-----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, SPSZVf36xrdY24TIc4MGvBjag9jkvXlAFg/70GUxRTZt7tSOGxeMe/WZE6uilcQW Jk17tVrj0/9y2o82FYhx2Q== 0000950147-01-501403.txt : 20010813 0000950147-01-501403.hdr.sgml : 20010813 ACCESSION NUMBER: 0000950147-01-501403 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20010627 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20010810 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: 1934 Act SEC FILE NUMBER: 001-11111 FILM NUMBER: 1705026 BUSINESS ADDRESS: STREET 1: 4515 E MUIRWOOD DR CITY: PHOENIX STATE: AZ ZIP: 85048 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-7325.txt CURRENT REPORT DATED 7-27-01 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) July 27, 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.) 4111 E. Ray Road Phoenix, Arizona 85044 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (480) 706-2500 4515 E. Muirwood Drive, Phoenix, Arizona 85048 (Former name or former address, if changed since last report.) ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. SALE OF SUNRISE PRESCHOOLS On July 27, 2001, Sunrise Educational Services, Inc. ("Sunrise"), a Delaware corporation and wholly owned subsidiary of The TesseracT Group, Inc., sold certain of its assets to Borg Holdings, Inc., an Arizona corporation ("Borg"). Sunrise made this sale pursuant to the terms of a Purchase and Sale Agreement, dated May 11, 2001, by and between Sunrise and Borg. In this transaction, Sunrise sold the majority of its remaining assets including equipment, real property interests, personal property, intellectual property and goodwill related to the operations of the Sunrise preschools. Additionally, Borg assumed certain liabilities connected with the operations of the Sunrise preschools. In consideration for the sale of its assets, Sunrise was to receive approximately $2,800,000 (plus reimbursements as stated in the Purchase and Sale Agreement (as amended)). Pursuant to an order of the United States Bankruptcy Court for the District of Arizona, a copy of which is filed as an exhibit to this report, Sunrise and Borg orally modified the Purchase and Sale Agreement to increase the purchase price of the assets from $2,800,000 to $3,000,000. A copy of the Purchase and Sale Agreement and the First Amendment to Purchase and Sale Agreement are filed as exhibits to this report. Reference is made to the Purchase and Sale Agreement (as amended) for a full statement of the terms and conditions of the transaction. ITEM 5. OTHER EVENTS. As previously disclosed, the TesseracT Group, Inc. and 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 of its bankruptcy petition. Therefore, the registrant does not include pro forma financial information reflecting the effect of the asset disposition described herein. Monthly Operating Reports for June 2001 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 99.2 and 99.3. 2 ITEM 7. FINANCIAL STATEMENTS; EXHIBITS. (b) Pro Forma Financial Information See Item 5 herein. (c) Exhibits Exhibit No. ----------- 10.1 Purchase and Sale Agreement, dated as of May 11, 2001, by and between Sunrise Educational Services, Inc. and Borg Holdings, Inc. 10.2 First Amendment to Purchase and Sale Agreement, dated as of June 5, 2001, by and between Sunrise Educational Services, Inc. and Borg Holdings, Inc. 99.1 Order of the United States Bankruptcy Court for the District of Arizona, dated July 20, 2001. 99.2 Monthly Operating Report of The TesseracT Group, Inc. for June 2001. 99.3 Monthly Operating Report of Sunrise for June 2001. 3 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: August 10, 2001 By /s/ Douglass E. Snell ----------------------------------- Douglass E. Snell Controller 4 EX-10.1 3 ex10-1.txt PURCHASE AND SALE AGREEMENT - SUNRISE Exhibit 10.1 PURCHASE AND SALE AGREEMENT (SUNRISE PRESCHOOLS) This PURCHASE AND SALE AGREEMENT (the "Agreement") is entered into as of the 11th day of May, 2001, by and between SUNRISE EDUCATIONAL SERVICES, INC., a Delaware 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 BORG HOLDINGS, INC. ("Buyer"). RECITALS A. Seller operates those certain private preschools ("Preschools") commonly referred to as the "Sunrise Preschools" as set forth on SCHEDULE A attached hereto and incorporated herein by reference. B. On October 6, 2000, Seller 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 as defined below and set forth in Article 2.1 of this Agreement and assume certain liabilities of Seller in connection with Seller's operations of the Preschools on the terms and conditions set forth in this Agreement and in accordance with Bankruptcy Code ss.ss. 363 and 365. D. Seller further desires, subject to the approval of the Court, to assign, and Buyer desires to assume, the management agreement Seller has in connection with Seller's operations of the Preschool set forth on SCHEDULE D (the "Preschool Operation") on the terms and conditions set forth in this Agreement and in accordance with the Bankruptcy Code ss. 365. E. In addition, Buyer and Seller further desire, subject to the approval of the Court, to enter into such other agreements that effectuate the assignment of the Leases and other contracts by Seller for the Preschools' sites of operation and the assumption of those Leases by Buyer, as fully set forth below. F. 