-----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, Ww9xoXsSTvFPTeOdCy6b7sZJlkIfLSCeE2jt5NSFn904wBsNTQiqKg5GvKehn4Bj vFAAluCEvCRsbjFmaYi1+w== 0000950147-01-500694.txt : 20010410 0000950147-01-500694.hdr.sgml : 20010410 ACCESSION NUMBER: 0000950147-01-500694 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20010316 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010406 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: 1596493 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-6576.txt CURRENT REPORT OF TESSERACT GROUP DATED 03/16/2001 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 March 16, 2001 Date of Report (Date of earliest event reported) 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) (480) 940-6300 Registrant's telephone number, including area code (Former name or former address, if changed since last report.) ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. SALE OF EDUCATION PROPERTY INVESTORS, INC. SCHOOL On March 16, 2001, The TesseracT Group, Inc. ("we" or "us") sold certain of our assets to Education Property Investors, Inc., a Nevada corporation ("EPI"). We made this sale pursuant to the terms of a Purchase and Sale Agreement for personal property, dated January 31, 2001, by and between us and EPI, as amended by that certain First Amendment to Purchase and Sale Agreement, dated March 15, 2001, and a separate Purchase and Sale Agreement for real property dated January 31, 2001. In this transaction, we sold certain of our assets including equipment, real property and goodwill related to our property commonly known as the North Scottsdale TesseracT School. In consideration for the sale of these assets we received $100,000 for the personal property and goodwill, and $1,462,000 for the real property less a mortgage payoff amount of $1,362,000. EPI waived various claims for rent. ITEM 7. FINANCIAL INFORMATION; EXHIBITS (c) Exhibits Exhibit No. ----------- 10.1 Purchase and Sale Agreement by and between The TesseracT Group, Inc. and Education Property Investors, Inc., dated January 31, 2001 (as amended). 10.2 Purchase and Sale Agreement by and between The TesseracT Group, Inc. and Education Property Investors, Inc., dated January 31, 2001. 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: March 27, 2001 By /s/ Douglas Snell --------------------------- Douglas Snell Controller EX-10.1 2 ex10-1.txt AMENDED PURCHASE AND SALE AGREEMENT Exhibit 10.1 PURCHASE AND SALE AGREEMENT (FF&E - NORTH SCOTTSDALE SCHOOL) This PURCHASE AND SALE AGREEMENT (FF&E - NORTH SCOTTSDALE SCHOOL) (this "AGREEMENT") is entered into as of the 31st day of January, 2001, 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 EDUCATION PROPERTY INVESTORS, INC. ("EPI"), a Nevada corporation (EPI or its assignee under SECTION 14.18 hereof is referred to herein as "BUYER"). RECITALS A. Seller operates that certain private school ("SCHOOL") commonly known as the "North Scottsdale TesseracT School" located at 9701 East Bell Road, Scottsdale, Arizona 85260. 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 of Seller used 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, including, but not limited to, the purchase of the Tract "B" Land (defined below). 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: 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 ADMINISTRATIVE LEASE CLAIM. The term "Administrative Lease Claim" shall mean the Claim for outstanding rent due to EPI for October, 2000 for the North Scottsdale School. The parties agree that the amount of rent for October, 2000 for the North Scottsdale School is $89,647.80. 1.2 INTENTIONALLY OMITTED. 1.3 BUSINESS. The term "Business" shall mean Seller's operations conducted under the name "TesseracT," "The TesseracT Group, Inc.," or "North Scottsdale TesseracT School," at the School and at any other location within or outside the State of Arizona. 1.4 CLAIM. The term "Claim" shall be given the same meaning as provided to such term under Bankruptcy Codess.101(5). 1.5 CLOSING. The term "Closing" shall mean the completed exchange of: (i) Closing documents set forth in ARTICLES XII AND XIII below, together with the simultaneous conveyance by Seller to Buyer of the Purchased Assets (defined below); and (ii) the payment by Buyer to Seller of the Purchase Price (defined below). 1.6 CLOSING DATE. The term "Closing Date" shall mean the date on which the Closing occurs as determined pursuant to ARTICLE IX hereof. 1.7 COURT. The term "Court" shall mean the United States Bankruptcy Court for the District of Arizona. 1.8 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 1.8 attached hereto. 1.9 JEBCO LOAN. JEBCO Loan means that certain Promissory Note, dated February 9, 2000 by Buyer to JEBCO Group, Inc. ("JEBCO") in the principal amount of $1,362,000 secured by that certain Deed of Trusts and Assignment of Rents, dated February 9, 2000 by Seller as Trustor, that certain Loan Agreement, dated February 9, 2000 by and between JEBCO and Seller, and that certain Arizona Form UCC-1 by Seller filed on February 10, 2000 with the Maricopa County Recorder. 1.10 Tract "B" LAND. The term "Tract "B" Land" shall refer to the real property adjacent to the Real Property that is being sold by Seller and acquired by Buyer contemporaneously with this Agreement pursuant to the Tract "B" Purchase and Sale Agreement. 2 1.11 LEASE. The term "Lease" shall mean that certain Amended and Restated Lease dated December 27, 1999 by and between Seller, as lessee, and Buyer, as lessor, pursuant to which Seller leases the Real Property from Buyer. 1.12 NEW LEASE. EPI and/or Thomas J. O'Brien, Bishop of the Roman Catholic Church of the Diocese of Phoenix will provide TesseracT with the benefit of use of the North Scottsdale School free of Minimum Rent (as defined in Article III of the Existing Lease), subject to the construction requirements of Assignee (as proposed buyer of the real property and improvements of the North Scottsdale School) for the period from February 1 through May 31, 2001, for the continuation of the North Scottsdale School; provided, however, that: (i) TesseracT shall not be responsible for the cost or expense of that new construction to be performed by Assignee; and (ii) in the performance of the Assignee's construction, Assignee shall not unreasonably interfere with TesseracT's use of the Land or operations at the North Scottsdale School. EPI and TesseracT shall execute a new lease ("NEW LEASE"), which New Lease shall be the same form as the Existing Lease with only the following material modifications, and except for those terms and conditions which are clearly and materially inconsistent with the terms and spirit of the parties' agreement reflected by or underlying this Agreement; (i) the term under the New Lease will commence as of, and only upon, the Closing, and shall expire on May 31, 2001 with no options to renew; and (ii) payment of Minimum Rent shall not be required, but all of TesseracT's other obligations, both of a monetary and non-monetary nature, shall remain in effect. The form of the New Lease shall be approved by the parties by February 15, 2001. 