THUMOU000 THUNDER MOUNTAIN CLEANING SERV 11/1/00 OPERATING PMCHK00000004 $2,399.50 100012066 U0CWIN000 U-C WINDOW CLEANING 11/1/00 OPERATING PMCHK00000004 $780.16 100012067 US0BAN000 US BANK NATIONAL ASSOCIAT-401K 11/1/00 OPERATING PMCHK00000004 $5,788.41 100012068 US0WES003 US WEST COMMUNICATIONS-29060 11/1/00 OPERATING PMCHK00000004 $898.26 100012069 WELEMI000 EMILY WELLMAN 11/1/00 OPERATING PMCHK00000004 $120.00 100012070 AZCON0000 AZ CONSTRUCTION AND MAINTENANC 11/2/00 OPERATING PMCHK00000005 $11,629.46 100012071 EXTCLE000 EXTRACTION CLEANING COMPANY 11/2/00 OPERATING PMCHK00000005 $1,320.00 100012072 STRPLU000 STRUSE PLUMBING INC. 11/2/00 OPERATING PMCHK00000005 $2,985.00 100012073 US0FOO000 US FOODSERVICE 11/2/00 OPERATING PMCHK00000005 $14,499.94 100012074 US0FOO000 US FOODSERVICE 11/6/00 OPERATING PMCHK00000006 $5,530.29 100012075 US0FOO000 US FOODSERVICE 11/9/00 OPERATING PMCHK00000007 $18,648.80 100012076 DAIMAR000 DAILEY, MARGE 11/9/00 OPERATING PMCHK00000008 $500.00 100012077 APS200000 APS - 2907 11/13/00 OPERATING PMCHK00000009 $3,781.51 100012078 ARIAIR000 ARIZONA AIR-SCENT 11/13/00 OPERATING PMCHK00000009 $880.36 100012079 ARIREP000 ARIZONA REPUBLIC 11/13/00 OPERATING PMCHK00000009 $468.00 100012080 AT&T000 AT& T 78522 11/13/00 OPERATING PMCHK00000009 $1,573.89 100012081 AT&T78522 AT&T - 78225 11/13/00 OPERATING PMCHK00000009 $337.44 100012082 AUTDAT000 AUTOMATIC DATA PROCESSING ADP 11/13/00 OPERATING PMCHK00000009 $1,589.38 100012083 AZCON0000 AZ CONSTRUCTION AND MAINTENANC 11/13/00 OPERATING PMCHK00000009 $4,869.51 100012084 BELVIS000 BELLA VISTA WATER COMPANY 11/13/00 OPERATING PMCHK00000009 $212.49 100012085 BRICOM000 BRIXTON COMMERCIAL CLEANING 11/13/00 OPERATING PMCHK00000009 $1,000.00 100012086 BRU000000 BRUBAKER,JULIE 11/13/00 OPERATING PMCHK00000009 $116.87 100012087 BUI70U000 BUILDING 7 UNION HILLS LLC 11/13/00 OPERATING PMCHK00000009 $1,215.60 100012088 CITCHAUT1 CITY OF CHANDLER - UTILITIES 11/13/00 OPERATING PMCHK00000009 $220.74 100012089 CITPHO296 CITY OF PHOENIX 29663 11/13/00 OPERATING PMCHK00000009 $578.13 100012090 CITTEM296 CITY OF TEMPE - 29617 11/13/00 OPERATING PMCHK00000009 $176.60 100012091 CON000000 CONCENTRA 11/13/00 OPERATING PMCHK00000009 $490.00 100012092 COUCHE000 COURTESY CHEVROLET 11/13/00 OPERATING PMCHK00000009 $3,679.37 100012093 DEPOFPUSA DEPARTMENT OF PUBLIC SAFETY - 11/13/00 OPERATING PMCHK00000009 $1,056.00 100012094 EARCOM000 EARLYCHILDHOOD.COM 11/13/00 OPERATING PMCHK00000009 $193.02 100012095 ELDCHR000 CHRISTINE ELDRIDGE 11/13/00 OPERATING PMCHK00000009 $228.00 100012096 