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 Preschools from Seller to Buyer. G. Buyer has completed its due diligence of the Preschools and all other matters addressed in this Agreement. H. The parties hereto acknowledge that (i) they intend the transaction contemplated under this Agreement to be an asset purchase, including Seller's rights to the name "Sunrise Preschools" or "Sunrise Educational Services, Inc.," 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: I.1 ACCOUNTS RECEIVABLE. The term "Accounts Receivable" shall mean all amounts owing to Seller for services rendered as part of its Business. I.2 AFFILIATE. The term "Affiliate" shall mean any person that directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with BORG HOLDINGS, INC., an Arizona corporation. I.3 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 1.3 attached hereto. Buyer assumes no liability for any contracts not expressly assumed by Buyer. I.4 BUSINESS. The term "Business" shall mean Seller's operations conducted under the name "Sunrise," "Sunrise Preschools," or "Sunrise Educational Services, Inc.," at the Preschools and at any other location within the State of Arizona. I.5 CLAIM. The term "Claim" shall be given the same meaning as provided to such term under Bankruptcy Codess. 101 (5). I.6 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, as defined in Article II, following approval by the Bankruptcy Court; (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, following entry of the Section 365 Order. I.7 CLOSING DATE. The term "Closing Date" shall mean the date on which the Closing occurs which shall not be later than ten (10) days after (i) entry of Sale Orders, or (ii) upon Buyer obtaining Buyer's Licenses, whichever is later. The Court order approving the Sale Motions shall be entered by June 22, 2001, unless such date is extended as mutually agreed in writing by the parties hereto. 2 I.8 EQUIPMENT. The term "Equipment" shall mean all furniture, fixtures, office equipment, computers, printers, all of Seller's rights to any building improvements, motor vehicles, vans, and other tangible personal property owned by Seller as specifically set forth on SCHEDULE 1.8 attached hereto. I.9 LEASES. The term "Leases" shall mean those certain Leases listed on SCHEDULE 1.9 in which Seller leases the real property for each of the Preschools. When the term "Lease" is used, it shall refer to a particular lease of the real property for a particular Preschool. I.10 PRESCHOOL OPERATION. The term "Preschool Operation" shall refer to the Preschool site where Preschool services are provided under the management agreement dated April 26, 1996 between Seller and Swift Trucking. I.11 PRESCHOOLS. The term "Preschools" shall have the meaning set forth in Recital A above. When used singularly, the term "Preschool" shall refer to one of the applicable Preschools listed on SCHEDULE A. I.12 REAL PROPERTY. The term "Real Property" shall refer to the real property upon which each of the Preschools are located as listed in SCHEDULE 1.12. I.13 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. I.14 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) assume each Lease, as modified, as it relates to the applicable Real Property listed on SCHEDULE 1.12; and (ii) assume the Assumed Contracts, the form of which shall be agreed to by the parties hereto. I.15 SALE ORDERS. The term "Sale Orders" shall collectively mean the Section 363 and Section 365 Orders. I.16 SIERRA VISTA PRESCHOOL. The term "Sierra Vista Preschool" shall mean the preschool listed on SCHEDULE 1.16. I.17 SOFTWARE. The term "Software" shall mean all software used in connection with the Preschools and licenses to use such software specifically set forth on SCHEDULE 1.17 attached hereto. 3 Article II PURCHASE AND SALE II.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"): II.1.1 EQUIPMENT AND THE ASSUMED CONTRACTS. The Equipment and the Assumed Contracts. Buyer shall be responsible for all costs associated with the transfer of titles to Buyer for the vehicles listed as Equipment, and Buyer, within ten (10) business days after Closing, shall provide to Seller evidence of such transfers. II.1.2 OTHER PERSONAL PROPERTY. In addition to the Equipment, any and all other tangible personal property utilized by Seller in connection with the Business conducted at the Preschools and located those facilities, including, but not limited to, supplies-on-hand, and all marketing and promotional materials. II.1.3 RECORDS, FILES AND RELATED MATERIALS. Copies of all records, files, invoices, student lists, employee files, accounting records, business records, operating information and other data of Seller relating to the Preschools. II.1.4 GOODWILL. All of Seller's goodwill that relates to the