1.13 PRESCHOOL. The term "Preschool" shall mean the preschool presently operated by Seller at the Real Property. 1.14 REAL PROPERTY. The term "Real Property" shall mean the real property on which the School is located as more particularly described on SCHEDULE 1.14. 1.15 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 Land and 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 including the JEBCO Loan, the form of which shall be agreed to by the parties hereto. 1.16 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; and (ii) assume the Assumed Contracts, the form of which shall be agreed to by the parties hereto. 3 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. The Equipment. 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 (which supplies shall, prior to Closing, be maintained by Seller in the ordinary course). 2.1.3 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. 2.1.4 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. 4 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. This Agreement addresses only the Purchased Assets. ARTICLE III. [INTENTIONALLY OMITTED] ARTICLE IV. TERMS OF PAYMENT 4.1 PAYMENT DUE AT CLOSING. At Closing, Buyer shall provide, and Seller shall receive the "PURCHASE PRICE". The Purchase Price is comprised of: (i) Buyer's release and waiver of the Administrative Lease Claim (see SECTION 6.3 below) (the "WAIVED ADMINISTRATIVE CLAIM"); and (ii) $100,000 in cash paid by certified funds or wire transfer on the Closing Date (the "CASH PAYMENT") 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. 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: 5 6.1 ORGANIZATION. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and is qualified to do business in 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 ADMINISTRATIVE LEASE CLAIM. As of the Closing Date: (i) Buyer owns a one hundred percent (100%) undivided interest in the Administrative Lease Claim; and (ii) Buyer shall not have previously sold, assigned, or transferred the Administrative Lease Claim. ARTICLE VII. OTHER COVENANTS 7.1 REJECTION OF LEASE OF REAL PROPERTY. Buyer shall have a claim as defined in Bankruptcy Code ss.101(5) for lease rejection damages under the Lease as it relates to the School (the "REJECTION CLAIM"). The Rejection Claim shall be "allowed" as that term is used in Bankruptcy Code ss.502 (the "ALLOWED REJECTION CLAIM"). The amount of the Allowed Rejection Claim shall be calculated in accordance with the Lease and shall only be further limited pursuant to Bankruptcy Code ss.502(b)(6), and such calculation will be determined on or before February 15, 2001. Seller waives its right to seek reconsideration of the Allowed Rejection Claim pursuant to Bankruptcy Code ss.502(j) or otherwise. ARTICLE VIII. INDEMNITIES 8.1 SELLER. Seller agrees to hold harmless, indemnify and defend Buyer from and against any and all uninsured loss, claim, damage, liability or expense (including, but not limited to, reasonable attorneys' fees and costs) (i) arising out of or occurring as the result of any breach by Seller of any of its covenants, representations or warranties hereunder or (ii) arising out of or in connection with or related to the Purchased Assets or operation of the Business at the School or at the Land prior to the date of Closing, other than the Assumed Liabilities. In no event shall the liability of Seller under this Section 8.1 together with the liability of Seller arising out of or relating to the Adjacent Property Purchase and Sale Agreement collectively exceed $5,000. 8.2 BUYER. Buyer agrees to hold harmless, indemnify and defend Seller from and against any and all uninsured loss, claim, damage, liability or expense (including, but not limited to, reasonable attorneys' fees and costs) (i) 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 or (ii) arising out of or in connection with or related to the Purchased Assets or operations at the School or the Land on or after the date of Closing. 6 8.3 SOLE REMEDY. The indemnifications in SECTION 8.1 OR 8.2, as the case may be, will be the sole remedy of the Buyer or the Seller if any matter which is the subject of a representation or warranty contained in ARTICLE V or ARTICLE VI is not as represented or warranted. ARTICLE IX. CLOSING 9.1 CLOSING. Closing shall occur at the law offices of Chicago Title Insurance Company, 2415 E. Camelback Road, Suite 30, Phoenix, Arizona 85016 Escrow Officer: Jack Knott, the Closing must occur by no later than March 13, 2001; provided that such Closing may be extended for a period of up to, but not to exceed fifteen (15) days to allow for the closing of the transaction with the Assignee (the "CHURCH TRANSACTION"). ARTICLE X. 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: 10.1 CONTINUED TRUTH OF WARRANTIES. All of the representations and warranties of Seller contained herein shall continue to be true and correct at Closing. 10.2 PERFORMANCE OF OBLIGATIONS. Seller 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. 10.3 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. 10.4 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. 10.5 COURT ORDERS. The Court shall have entered the Section 363 Order and the Section 365 Order. 10.6 TRACT "B" PURCHASE AND SALE AGREEMENT. The conditions precedent to the Buyer's obligations under the Adjacent Property Purchase and Sale Agreement shall have been fulfilled or waived by the Buyer. 10.7 TRANSACTION WITH ASSIGNEE. Buyer shall have consummated the closing of the Church Transaction. 7 ARTICLE XI. 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: 11.1 CONTINUED TRUTH OF WARRANTIES. All of the representations and warranties of Buyer contained herein shall continue to be true and correct at Closing. 11.2 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. 11.3 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. 11.4 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. 11.5 COURT ORDERS. The Court shall have entered the Section 363 Order and the Section 365 Order. 11.6 ADJACENT PROPERTY PURCHASE AND SALE AGREEMENT. The conditions precedent to the Seller's obligations under the Adjacent Property Purchase and Sale Agreement shall have been fulfilled or waived by the Seller. ARTICLE XII. 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: 12.1 BILL OF SALE. A duly executed bill of sale selling, assigning, transferring, and conveying the Purchased Assets to Buyer or its assignee. 12.2 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. 8 12.3 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 XIII. 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: 13.1 CERTIFIED RESOLUTION. A copy of the resolutions appropriate representative(s) of Buyer authorizing the execution and performance of this Agreement. 13.2 THE NEW LEASE. The New Lease. 13.3 THE ADMINISTRATIVE LEASE CLAIM. Buyer's written release and waiver of the Administrative Claim. 13.4 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. 