FREMEY000-B FRED MEYERS 11/13/00 OPERATING PMCHK00000009 $202.38 100012097 HEAIMC000 HEALTHSOUTH IMC INC-PHOENIX 11/13/00 OPERATING PMCHK00000009 $99.00 100012098 HEASAV000 HEART SAVERS 11/13/00 OPERATING PMCHK00000009 $84.00 100012099 JONDEB000 DEBRA ANN JONES 11/13/00 OPERATING PMCHK00000009 $228.00 100012100 LPS000000 LPS.CO 11/13/00 OPERATING PMCHK00000009 $302.25 100012101 MARTRE000 MARICOPA COUNTY TREASURER 11/13/00 OPERATING PMCHK00000009 $150.90 100012102 MOUPAR001 MOUNTAIN PARK RANCH HOA 11/13/00 OPERATING PMCHK00000009 $23.00 100012103 PROUSA000 PROFORCE USA 11/13/00 OPERATING PMCHK00000009 $2,217.65
Sunrise Preschools, Inc. VENDOR CHECK REGISTER REPORT Payables Management
Ranges: From: To: From: To: Check Number First Last Check Date 11/01/2000 11/30/2000 Vendor ID First Last Checkbook ID First Last Vendor Name First Last Sorted By: Check Number * Voided Checks Check Number Vendor ID Vendor Check Name Check Date Checkbook ID Audit Trail Code Amount - ------------ --------- ----------------- ---------- ------------ ---------------- ----------- 100012104 SOUGAS000 SOUTHWEST GAS CORPORATION 11/13/00 OPERATING PMCHK00000009 $45.37 100012105 SRP2950 SRP2950 11/13/00 OPERATING PMCHK00000009 $19,950.00 100012106 TERINT000 TERMINEX INTERNATIONAL 11/13/00 OPERATING PMCHK00000009 $597.00 100012107 TOOLOR000 LORI TOOLEY 11/13/00 OPERATING PMCHK00000009 $127.39 100012108 TOWOF0002 TOWN OF GILBERT - UTILITIES 11/13/00 OPERATING PMCHK00000009 $295.98 100012109 US0BAN000 US BANK NATIONAL ASSOCIAT-401K 11/13/00 OPERATING PMCHK00000009 $5,563.68 100012110 US0WES003 US WEST COMMUNICATIONS-29060 11/13/00 OPERATING PMCHK00000009 $1,771.51 100012111 VEL000000 VELA,DANA 11/13/00 OPERATING PMCHK00000009 $145.67 100012112 WASMAN001 WASTE MANAGEMENT OF ARIZONA 11/13/00 OPERATING PMCHK00000009 $1,334.89 100012113 WESINN000 WESTERN INNOVATIONS INC 11/13/00 OPERATING PMCHK00000009 $6,040.66 100012114 MARPUB000 MARCOA PUBLISHING INC 11/13/00 OPERATING PMCHK00000009 $625.00 100012115 CENLEA000 CENTENNIAL LEASING & SALES INC 11/13/00 OPERATING PMTRX00000017 $408.65 100012117 FIDCON000 FIDELITY CONTRACT SERVICES,INC 11/14/00 OPERATING PMCHK00000010 $16,841.08 100012118 SLAJAC000 JACK SLATE 11/14/00 OPERATING PMCHK00000010 $969.78 100012119 GILBER000 BERNITA GILLIAM 11/14/00 OPERATING PMTRX00000022 $477.17 100012120 US0FOO000 US FOODSERVICE 11/16/00 OPERATING PMCHK00000011 $16,407.16 100012121 APS200000 APS - 2907 11/16/00 OPERATING PMTRX00000027 $25,945.00 100012122 JL0HAM000 JL HAMMETT CO- NO 11/16/00 OPERATING PMTRX00000028 $485.47 100012123 