Preschools. II.1.5 INTELLECTUAL PROPERTY. Assignment to Buyer of Seller's (i) trademarks, service marks, and trade names listed on SCHEDULE 2.1; (ii) curriculum materials, procedure manuals, client contracts, operational forms, procedure and marketing materials, and policy manuals; and (iii) right to use the name "Sunrise Preschools" and/or "Sunrise Educational Services, Inc." as provided by such trademarks, service marks and trade names listed in SCHEDULE 2.1. Buyer will permit Seller to use the trade name in corporate and/or bankruptcy matters up until substantial consummation of the debtor's Chapter 11 Plan. II.1.6 SOFTWARE. Rights to use Software, provided that Buyer obtains all necessary consents to assignment from the respective software manufacturers. II.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"): II.2.1 CONSIDERATION. The consideration delivered by Buyer to Seller pursuant to this Agreement. II.2.2 INTELLECTUAL PROPERTY. Buyer shall not obtain rights to the use of (i) the trade name or service mark "Tesseract" or (ii) any intellectual property of the Seller specifically listed in SCHEDULE 2.2.2 herein. 4 II.2.3 INSURANCE POLICIES. Seller's insurance policies and rights thereunder, including, but not limited to, general liability, vehicular and workers' compensation insurance held by Seller. II.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, and Seller's use of the name "Sunrise Educational Services, Inc." or "Sunrise" or any variation of such name as it is used exclusively by Seller for corporate matters related to its bankruptcy case until substantial consummation of Debtor's Plan of Reorganization. II.2.5 PHYSICAL ASSETS AND REAL PROPERTY OF THE PRESCHOOL OPERATION. All physical assets, personal property, right or title in that real property located at the Preschool listed in SCHEDULE 1.16 and known as the "Sierra Vista Preschool." II.2.6 PRESCHOOL LICENSE. Seller's license(s) issued by the Arizona Department of Health Services ("ADHS") to operate the Preschools. II.2.7 CASH AND ACCOUNTS RECEIVABLE. Seller's cash and Accounts Receivable accrued prior to Closing, including, but not limited to, the Government Payments referred to in SECTION 7.3. Article III ASSUMPTION OF LIABILITIES III.1 ASSUMED LIABILITIES. At Closing, Buyer shall not assume any of the Seller's liabilities other than the Assumed Contracts and all liabilities directly arising under the Assumed Contracts and Leases from and after the Closing (the "Assumed Liabilities"). No other liabilities incurred by the Seller prior to Closing shall be assumed by the Buyer. Notwithstanding the above sentence, the Buyer shall only be obligated to pay, perform, or discharge in accordance with their terms the assumed obligations hereunder that first become performable on or after the Closing Date. Buyer shall fully and faithfully perform all duties and obligations, due or owing after Closing, of Seller with respect to the Assumed Liabilities. III.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. 5 Article IV TERMS OF PAYMENT IV.1 PAYMENT DUE AT CLOSING. At Closing, Buyer shall pay to Seller, in immediately available U.S. funds, an amount equal to Two Million Eight Hundred Thousand and No/100 Dollars ($2,800,000,00.00) (the "Purchase Price") less (i) the amount of the Deposit delivered by Buyer to Seller in accordance with SECTION 4.2 below. IV.2 DEPOSIT. Buyer delivered and Seller accepted a cash Deposit in the amount of $100,000.00 (the "Deposit") in connection with the executed Letter of Intent, 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 as set forth in Article XII of this Agreement; (ii) if Seller otherwise refuses to close the transactions contemplated in this Agreement; (iii) if the Court does not approve a sale of the Purchased Assets to Buyer on or before June 22, 2001; or (iv) if the transaction does not close for reasons of Force Majeure as provided in Section 17.27. If the Closing does not occur on or before the Closing Date due to any event described in the immediately preceding (i) or (ii), and Buyer and Seller have not mutually agreed in writing to extend the Closing Date, then Seller shall immediately transfer the Deposit to Buyer. 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: V.1 CORPORATE STATUS. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is qualified to do business in the State of Arizona. V.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. V.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. V.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. 6 V.5 FINANCIAL STATEMENTS. Except that Seller's Financial Statements (as defined below) do not comply with generally accepted accounting principles consistently applied ("GAAP"), Seller's financial statements, for the period January 1 through March 31, 2001, accurately and truthfully reflect the financial performance and condition of the Seller. 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: VI.1 ORGANIZATION. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Arizona. VI.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. VI.