13.5 THE PURCHASE PRICE. The Purchase Price. ARTICLE XIV. MISCELLANEOUS 14.1 RIGHT TO BID. Buyer acknowledges and understands that the Court may consider higher and better offers for the Purchased Assets and the Land. Notwithstanding any other language to the contrary herein, Buyer acknowledges and agrees that, Buyer shall not be entitled to receive any overbid protections, breakup fees or other buyer protections, if Buyer is not ultimately approved as the buyer of the Purchased Assets. 14.2 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. 14.3 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. 9 14.4 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. 14.5 Intentionally Omitted. 14.6 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 Copy To: Robert J. Miller, Esq. Bryan Cave LLP Two North Central Avenue, Suite 2200 Phoenix, Arizona 85004 To Buyer: Education Property Investors, Inc. Legal Department 300 Esplanade Drive, Suite 1860 Oxnard, California 93030 Attention: Mr. Andre C. Dimitriadis. Copy to: Education Property Investors, Inc. Legal Department 300 Esplanade Drive, Suite 1860 Oxnard, California 93030 Attention: Legal Department 14.7 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. 14.8 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, or Buyer may proceed with 10 this transaction on the terms and conditions mutually agreeable to the parties, including any adjustment in the Purchase Price. 14.9 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. 14.10 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. It is not intended by this Agreement to, and nothing contained in this Agreement shall, create any partnership, joint venture or other similar arrangement between Seller and Buyer. 14.11 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. 14.12 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. 14.13 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: 14.13.1 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. 14.13.2 References to the plural include the singular, the singular the plural and the part the whole. 14.13.3 The words "include," "includes," and "including" are not limiting. 14.13.4 A reference to any law includes any amendment or modification to such law which is in effect on the relevant date. 14.13.5 A reference to any person or entity includes its successors, heirs and permitted assigns. 11 14.13.6 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. 14.13.7 All Schedules to this Agreement constitute material terms of this Agreement and are incorporated fully into the terms of this Agreement. 14.14 TIME IS OF THE ESSENCE. Time is of the essence in the performance and observance of all obligations and duties under this Agreement. 14.15 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. 14.16 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. 14.17 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. 14.18 NO ASSIGNMENTS. Neither this Agreement nor any right or obligation hereunder may be assigned by either party hereto without the written consent of the other party; provided that Buyer may assign its rights and obligations under this Agreement to Assignee. 14.19 BANKRUPTCY COURT APPROVAL. Seller shall file a motion seeking bankruptcy court approval of the transactions addressed herein promptly upon the execution of this Agreement. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 12 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/ LUCIAN SPATARO --------------------------------------- Its CFO --------------------------------------- SELLER EDUCATION PROPERTY INVESTORS, INC., a Nevada corporation By /S/ JULIA KOPTA --------------------------------------- Its SENIOR VICE PRESIDENT --------------------------------------- BUYER 13 SCHEDULE 1.8 (EQUIPMENT) SCHEDULE 1.14 (DESCRIPTION OF REAL PROPERTY) FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT (FF&E - NORTH SCOTTSDALE SCHOOL) THIS FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT (FF&E - NORTH SCOTTSDALE SCHOOL) (this "AMENDMENT") is made and entered into as of this 15th day of March, 2001 by and between THE TESSERACT GROUP, INC., a Minnesota corporation ("SELLER") and EDUCATION PROPERTY INVESTORS, INC., a Nevada corporation ("BUYER"). RECITALS A. Buyer and Seller have previously executed that certain Purchase and Sale Agreement (FF&E - North Scottsdale School) dated as of January 31, 2001 (the "AGREEMENT"), with respect to certain assets of Seller located in Maricopa County, Arizona. B. Buyer and Seller wish to amend the Agreement, subject to and in accordance with the further terms, covenants and provisions of this Amendment. NOW, THEREFORE, IN CONSIDERATION OF the Agreement, the foregoing Recitals, the mutual agreements, covenants and promises contained in this Amendment and other good and valuable consideration, the receipt, sufficiency and validity of which is hereby acknowledged, Buyer and Seller agree as follows: 1. DEFINITIONS. Capitalized terms used in this Amendment without definition shall have the meanings assigned to such terms in the Agreement, unless the context expressly requires otherwise. 2. ADMINISTRATIVE LEASE CLAIM. SECTION 1.1 of the Agreement is hereby amended in its entirety to read as follows: "The term "Administrative Lease Claim" shall mean EPI's Claim for: (i) one-half (1/2) of the outstanding rent due for October, 2000 for the North Scottsdale School, in the amount of $44,823.90; (ii) the outstanding rent due for October, 2000 for the Eagan School in the amount of $32,837.63; and (iii) the outstanding rent due for October, 2000 for the Paradise Lane School in the amount of $16,772.12." 3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER. SECTION 6.3 of the Agreement is hereby amended in its entirety to read as follows: "As of the Closing Date, (i) Buyer owns the Administrative Lease Claim; and (ii) Buyer shall not have previously sold, assigned, or transferred the Administrative Lease Claim." 5. COUNTERPARTS; FACSIMILE SIGNATURES. This Amendment 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 facsimile 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 facsimile 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 Amendment. 6. FULL FORCE AND EFFECT. Except as expressly modified by this Amendment, the Agreement remains unmodified and in full force and effect. All references in the Agreement to "this Agreement" shall be deemed references to the Agreement as modified by this Amendment. IN WITNESS WHEREOF, Buyer and Seller have executed this Amendment as of the date and year first above written. SELLER: BUYER: THE TESSERACT GROUP, INC. EDUCATION PROPERTY INVESTORS, INC., a Minnesota corporation a Nevada corporation By: /S/ MIKE LYNCH By: /S/ JULIA KOPTA -------------------------- -------------------------- Name: Mike Lynch Name: JULIA KOPTA Its: Chief Operating Officer Its: SENIOR VICE PRESIDENT EX-10.2 3 ex10-2.txt PURCHASE AND SALE AGREEMENT Exhibit 10.2 PURCHASE AND SALE AGREEMENT (ADJACENT REAL PROPERTY - TRACT "B") BY THIS PURCHASE AND SALE AGREEMENT (this "AGREEMENT") entered into as of the 31st day of January, 2000, THE TESSERACT GROUP, INC., a Minnesota corporation ("SELLER"), and EDUCATION PROPERTY INVESTORS, INC., a Nevada corporation ("BUYER"), agree as follows: 1. PURCHASE AND SALE. Subject to the terms and conditions set forth in this Agreement, Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, that real property legally described on EXHIBIT "A" attached hereto, together with all of Seller's right, title and interest in all rights, easements and interests appurtenant thereto, including but not limited to, any streets or other public ways adjacent to such real property and any development rights, water or mineral rights owned by, or lease to, Seller, if any (the "SALE PROPERTY"). 