EDWROY000 ROY EDWARDS 11/17/00 OPERATING PMCHK00000012 $536.43 100012124 ARC000000 ARC 11/17/00 OPERATING PMTRX00000030 $831.84 100012125 SRTA INV000 STAR INVENTORY SERVICES, L.L.C 11/20/00 OPERATING PMCHK00000013 $4,480.50 100012126 US0FOO000 US FOODSERVICE 11/21/00 OPERATING PMCHK00000014 $16,456.91 100012127 BOWTAM000 TAMI BOWEN 11/21/00 OPERATING PMCHK00000015 $328.41 100012128 CASELI000 ELIZABETH CASON 11/21/00 OPERATING PMCHK00000015 $422.09 100012129 CHEUSA000 CHEVRON USA INC 11/21/00 OPERATING PMCHK00000015 $7,604.44 100012130 DYCNAN000 DYCK, NANCY 11/21/00 OPERATING PMCHK00000015 $382.09 100012131 FEIBRE000 BRENDA FEIDLER 11/21/00 OPERATING PMCHK00000015 $366.23 100012132 KRATER000 TERRILYNN KRAMER 11/21/00 OPERATING PMCHK00000015 $369.62 100012133 MARALF000 ALFREDA MARTIN 11/21/00 OPERATING PMCHK00000015 $296.83 100012134 MONROX000 MONTANEZ, ROXANN 11/21/00 OPERATING PMCHK00000015 $200.00 100012135 THORAE000 THOMAS, RAE ANN 11/21/00 OPERATING PMCHK00000015 $285.82 100012136 TPA000000 TPA 11/21/00 OPERATING PMCHK00000015 $7,095.51 100012137 VIP000000 VIP 11/27/00 OPERATING PMCHK00000016 $15.75 100012138 VIP000000 VIP 11/27/00 OPERATING PMCHK00000016 $15.75 100012139 VIP000000 VIP 11/27/00 OPERATING PMCHK00000016 $15.75 100012140 VIP000000 VIP 11/27/00 OPERATING PMCHK00000016 $15.75 100012141 MOTVEH000 MOTOR VEHICLE DIVISION 11/27/00 OPERATING PMCHK00000016 $62.72 100012142 MOTVEH000 MOTOR VEHICLE DIVISION 11/27/00 OPERATING PMCHK00000016 $315.66 100012143 MOTVEH000 MOTOR VEHICLE DIVISION 11/27/00 OPERATING PMCHK00000016 $315.66 100012144 MOTVEH000 MOTOR VEHICLE DIVISION 11/27/00 OPERATING PMCHK00000016 $162.30 100012145 MOTVEH000 MOTOR VEHICLE DIVISION 11/27/00 OPERATING PMCHK00000016 $167.18 100012146 MOTVEH000 MOTOR VEHICLE DIVISION 11/27/00 OPERATING PMCHK00000016 $167.18 100012147 LARDEB000 DEB LARSON 11/28/00 OPERATING PMCHK00000017 $35.90 100012148 SANBAR000 SANTA BARBARA BANK & TRUST 11/28/00 OPERATING PMCHK00000017 $289.17 100012149 SANBAR000 SANTA BARBARA BANK & TRUST 11/28/00 OPERATING PMCHK00000017 $577.90 100012150 SANBAR000 SANTA BARBARA BANK & TRUST 11/28/00 OPERATING PMCHK00000017 $7,657.13 100012151 US0BAN000 US BANK NATIONAL ASSOCIAT-401K 11/28/00 OPERATING PMCHK00000017 $2,355.63 100012152 US0BAN000 US BANK NATIONAL ASSOCIAT-401K 11/28/00 OPERATING PMCHK00000017 $397.42 100012153 4DPROP000 4D PROPERTIES 11/29/00 OPERATING PMCHK00000018 $11,772.03 100012154 ANCVIL000 ANCALA VILLAGE SHOPPING CENTER 11/29/00 OPERATING PMCHK00000018 $16,622.87 100012155 BUI70U000 BUILDING 7 UNION HILLS LLC 11/29/00 OPERATING