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 VII.1 PRESCHOOLS. Buyer shall diligently pursue a license (collectively, "Buyer's Licenses") from the Arizona Department of Health Services ("ADHS") to operate each of the Preschools (the "Preschool Licenser"), and Buyer shall be responsible for reimbursing Seller for all hard costs and expenses Seller incurred to assist Buyer in connection therewith, including, but not limited to, any and all facility-related expenses required by ADHS ("Preschool Expenses"), not to exceed Fifteen Thousand Dollars ($15,000.00). Buyer shall only be responsible for such Preschool Expenses if Buyer receives Buyer's Licenses. In entering this Agreement, Buyer warrants that there are no material violations and it currently has licenses in good standing with the ADHS. VII.2 GOVERNMENT PAYMENTS AND ACCOUNTS RECEIVABLE. As of the date hereof, Seller estimates that Seller has approximately $225,000.00 in revenues due on behalf of students at the Preschools which has been billed to the State of Arizona, but is as of yet uncollected, by Seller for April, 2001 (the "Government Payments"). For informational purposes only, see SCHEDULE 7.2 for a 7 breakdown of the Accounts Receivable owed to Seller. Buyer agrees that any and all Accounts Receivable listed in SCHEDULE 7.2 (as this schedule is updated at Closing), including, but not limited to, Government Payments, for services rendered by Seller prior to the Closing Date will be immediately forwarded to Seller upon Buyer's receipt. Buyer also agrees that, after the Closing, Seller shall have the right to audit Buyer's records to determine that all such amounts are forwarded to Seller. If Seller receives any accounts receivables for services rendered by Buyer following the Closing Date, Seller agrees to immediately forward all such receivables to Buyer. VII.3 LEASES. Seller is in the process of negotiating rent reductions with the landlords of the Leases, and Seller shall continue to negotiate such rent reductions and extensions of lease terms with the input and cooperation of Buyer. Seller, with Buyer's assistance, shall enter into written modifications with each of the landlords of the Leases to reduce the aggregate monthly rent on all Leases by a dollar amount that is not less than ten percent (10%) of the current base monthly rent due under such Leases; provided, however, that Seller shall have the option to pay Buyer cash at Closing in the amount of $50,000.00 in lieu of obtaining base rent reductions with respect to any three (3) of the Leases for purposes of calculating the ten percent (10%) rent reduction. VII.4 SELLER COOPERATION. Seller agrees that it will make reasonable efforts to have its senior employees who have knowledge of the operation of the Preschools available to discuss such operations with the Buyer until sixty (60) days after Closing. In addition, Seller will cooperate with Buyer in Buyer's application for Buyer's Licenses subject to Buyer's reimbursement obligations set forth herein. The Closing is expressly subject to licensing approval for all of the Preschools by the ADHS to allow the Buyer to operate the Preschools. If Buyer does not obtain Buyer's Licenses due to Buyer's failure to qualify as a licensee prior to July 30, 2001 (unless such date is extended by mutual written consent), the Buyer will be entitled to an immediate return of the Deposit referred to in SECTION 4.2 LESS Seller's actual costs and expenses, including attorneys' fees, related to this contemplated transaction with Buyer in an amount not to exceed Forty Thousand and No/100 Dollars ($40,000.00). Article VIII EMPLOYEES VIII.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 each of the Preschools. VIII.2 EMPLOYMENT OF SELLER'S EMPLOYEES AT THE PRESCHOOLS. At Closing, Seller will terminate all employees of Sunrise Educational Services, Inc. At Closing, Buyer agrees to employ all of Seller's employees currently enrolled at the Preschools at a similar wage; however, this section in no respect consists of a contract or an agreement between Buyer and any party that gives rise to rights of third parties. Buyer will no longer employ those employees who are unable to work and are receiving workers' compensation at the time of the Closing. 8 VIII.3 EMPLOYEE SOLICITATIONS. Buyer shall be entitled to reasonable access to all employees related to the Preschools for purposes of interviewing these individuals. VIII.4 WORKERS' COMPENSATION. Seller agrees to assume all responsibility for liability arising from workers' compensation claims, which arise out of incidents occurring prior to Closing. Buyer shall be responsible for all claims which arise out of, or are based upon, incidents which occur subsequent to Closing. To the extent of the actual knowledge, without investigation, of Mike Lynch, in his capacity as CEO of Seller, Seller currently has no workers' compensation claims pending in the State courts. Article IX INDEMNITIES IX.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, and shall not exceed Fifty Thousand Dollars ($50,000.00). IX.