2. ESCROW. Upon execution of this Agreement by Seller and Buyer, the parties shall cause an escrow (the "ESCROW") to be established with Chicago Title Insurance Company, 2415 E. Camelback Road, Suite 30, Phoenix, Arizona 85016 Escrow Officer: Jack Knott within three (3) business days ("ESCROW AGENT"). As used herein, the term "OPENING OF ESCROW" shall mean the day on which Escrow Agent receives a copy of this Agreement executed by both Buyer and Seller, and Escrow Agent shall immediately notify Seller and Buyer of the Opening of Escrow. The parties shall deliver to Escrow Agent an executed copy of this Agreement, which shall constitute instructions to Escrow Agent, and Escrow Agent shall execute this Agreement to acknowledge acceptance of the Escrow. 3. CLOSING. Consummation of the sale provided for herein (the "CLOSING") shall take place on the closing date (the "CLOSING DATE") defined in the Purchase and Sale Agreement (FF&E - North Scottsdale) by and between Buyer and Seller of even date herewith (the "FF&E PURCHASE AND SALE AGREEMENt") through the Escrow at the offices of Escrow Agent or at such other place as Buyer and Seller mutually agree in writing. At or prior to the Closing, each of the parties shall execute and deliver such documents and perform such acts as are provided for herein, or as are necessary, to consummate the transaction contemplated hereunder. All obligations of the parties to be performed at or prior to Closing are conditions precedent to the Closing as well as covenants. 4. PURCHASE PRICE AND PAYMENT TERMS. 4.1. PURCHASE PRICE. The total purchase price to be paid for the Sale Property shall be ONE MILLION FOUR HUNDRED SIXTY-TWO THOUSAND AND NO/100 DOLLARS ($1,462,000.00) (the "PURCHASE PRICE"), to be paid by Buyer to Seller in cash or by wire transfer of cash credit through Escrow at or before Closing. 4.2. INVESTMENT OF DEPOSITED FUNDS. All funds deposited by Buyer pursuant hereto shall be invested by Escrow Agent in such investments as may be directed from time to time by Seller and Buyer. All earnings on such invested funds shall belong to the party receiving said funds pursuant to the terms hereof (provided that if the sale of the Sale Property is consummated, Buyer shall receive a credit toward the purchase price, and a corresponding credit toward the cash payable by Buyer at Closing, in the amount of the accrued interest) and shall be paid at such time as said party receives said funds. 5. TITLE REPORT AND SURVEY. Promptly after Opening of Escrow, (i) Seller shall deliver to Buyer a copy of the existing ALTA survey of the Sale Property in Buyer's possession (the "SURVEY"), (ii) Escrow Agent shall issue to Buyer a preliminary title report incident to the issuance of the title policy referred to in Section 7.2, together with legible copies of matters shown on Schedule "B" thereto (the "TITLE REPORT"), and (iii) Buyer shall have prepared, at Buyer's expense, an update of the existing Survey (the "UPDATE"). 6. INSPECTION PERIOD. 6.1. INSPECTION. Within five (5) days of Opening of Escrow, Seller shall provide Buyer with any existing A.L.T.A. Survey Seller has in its possession regarding this property. Buyer warrants and represents that it will conduct, and will be responsible for, such examinations, inspections or tests as Buyer deems necessary and appropriate, and Buyer will comply with all federal, state and local laws which might have in any way related to any such examinations, inspections or tests. Buyer warrants and represents that it will not damage the Sale Property in the course of performing its investigations. Buyer shall, on demand by Seller, defend, hold harmless, reimburse and indemnify Seller from, for, of and against any and all direct and indirect, known and unknown, obligations, actions, liabilities, judgments, claims, demands, losses, damages, costs, including costs of defense, expenses and fees (including reasonable attorneys' fees and costs) arising from or relating to any such entry, examinations, inspections, tests or restoration of the Sale Property including without limitation any costs, expenses and fees (including attorneys' fees), incurred to establish a right to indemnification, regardless of whether a proceeding is instituted. Buyer's indemnity shall survive the Closing and any termination of this Agreement. Buyer acknowledges the importance of inspections, including tests, survey, and other studies to determine the value and condition of the Sale Property. Buyer acknowledges that more than one inspection can be required to perform the selected inspections. The inspections may include physical, environmental, and other types of inspections including, but not limited to, soil, square footage/acreage, designated flood hazard areas, wells, possible environmental hazards (including, but not limited to, radon gas, fuel or chemical storage tanks, hazardous waste, petrochemicals, pesticides, 2 industrial polymers, lead, sulfuric acid of high fertilizer concentrates, and other substances, materials or products which are not natural to the Sale Property or which are subject to regulation under environmental or public health and welfare laws and ordinances, location in a federal or state Superfund area), geologic conditions, location of property lines and water/utility use restrictions and fees for services (such as garbage or fire protection). Buyer also acknowledges the importance of further inquiries and consultations of governmental agencies, lenders, insurance agents, architects, and other appropriate persons and entities concerning the use of the Sale Property and the surrounding areas under applicable building, zoning, fire, health, and safety codes, and for evaluation of potential hazards. Buyer specifically releases Seller of any liability for any defects in the Sale Property, including, but not limited to, those which could have been discovered by such inspections. Buyer shall provide, at no cost, copies of any and all reports concerning the Sale Property obtained by Buyer, without representation or warranty. If, on or before 5:00 p.m. (Arizona time) on February 15, 2001 (the "REVIEW DEADLINE") Seller has not received written notice from Buyer of any objections that may arise in the course of its investigations, then Buyer shall be deemed to have approved all matters relating to the physical condition and use of the Sale Property, and