PMCHK00000018 $7,626.51 100012156 DERENT000 DER ENTERPRISES LLP 11/29/00 OPERATING PMCHK00000018 $15,132.93 100012157 DIVINS000 DIVALL INSURED INCOME PROP INC 11/29/00 OPERATING PMCHK00000018 $11,418.37 100012158 FIDCON000 FIDELITY CONTRACT SERVICES,INC 11/29/00 OPERATING PMCHK00000018 $16,481.08 100012159 JONEAR000 EARL JONES 11/29/00 OPERATING PMCHK00000018 $10,821.18 100012160 MCCVEN003 MCCLINTOCK VENTURE LC 11/29/00 OPERATING PMCHK00000018 $13,067.25 100012161 MESDEV000 MESA DEVELOPMENT INC 11/29/00 OPERATING PMCHK00000018 $12,568.84 100012162 PEOINV000 PEORIA INVESTMENTS INC 11/29/00 OPERATING PMCHK00000018 $18,550.59 100012163 SANVIL003 SANTIAGO VILLA (#129) 11/29/00 OPERATING PMCHK00000018 $13,836.33 100012164 SANVIL005 SANTIAGO VILLA (#124) 11/29/00 OPERATING PMCHK00000018 $14,980.76 100012165 SC0WAR000 SC WARNER TEMPE, INC. 11/29/00 OPERATING PMCHK00000018 $12,330.04 100012166 SDMFAM000 SDM FAMILY CORP 11/29/00 OPERATING PMCHK00000018 $13,794.27 100012167 SUNPRE000 SUNRISE PRESCHOOL VI INVESTME 11/29/00 OPERATING PMCHK00000018 $18,624.11 100012168 THEYOU000 THE YOUNG ONES CENTER 11/29/00 OPERATING PMCHK00000018 $6,525.16 100012169 WELFAR002 WELLS FARGO BANK 11/29/00 OPERATING PMCHK00000018 $18,541.69 100012170 WILPRE000 WILLIS PRESCHOOL VI 11/29/00 OPERATING PMCHK00000018 $13,002.84 100012171 CLEOF0002 CLERK OF SUPERIOR COURT 11/30/00 OPERATING PMCHK00000019 $18.00 100012172 MOTVEH000 MOTOR VEHICLE DIVISION 11/30/00 OPERATING PMCHK00000019 $167.18 100012173 SECOF0000 SECRETARY OF STATE 11/30/00 OPERATING PMCHK00000019 $25.00 100012174 STOLON000 LONN STONE 11/30/00 OPERATING PMCHK00000019 $10.00 100012175 US0FOO000 US FOODSERVICE 11/30/00 OPERATING PMCHK00000020 $10,634.28 1004 AZCON0000 AZ CONSTRUCTION AND MAINTENANC 11/2/00 OPERATING PMPAY00000005 $1,837.07 REMIT000000000000002 SUNPET000-B SUNRISE PETTY CASH 11/13/00 PMCHK00000009 $0.00 ----------- Total Checks: 140 Total Amount of Checks: $516,570.09 ===========
SUNRISE EDUCATIONAL SERVICES, INC. CASH FLOW ANALYSIS B-00-10939-ECF-RTB BEGINNING FUNDS AVAILABLE: $ 14,395.08 ------------- Cash In: Telecheck $ 204,855.77 Credit Card Deposit (Preschools) 514,388.09 Regular Deposits (Preschools) 466,871.05 ------------- Daily Cash In: $1,186,114.91 ============= Cash Out: Preschool A/P $ 516,570.09 Preschool Payroll 485,810.14 Corporate A/P (allocated) 114,079.11 Preschool NSF 5,320.57 ------------- Daily Cash Out: $1,121,779.91 ============= Net Cash In/Out: $ 64,335.00 ------------- ENDING FUNDS AVAILABLE: $ 78,730.08 ============= -----END PRIVACY-ENHANCED MESSAGE-----