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, not to exceed Fifty Thousand Dollars ($50,000.00). Such indemnification shall include any claims pertaining to events or actions occurring after the date of Closing. Article X CLOSING X.1 CLOSING. Closing shall occur at the law offices of Bryan Cave LLP, in Phoenix, Arizona. If the Court enters the Sale Orders by June 22, 2001, and the Closing does not occur due to any event described in SECTION 4.2(I) OR (II), then this Agreement may be terminated by Buyer or Seller, and Buyer shall, subject to the approval of the Court, be entitled to reimbursement of its actual costs and expenses, including attorneys' fees, related to this contemplated transaction with Seller in an amount not to exceed Forty Thousand and No/100 Dollars ($40,000.00). X.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. 9 Article XI PRORATIONS The following costs and expenses shall be prorated as of the Closing Date: XI.1 Personal property taxes and any other assessments related to the Purchased Assets, including, but not limited to, all accounts payable of Seller for services as of the Closing Date; XI.2 Charges for utilities servicing the Preschools, including, without limitation, charges or gas, electricity, water, sewer, cable television, and telephone services; and XI.3 Any other reasonable expenses approved in writing by Buyer and prepaid by Seller related to the operation of the Preschools. 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 ease 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: XII.1 CONTINUED TRUTH OF WARRANTIES. All of the representations and warranties of Seller contained herein shall continue to be true and correct at Closing. XII.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 on or before Closing. XII.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. XII.4 LITIGATION. With the exception of the pending Chapter 11 case, 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. XII.5 COURT ORDERS. The Court shall issue the Sale Orders on or before June 22, 2001 (the "Sale Orders") that (a) approve a sale of the purchased assets to Buyer pursuant to Section 363 and Section 365 of the Bankruptcy Code, free and clear of liens, claims and interests (except to the extent securing an assumed liability), (b) contain findings of fact and provide that Buyer is a good faith 10 purchaser entitled to the protections of Section 363(m) of the Bankruptcy Code, (c) authorize the assumption by Seller and assignment to Buyer of all assumed real property leases (as modified) and assumed contracts in connection with this Agreement, (d) approve the repayment of the reimbursement right referenced in this Agreement, and (e) are otherwise reasonably acceptable to Buyer and Seller. XII.6 LICENSURE. Buyer has obtained Buyer's Licenses. XII.7 SELLER'S ORDINARY COURSE OF BUSINESS. Seller has continued to operate its Business during the period between the date hereof and the Closing Date in the ordinary course under the circumstances (with reference to Seller's filing for Chapter 11 relief with the Court) and in compliance with all applicable laws and regulations. Seller shall use all commercially reasonable efforts to maintain the Business such that the Business does not experience any materially adverse change. 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: XIII.1 CONTINUED TRUTH OF WARRANTIES. All of the representations and warranties of Buyer contained herein shall continue to be true and correct at Closing. XIII.2 PERFORMANCE OBLIGATIONS. Buyer shall have fully performed or tendered performance of each and every one of its obligations hereunder which by its terms is capable of performance on or before Closing. XIII.3 DELIVERY OF CLOSING DOCUMENTS. Buyer shall have tendered delivery to Seller of all the documents, in form and substance reasonably satisfactory to Seller, required to be delivered to Seller by Buyer on or before Closing pursuant to this Agreement. XIII.4 LITIGATION. With the exception of the pending Chapter 11 case, 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. XIII.5 COURT ORDERS. The Court shall issue the Sale Orders on or before June 22, 2001 (the "Sale Orders") that (a) approve a sale of the purchased assets to Buyer pursuant to Section 363 and Section 365 of the Bankruptcy Code, free and clear of liens, claims and interests (except to the extent securing an assumed liability), (b) contain findings of fact and provide that Buyer is a good faith purchaser entitled to the protections of Section 363(m) of the Bankruptcy Code, (c) authorize the assumption by Seller and assignment to Buyer of all assumed real property leases and assumed contracts in connection with this Agreement, (d) approve the repayment of the reimbursement right referenced 11 in this Agreement, and (e) are otherwise reasonably acceptable to Buyer and Seller. XIII.6 APPROVAL. Buyer has obtained the consent to assignment of the Leases (as modified) to Buyer from the landlords for the respective