shall thereafter waive any right to raise any objections with respect to the physical condition and/or use of the Sale Property (except with respect, and only with respect to, any Material New Matter (defined below). Buyer shall have the right to object to any new material adverse condition that arises after the Review Deadline and before the Closing Date (any such matter being referred to herein as a "MATERIAL NEW MATTER"); provided, however, Buyer must deliver to Seller written objection with respect to any Material New Matter on or before the date that is three (3) business days after Buyer obtains knowledge thereof. If Seller has not received written notice from Buyer of any objections to any Material New Matter within such three (3) business day period, then Buyer shall be deemed to have approved such Material New Matter(s), and shall thereafter waive any right to raise any objections with respect to such Material New Matter(s). Upon timely receipt of written objection(s) from Buyer, Seller shall thereafter have five (5) business days following its receipt thereof within which to notify Buyer in writing as to whether Seller, in its sole and absolute discretion, will cure any of the matters to which Buyer has objected, provided, however, Seller shall have no obligation whatsoever to cure any objections raised by Buyer. If Seller fails to notify Buyer within such five (5) business day period whether Seller will cure or remove the exceptions, defects or matters to which Buyer has objected, then (a) Seller shall be deemed to have elected not to cure such matter, and (b) Buyer shall elect either (i) to terminate this Agreement, or (ii) waive its objections and purchase the Sale Property subject to the matters objected to but which Seller has elected not to cure. If Seller timely notifies Buyer of its intention to cure any matter to which Buyer has objected, Seller shall have until Closing to cure such matter. 6.2. SOPHISTICATED PARTY. Buyer warrants and represents that it is a sophisticated party, knowledgeable and experienced in the acquisition of real property, and, that condition of title, survey results and inspections and investigations are very important aspects in the purchase and sale of real property. 3 7. CLOSING DOCUMENTS. 7.1. DEED AND OTHER CONVEYANCE DOCUMENTS. On or before the Closing Date, Seller and Buyer shall execute where indicated (or obtain the execution of), have acknowledged as appropriate, and deliver to Escrow Agent the following documents: (a) A Special Warranty Deed executed by Seller in favor of Buyer or its Assignee, as defined in Section 14.4, in the form attached hereto as EXHIBIT "B" (the "DEED"); (b) An Affidavit of Real Property Value executed by Buyer and Seller; (c) A Non-Foreign Affidavit executed by Seller in the form attached as EXHIBIT "C"; and (d) Such other documents as Buyer, Seller or Escrow Agent may reasonably request in connection with this transaction consistent with the terms and conditions hereof. 7.2. OWNER'S POLICY. At Closing, Escrow Agent shall furnish to Buyer (or its Assignee), at Buyer's expense, a standard coverage ALTA owner's title insurance policy (or, at Buyer's option, an extended coverage policy, subject to Buyer's payment of additional charges associated therewith as provided hereinafter) issued by Escrow Agent, or the unconditional commitment of Escrow Agent to issue such policy (which commitment shall be deemed made upon the recordation by Escrow Agent of the Deed), in the amount of the Purchase Price, insuring the title to the Sale Property in Buyer, subject only to the printed exceptions normally contained in such policies, and the matters approved by Buyer pursuant to SECTION 5. The policy shall be standard or extended coverage, at Buyer's option; provided, however, Buyer shall pay the premium for such policy. In no event shall Closing be extended because of Buyer's election of extended coverage. 7.3. INABILITY TO ISSUE. If Escrow Agent is unwilling or unable to issue the policy or commitment described above, then the Closing Date shall be extended for a period of up to fifteen (15) days, at Seller's option, to allow Seller, if it so elects, to attempt to eliminate the matter preventing issuance of the policy. If, however, Seller does not elect to so extend the Closing Date or if Escrow Agent remains unable or unwilling to issue the policy or commitment on the extended Closing Date, then this Agreement shall automatically terminate, and the parties hereto shall have no further liability to each other under this Agreement, except as otherwise specifically set forth in this Agreement. 8. REPRESENTATIONS AND WARRANTIES. 8.1. SELLER'S REPRESENTATIONS AND WARRANTIES. Seller hereby makes the following representations and warranties: 4 (a) Seller is duly organized, validly existing and in good standing under the laws of the state of Minnesota, is qualified to do business in Arizona and, subject only to approval of the Court, has full power and authority to enter into and to perform its obligations under this Agreement. (b) This Agreement and each of the documents and agreements to be delivered by Seller at the Closing, constitutes a valid, legally binding obligation of Seller, enforceable against Seller in accordance with its terms subject only to approval by the Court. (c) Seller is not a "foreign person" as defined in Section 1445 of the Internal Revenue Code of 1986, as amended, and any related regulations. 8.2. RELEASE FROM OTHER REPRESENTATIONS AND WARRANTIES. Seller is hereby released from all responsibility and liability regarding the condition, valuation or utility of the Sale Property. Buyer expressly acknowledges that Buyer has not relied on any warranties, promises, understandings or representations, express or implied, of Seller or any agent of Seller relating to the present or future physical condition, development potential, operation, income generated by, or any other matter or thing affecting or related to the Sale Property which are not contained in this Agreement and no such representation or warranty shall be implied. Buyer is acquiring the Sale Property in its present condition and state of repair, "AS IS". Buyer acknowledges that any and all engineering data, soil reports, or other information of any type which Buyer has received or may receive from Seller or Seller's agents is furnished without any warranty whatsoever. Buyer agrees that Buyer will not attempt to assert any liability against Seller for furnishing any such information. In particular, but without in any way limiting the foregoing, Buyer hereby releases Seller from any and all responsibility, liability and claims for or arising out of the presence on or about the Sale Property or any property in the vicinity of the Sale Property (including in the soil, air, structures and surface and subsurface water) of materials, wastes or substances that are or become regulated under, or that are or become classified as toxic or hazardous, under any Environmental Law, including, without limitation, petroleum, oil, gasoline or other petroleum products, byproducts or waste. As used herein, "Environmental Law" shall mean, as amended and in effect from time to time, any federal, state or local statute, ordinance, rule, regulation, judicial decision, or the judgment or decree of a governmental authority, arbitrator or other private adjudicator by which Buyer or the Sale Property is bound, pertaining to health, industrial hygiene, occupational safety or the environment, including, without limitation, the Comprehensive Environmental Response, Compensation & Liability Act of 1980, the Resource, Conservation & Recovery Act of 1976, and the Arizona Environmental Quality Act, Title 49, Arizona Revised Statutes, and all rules adopted and guidelines promulgated pursuant to the foregoing. 