Leases. Article XIV TERMINATION XIV.1 TERMINATION RIGHTS. This Purchase Agreement and the transactions contemplated hereby maybe terminated at any time prior to the Closing Date with written notice thereof (a "Termination Notice") by any of the following: (a) by written mutual written consent of Seller and Buyer at any time; or (b) by Buyer or Seller alone in writing, if any of the conditions set forth in Article XII or Article XIII have not been or are not capable of being satisfied by the Closing Date. Article XV ITEMS TO BE DELIVERED AT CLOSING BY SELLER At Closing, Seller shall, unless waived in writing by Buyer, deliver the following items, each in form and substance reasonably acceptable to Buyer and Buyer's counsel, to Buyer: XV.1 BILL OF SALE. A duly executed bill of sale selling, assigning, transferring, and conveying the Purchased Assets. XV.2 CERTIFIED RESOLUTION. A copy of the resolution of the Board of Directors of Seller authorizing the execution and performance of this Agreement. XV.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. XV.4 OTHER CLOSING DOCUMENTS. A duly executed assignment of Seller's intellectual property pursuant to this Agreement, and a duly executed assignment of each Lease. Article XVI 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: 12 XVI.1 CERTIFIED RESOLUTION. A copy of the resolutions of the Executive Director of Buyer or other appropriate representative(s) author/zing the execution and performance of this Agreement. XVI.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. XVI.3 THE PURCHASE PRICE. The Purchase Price. XVI.4 OTHER CLOSING DOCUMENTS. A duly executed agreement assuming the Purchased Assets, including, without limitation, each Lease and the Assumed Contracts. Article XVII MISCELLANEOUS XVII.1 BUYER'S LIABILITY. Notwithstanding anything in this Agreement to the contrary, in no event shall Buyer be liable for any amount in excess of the Deposit. XVII.2 RIGHT TO BID. Buyer acknowledges and understands that the Court may consider higher and better offers. If Buyer is outbid in Court and another buyer buys the Purchased Assets for at least Two Million Eight Hundred Forty Thousand Dollars ($2,840,000.00) and, therefore, the Agreement is not approved by the Court, Buyer shall be entitled to the reimbursement of its actual out-of-pocket expenses and costs incurred in this transaction, including attorneys' fees, in an amount not to exceed Forty Thousand and No/100 Dollars ($40,000.00) and will be entitled to the return of the Deposit referred to in SECTION 4.2 to be returned within ten (10) days of the entry of the Bankruptcy Court's Order not approving this Agreement. In addition, if a 363 Motion and 365 Motion are not filed with the Court within ten (10) days from the execution of this Agreement, Buyer is entitled to the return of the Deposit referred to in SECTION 4.2. Buyer shall provide adequate records, receipts and other documents to demonstrate such reimbursable expenses. XVII.3 ACQUISITION PROPOSALS. Neither Seller nor any of their affiliates nor any of their affiliates' respective directors, officers, employees, agents or representatives shall solicit, or initiate either directly or indirectly, any inquiries, discussions or proposals for an acquisition proposal or engage in or continue any discussions with any party that has made or who make any acquisition proposal until after a motion requesting a hearing of the 363 and 365 Motions has been filed by Seller, provided that, Seller may respond to any unsolicited proposals received from a third party relating to an acquisition proposal during such period. By no later than three (3) business days prior to the final hearing on Court approval of this transaction, Seller will provide Buyer with all written alternative bids received by Buyer regarding any of the assets that are the subject of this Agreement; provided, however, that such written alternative bids will be redacted so that the identity of such alternative bidders will not be disclosed to Buyer. 13 XVII.4 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. XVII.5 USE OF INTELLECTUAL PROPERTY AND OTHER INFORMATION. Except in connection with Seller's completion of such administrative, ministerial or other matters as may be required to effectuate an orderly conclusion of winding up of the business affairs of Seller, after the Closing Date, Seller shall not communicate, disclose, divulge, or use for their own benefit or for the benefit of any other person or entity, or misuse in any way any of the intellectual property or other proprietary or confidential information of Buyer relating to the business or the purchased assets except as consented to by Buyer in writing. XVII.6 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. XVII.7 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. XVII.8 TRANSITION COOPERATION. Buyer agrees to provide Seller with the list of all of Seller's employees that Buyer intends to hire, no later than five (5) business days after execution by both parties of this Agreement. Seller and Buyer have agreed to cooperate in an orderly transition of administrative and clerical services for sixty (60) days following the Closing (the "Transition Period"). Seller and Buyer will equally divide the salary cost of accounting and information services personnel during this period, based upon the allocable portion of the salary and other employee costs of any employees who work for both Buyer and Seller during the Transition Period. Buyer agrees that Seller shall have an account/information technology employee of Seller's choice available for fifty percent (50%) of the employee's work schedule to assist Seller. Buyer shall indemnify, defend and hold harmless Seller for, from and against any and all claims, causes of action, costs, expenses and liabilities resulting from Buyer's employment of any employee pursuant to this paragraph, including, without limitation, disability claims, wrongful termination claims, harassment claims, discrimination claims, and claims relating to vacation, sick leave, wages, salaries or other employee benefits, and any liability as a result of actions by such employees. Seller shall indemnify, defend and hold harmless Buyer for, from and against any and all claims, causes of action, costs, expenses and liabilities resulting from Buyer's employment of any employee pursuant to this paragraph, including, without limitation, disability claims, wrongful termination claims, harassment claims, discrimination claims, and claims relating to vacation, sick leave, wages, salaries or other employee benefits, and any liability as a result of actions by such employees. XVII.9 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 14 its obligations to Close. Any such waiver shall be valid only if contained in a writing signed by the waiving party. XVII.10 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. XVII.11 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: Mike Lynch, Chief Executive Officer The TesseracT Group, Inc. 4515 East Muirwood Drive Phoenix, Arizona 85048 Copy To: Susan E. Klemmer, Esq. Bryan Cave LLP Two North Central Avenue Phoenix, Arizona 85004 To Buyer: BORG HOLDINGS, INC. c/o Randall Gusikoski Nine Montia Irvine, California 92620 BORG HOLDINGS, INC. c/o Robert Orsi 222 Via Arabella San Dimas, California 91773 Copy To: Michael Reynolds, Esq. Greenberg Traurig LLP 2375 East Camelback Road, Suite 700 Phoenix, Arizona 85016 XVII.12 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 XVII.13 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. XVII.14 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. XVII.15 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. XVII.16 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. XVII.17 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. XVII.18 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. XVII.19 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: XVII.19.1 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. XVII.19.2 References to the plural include the singular, the singular the plural and the part the whole. XVII.19.3 The words "include," "includes," and "including" are not limiting. XVII.19.4 A reference to any law includes any amendment or modification to such law which is in effect on the relevant date. 16 XVII.19.5 A reference to any person or entity includes its successors, heirs and permitted assigns. XVII.19.6 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. XVII.19.7 All Schedules to this Agreement constitute material terms of this Agreement and are incorporated fully into the terms of this Agreement. XVII.20 TIME IS OF THE ESSENCE. Time is of the essence in the performance and observance of all obligations and duties under this Agreement. XVII.21 ATTORNEYS' FEES. Each party shall bear its own legal fees and costs incurred in the negotiation and closing of this transaction, and 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. XVII.22 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. XVII.23 ASSIGNMENT. This Agreement and the rights, duties and obligations hereunder may not be assigned or delegated by any party without the prior written consent of the other party or parties; provided that Buyer may, without the prior consent of Seller, collaterally assign this Agreement and/or its rights and obligations hereunder (a) as security to any lender providing financing for the transactions contemplated hereby (and any refinancing thereof), or (b) to an Affiliate of Buyer. Subject to the foregoing sentence, any assignment of rights or delegation of duties or obligations hereunder made without the written consent of the other party hereto shall be void and be of no effect. XVII.24 SUCCESSORS AND ASSIGNS. This Agreement and the provisions hereof shall be binding upon each of the parties, their successors and permitted assigns. XVII.25 SEVERABILITY. If any part of this Agreement for any reason shall be declared illegal, invalid or unenforceable, such decision shall not affect the validity of any remaining portion, which shall remain in full force and