8.3. BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer hereby makes the following representations and warranties: (a) Buyer is duly organized, validly existing and in good standing under the laws of the state of its organization, is qualified to do business in Arizona and has full power and authority to enter into and to perform its obligations under this Agreement. The person executing this 5 Agreement on behalf of Buyer has full power and authority to do so and to perform every act and to execute and deliver every document and instrument necessary or appropriate to consummate the transactions contemplated hereby. (b) This Agreement and each of the documents and agreements to be delivered by Buyer at the Closing, constitute valid, legally binding obligations of Buyer, enforceable against Buyer in accordance with its terms. 9. CONDITIONS TO CLOSING. 9.1. SELLER'S CONDITIONS TO CLOSING. The following conditions are precedent to Seller's obligations to sell the Sale Property and deliver the Deed: (a) This Agreement shall not have terminated pursuant to any other provision hereof; (b) The FF&E Purchase and Sale Agreement (of which this Agreement is an attached schedule) shall not have terminated and shall close simultaneously herewith; (c) Buyer shall not be in material default of any of the terms and provisions required of Buyer hereunder; (d) All of Buyer's representations and warranties contained herein shall have been materially true when made and shall be materially true and correct as of the Closing Date; and (e) Entry of an order by the Bankruptcy Court in Seller's Chapter 11 case approving this Agreement and the sale of the Sale Property free and clear of all liens, encumbrances, claims, security interests and adverse interests of any kind pursuant to the Bankruptcy Code ss.363 (the "SALE ORDER"). 9.2. BUYER'S CONDITIONS TO CLOSING. The following conditions are precedent to Buyer's obligations to buy the Sale Property and deliver the Purchase Price: (a) This Agreement shall not have terminated pursuant to any other provision hereof; (b) The FF&E Purchase and Sale Agreement (of which this Agreement is an attached schedule) shall not have terminated and shall close simultaneously herewith; (c) Seller shall not be in material default of any of the terms and provisions required of Buyer hereunder; (d) All of Seller's representations and warranties contained herein shall have been materially true when made and shall be materially true and correct as of the Closing Date; 6 (e) Entry of the Sale Order; and (f) The simultaneous closing of the transaction set forth in the Real Estate Purchase and Sale Agreement Chicago Title Insurance Company Escrow No. 2015243-42 dated January 12, 2001 by and between Buyer, as seller, and Assignee, as buyer (the "CHURCH AGREEMENT"). 10. COMMISSIONS. Each party hereto represents and warrants to the other that it has not employed any other broker or finder in connection with the transaction 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 party shall defend and hold the other harmless from all liability and expense including, without limitation, reasonable attorneys' fees arising from any claim by any other broker, agent or finder for commissions, finder's fees or similar charges, because of any act of such party. 11. CONDEMNATION. In the event of condemnation or notice of condemnation of all or a substantial portion of the Sale Property prior to Closing, Buyer shall have the right to terminate this Agreement by written notice delivered to Seller and Escrow Agent no later than ten (10) days after the date of Buyer's receipt of notice of such condemnation. If Buyer elects to terminate this Agreement, the parties shall have no further obligations to each other under this Agreement, except as specifically set forth in this Agreement. If Buyer does not elect to terminate this Agreement, the parties shall proceed to Closing with no reduction in the purchase price and at Closing, Seller shall (i) pay to Buyer through Escrow any condemnation proceeds received by Seller with respect to the Sale Property, less fees, costs and expenses incurred by Seller in connection therewith; and (ii) assign to Buyer all of Seller's right, title and interest in and to any condemnation proceeds with respect to the Sale Property, less fees, costs and expenses incurred by Seller in connection therewith. 12. PRORATIONS, CLOSING COSTS. 12.1. PRORATIONS. At the Closing, the parties shall obtain all necessary information and shall prorate and adjust or direct Escrow Agent to prorate and adjust through Escrow, real estate taxes and assessments based on the most recent information and such proration shall be final. All cash on hand as of 12:01 a.m., Phoenix time, on the Closing Date and all cash in any operating or other accounts on the Closing Date shall belong to Seller. The existing insurance coverage for the Sale Property, if any, shall terminate at Closing and any refund in premium shall be paid to Seller. 12.2. CLOSING COSTS. All recording and similar charges shall be allocated between Buyer and Seller in Escrow Agent's customary manner and Escrow Agent's fees shall be paid one-half by Buyer and one-half by Seller; provided, however, that the defaulting party shall be responsible to pay any escrow cancellation fees if the Escrow fails to close. All other costs of Closing shall be allocated 7 between Seller and Buyer in accordance with the standard custom and practice of Escrow Agent. Seller and Buyer shall each pay their respective financial advisors' attorneys' and other professionals' fees. 12.3. POSSESSION. Seller will deliver and Buyer will accept possession of the Sale Property on the Closing Date. 13. REMEDIES. 13.1. SELLER'S REMEDIES. In the event of any default in this Agreement by Buyer, actual damages to Seller will be difficult to calculate but Buyer and Seller agree that the amount of Fifty Thousand and 00/100 Dollars ($50,000.00) ("LIQUIDATED DAMAGES") designated above is a reasonable approximation thereof. Accordingly, if Buyer defaults, Seller shall be entitled as its sole remedy, to terminate this Agreement and immediately upon such termination by Seller, Buyer shall pay to Seller, as Seller's sole remedy, Liquidated Damages and any other monies paid on behalf of Seller. If, however, Buyer contests or opposes Seller's right to collect Liquidated Damages or other sums or fails to cooperate with Seller in collecting the same, Seller shall also be entitled to the additional remedies provided for in SECTION 13.3 below. Nothing contained in this Section shall prevent Seller from enforcing Buyer's obligations and liabilities which survive a termination of this Agreement as to which Seller shall have all rights and remedies provided for or allowed by law or in equity. 13.2. BUYER'S REMEDIES. In the event of a default hereunder by Seller, then Buyer's sole and exclusive remedy shall be either to (i) terminate this Agreement or (ii) sue for specific performance of this Agreement. Buyer hereby expressly waives any and all claims for damages against Seller. As a condition precedent to any suit for specific performance, Buyer shall, on or before the Closing Date, shall have performed all of its obligations hereunder. 13.3. COSTS AND FEES. If either party hereto breaches any term of this Agreement, the breaching party agrees to pay the non-breaching party all attorneys' fees, expert witness fees, investigation costs, costs of tests and analysis, travel and accommodation expenses, deposition and trial transcript costs, court costs and other costs and expenses incurred by the non-breaching party in enforcing this Agreement or preparing for legal or other proceedings, whether or not instituted. If any legal or other proceedings are instituted, the party prevailing in any such proceeding shall be paid all of the aforementioned costs, expenses and fees by the other party, and if any judgment is secured by such prevailing party, all such costs, expenses, and fees shall be included in such judgment, attorneys' fees to be set by the court and not by the jury. 13.4. Intentionally Omitted. 13.5. WAIVER. Excuse or waiver of the performance by the other party of any obligation under this Agreement shall only be effective if evidenced by a written statement signed by the party so excusing. No delay in exercising any right or remedy shall constitute a waiver thereof, and no waiver by Seller or Buyer of the breach of any covenant of this Agreement shall be construed as a waiver of any preceding or succeeding breach of the same or any other covenant or condition of this Agreement. 8 13.6. Intentionally Omitted. 14. MISCELLANEOUS. 14.1. NOTICES. No notice, consent, approval or other communication provided for herein or given in connection herewith shall be validly given, made, delivered or served unless it is in writing and delivered personally, sent by overnight courier, or sent by registered or certified United States mail, postage prepaid, with return receipt requested, if to: Seller, at: THE TESSERACT GROUP, INC. 4515 East Muirwood Drive Phoenix, Arizona 85048 Attn: Lucian Spataro, Ph.D. With a copy to: BRYAN CAVE LLP Renaissance One Two North Central Avenue, Suite 2200 Phoenix, Arizona 85004 Attn: Robert J. Miller, Esq. Buyer, at: Education Property Investors, Inc. 300 Esplanade Drive, Suite 1865 Oxnard, California 93030 Attn: Julia Kopta, Esq., Legal Department With a copy to: Education Property Investors, Inc. 300 Esplanade Drive, Suite 1865 Oxnard, California 93030 Attn: Steve Korbin, Esq. Escrow Agent, at: Chicago Title Insurance Company 2415 E. Camelback Road, Suite 30 Phoenix, Arizona 85016 Attn: Mr. Jack Knott or to such other addresses as any party hereto may from time to time designate in writing and deliver in a like manner to the other party. Notices, consents, approvals, and communications given by mail shall be deemed delivered upon the earlier of forty-eight (48) hours after deposit in the United States mail in the manner provided above or upon delivery to the respective addresses set forth above if delivered personally or sent by overnight courier. 14.2. RIGHT TO BID. Buyer acknowledges and understands that the Court may consider higher and better offers for the Sale Property. Notwithstanding any other language to the contrary herein, Buyer acknowledges and agrees that Buyer shall not be entitled to receive any overbid protections, breakup fees or other buyer protections, if Buyer is not ultimately approved as the buyer of the Sale Property. 9 14.3. INTERPRETATION. The captions of the Sections of this Agreement are for convenience only and shall not govern or influence the interpretation hereof. This Agreement is the result of negotiations between the parties and, accordingly, shall not be construed for or against either party regardless of which party drafted this Agreement or any portion thereof. Time is of the essence of this Agreement. 14.4. SUCCESSORS AND ASSIGN. All of the provisions hereof shall inure to the benefit of and be binding upon the personal representatives, heirs, successors and assigns of Seller and Buyer. Buyer shall have no right to assign its interest hereunder without the prior written consent of Seller in Seller's sole and absolute discretion, and any such assignment shall not release Buyer hereunder, and any such assignment without Seller's consent shall be void at Seller's option. Seller hereby consents to the assignment of this Agreement to Thomas J. O'Brien, Bishop of the Roman Catholic Church of the Diocese of Phoenix ("ASSIGNEE"). If Buyer is a corporation, partnership, limited liability company or trust, the transfer or assignment of any stock, interest, membership or beneficial interest in such corporation, partnership, limited liability company or trust in excess of forty-nine percent (49%) shall be deemed an assignment within the meaning of this paragraph. 14.5. NO PARTNERSHIP, THIRD PERSON. It is not intended by this Agreement to, and nothing contained in this Agreement shall, create any partnership, joint venture or other similar arrangement between Seller and Buyer. No term or provision of this Agreement is intended to, or shall, be for the benefit of any person, firm, corporation or other entity not a party hereto (including, without limitation, any broker), and no such party shall have any right or cause of action hereunder. 14.6. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between and reflects the reasonable expectations of the parties pertaining to the subject matter hereof. All prior and contemporaneous agreements, representations and understandings of the parties, oral or written, are hereby superseded and merged herein. No change or addition is to be made to this Agreement except by a written agreement executed by all of the parties. Buyer shall not record this Agreement nor any memorandum thereof in the public records without the prior written approval of Seller, which approval may be withheld in Seller's sole and absolute discretion. 14.7. FURTHER DOCUMENTS. Buyer and Seller shall execute and deliver all such documents and perform all such acts as reasonably requested by the other party from time to time, prior to and following the Closing, to carry out the matters contemplated by this Agreement. 14.8. INCORPORATION OF EXHIBITS. All exhibits attached to this Agreement are by this reference incorporated herein. 14.9. ARIZONA LAW. This Agreement shall be governed by the laws of the State of Arizona and, as applicable, Title 11 of the United States Code (the "Bankruptcy Code"). 10 14.10. DATE OF PERFORMANCE. If the date of performance of any obligation or the last day of any time period provided for herein should fall on a Saturday, Sunday or legal holiday, then said obligation shall be due and owing, and said time period shall expire, on the first day thereafter which is not a Saturday, Sunday or legal holiday. Except as may otherwise be set forth herein, any performance provided for herein shall be timely made if completed no later than 5:00 p.m., Phoenix time, on the day of performance. The funds required from Buyer and all acts required of Buyer in order to close the Escrow pursuant hereto shall be deposited with Escrow Agent and be performed no later than 10:00 a.m., Phoenix time, on the Closing Date and shall be available for immediate distribution to Seller at Closing. 14.11. Intentionally Omitted. 14.12. COUNTERPARTS. This Agreement may be executed in any number of counterparts and delivered by facsimile transmission. Each such counterpart hereof shall be deemed an original, but all counterparts shall constitute but one agreement. 14.13. EXCULPATION. Notwithstanding anything to the contrary provided in this Agreement, the liability of Seller, if any, under this Agreement and any other document or agreement executed by Seller in connection with the Closing shall not extend to nor be enforceable against the assets of Seller or any partner or member of any partner in Seller except to the extent of their interest in the Sale Property. 14.14. BANKRUPTCY COURT APPROVAL. Seller shall file a motion seeking bankruptcy court approval of the transactions addressed herein promptly upon the execution of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. THE TESSERACT GROUP, INC., a Minnesota corporation By: /S/ LUCIAN SPATARO ---------------------------- Name: LUCIAN SPATARO Title: CFO "SELLER" EDUCATION PROPERTY INVESTORS, INC., a Nevada corporation By: /S/ JULIA KOPTA ---------------------------- Name: JULIA KOPTA Title: SENIOR VICE PRESIDENT "BUYER" 11 ACCEPTANCE BY ESCROW AGENT Escrow Agent agrees to act as escrow holder and Escrow Agent in accordance with the terms of this Agreement. ESCROW AGENT: By: /S/ JACK KNOTT ---------------------------- Name: JACK KNOTT Its: MANAGER 12 EXHIBIT "A" (Legal Description) EXHIBIT "B" SPECIAL WARRANTY DEED WHEN RECORDED, RETURN TO: ______________________________ ______________________________ ______________________________ ______________________________ SPECIAL WARRANTY DEED For Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, _________________________________ __________________________________ ("Grantor"), hereby grants, sells and conveys to ____________________________________________ ("GRANTEE"), that Sale Property located in Maricopa County, Arizona and legally described on EXHIBIT "A" attached hereto and incorporated herein by this reference, together with all interests, privileges and easements appurtenant thereto and any and all improvements located thereon (the "PROPERTY"). SUBJECT TO: current taxes not yet due and payable, assessments and any other liens arising therefrom, all reservations in patents, deed restrictions, if any, all easements, rights of way, covenants, conditions, restrictions, encroachments, liens, encumbrances, obligations and liabilities as may appear of record, all other matters that can be determined by a visual inspection or a complete and accurate survey of the Property, and those matters set forth on EXHIBIT "B". Notwithstanding any warranty which may otherwise be implied from the use of any word, phrase or clause herein, Grantor warrants title to the Property, subject to the matters referred to above, only against its own acts, but not the acts of any others. DATED as of this _____ day of ___________________, 200__. ___________________________________, ___________________________________ BY: _______________________________, _______________________________ By: ________________________ Name: ________________________ Title: ________________________ STATE OF ARIZONA ) ) ss. County of Maricopa ) The foregoing document was acknowledged before me this _____ day of _______________, 200__, by ____________________________, the ___________________ of ____________________________, a(n) ___________________________, for and on behalf of said ________________________________. IN WITNESS WHEREOF, I hereunto set my hand and official seal. ________________________________ Notary Public My commission expires: ________________________________ Exhibit "A" to the Deed Legal Description of the Property Exhibit "B" to the Deed Permitted Exceptions EXHIBIT "C" SELLER'S NON-FOREIGN AFFIDAVIT NON-FOREIGN AFFIDAVIT Section 1445 of the Internal Revenue Code of 1986 provides that a transferee of a United States Sale Property interest must withhold tax if the transferor is a foreign person. To inform the transferee that withholding tax is not required upon disposition of a U.S. Sale Property interest by ______________________________________________________________ ("Transferor") to ______________________________________________________________ ("Transferee"), the undersigned hereby certifies the following on behalf of the Transferor: 1. Transferor is not a foreign corporation, partnership, trust, estate, or individual as those terms are defined in the Internal Revenue Code and Income Tax Regulations; 2. Transferor's U.S. Employer Identification Number is _________________; and 3. Transferor's principal office is: ________________________________. Transferor understands that this certification may be disclosed to the Internal Revenue Service by Transferee and that any false statement made herein could be punished by fine, imprisonment, or both. Under penalties of perjury, I, the undersigned, declare that I have examined this certification and to the best of my knowledge and belief it is true, correct and complete, and I further declare that I have all authority to sign on behalf of Transferor. DATED this _____ day of _______________________, 200__. ___________________________________, ___________________________________ By: ____________________________ Name: ____________________________ Title: ____________________________ THIS AFFIDAVIT must be retained until the end of the fifth (5th) taxable year following the taxable year in which the transfer referred to above takes place. [ACKNOWLEDGMENT ON FOLLOWING PAGE] STATE OF ARIZONA ) ) ss. County of Maricopa ) The foregoing document was acknowledged before me this _____ day of _______________, 200__, by ____________________________, the ___________________ of ____________________________, a(n) ___________________________, for and on behalf of said ________________________________. IN WITNESS WHEREOF, I hereunto set my hand and official seal. ________________________________ Notary Public My commission expires: ________________________________ -----END PRIVACY-ENHANCED MESSAGE-----