effect, provided, however, that to the extent a substantially material provision is altered by the Sale Orders, this Agreement is voidable by the adversely effected party (whether Buyer or Seller). In addition, in lieu of such provision, there shall automatically be added as a part of this Agreement a provision similar in 17 terms to such illegal, invalid or unenforceable provisions so that the resulting reformed Agreement is legal, valid and enforceable. XVII.26 RELEVANT INFORMATION. Buyer and Seller agree that the financial information attached hereto as SCHEDULE 17.26 is relevant to this transaction, and should be considered by all parties. XVII.27 FORCE MAJEURE. Force Majeure shall mean the occurrence of any of the following events which will excuse such obligations of Seller and Buyer as they are rendered impossible or reasonably impracticable for so long as such event continues or for a period equal to the delay in the critical path of completing the performance of the impaired obligations as the case may be: delays caused directly or indirectly by strikes, lockouts, the unavailability of labor or materials, Acts of God, governmental restrictions, war insurrection, rebellion, riot, civil disorder, fire, explosion, windstorm, hail, snow, extreme weather conditions, rain, flood, damage from aircraft, vehicles, or smoke, or by any other casualty of a substantial enough nature to cause delay. Notwithstanding the foregoing, the financial capacity of Buyer to pay the Purchase Price is not an event of Force Majeure, and any casualty relating to the Purchased Assets shall be construed in accordance with SECTION 17.13 of this Agreement. IN WITNESS WHEREOF, the parties hereto have set their hands effective the date set forth above. SUNRISE EDUCATIONAL SERVICES, INC., a Delaware corporation By /s/ Michael A. Lynch ----------------------------------------- Name Michael A. Lynch --------------------------------------- Title CEO -------------------------------------- SELLER BORG HOLDINGS, INC., an Arizona corporation By /s/ Robert Orsi ----------------------------------------- Name Robert Orsi --------------------------------------- Title President ------------------------------------- BUYER 18 LIST OF SCHEDULES SCHEDULE A - List of Preschools SCHEDULE D - Preschool Operation (the Preschool with the management agreement) SCHEDULE 1.3 - List of Assumed Contracts SCHEDULE 1.8 - List of Equipment SCHEDULE 1.9 - List of Leases SCHEDULE 1.12 - List of Real Property where Preschools are located SCHEDULE 1.16 - Sierra Vista Preschool SCHEDULE 1.17 - List of Software SCHEDULE 2.1 - List of Seller's trademarks, service marks, and trade names SCHEDULE 2.2.2 - Seller's Excluded intellectual property SCHEDULE 7.2 - Seller's Account Receivables (to be updated at Closing) SCHEDULE 17.26 - Relevant Information 19 EX-10.2 4 ex10-2.txt FIRST AMENDMENT TO PURCHASE & SALE AGREEMENT Exhibit 10.2 FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT (SUNRISE PRESCHOOLS) This FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT (the "Amendment") is entered into as of the 5th day of June, 2001, by and between SUNRISE EDUCATIONAL SERVICES, INC., a Delaware 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 BORG HOLDINGS, INC. an Arizona corporation ("Buyer"). Unless otherwise specifically defined herein, capitalized terms used in this Amendment shall have the meanings set forth in the Agreement (as defined below). RECITALS A. Seller and Buyer executed the Purchase and Sale Agreement dated as of May 11, 2001 (the "Agreement"), whereby Seller agreed to sell and Buyer agrees to buy certain assets and assume certain liabilities in connection with Seller's operations of the Preschools on the terms and conditions set forth in the Agreement in accordance with the Bankruptcy Code and as approved by the Court. B. Seller and Buyer desire to amend the terms of the Agreement to provide Seller with a portion of the rental space at School No. 113 to conduct affairs of Seller and/or The TesseracT Group, Inc.; AMENDMENT NOW, THEREFORE, in consideration of TEN AND NO/100 DOLLARS ($10.00) and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. LEASE. Buyer agrees that, following the Closing, Buyer shall lease to Seller, and Seller shall lease from Buyer, the space shown on EXHIBIT A in the building on the premises located at 4111 E. Ray Road, Phoenix, Arizona ("Property"), along with non-exclusive rights to the common areas which include but are not limited to, parking spaces, ingress and egress from the parking lot, and access to the Property through the outside door of the Property, for a period of sixty (60) days beginning at the on the Closing Date (the "Lease Term"). Buyer and Seller agree that the rental amount for the Property during the Lease Term shall be $0.00. Buyer agrees to cooperate in all respects with Seller. Seller shall not be liable for any rent of any nature whatsoever for use of the Property and Seller shall be able to remove any and all personal property not included in the Purchased Assets (as defined in the Purchase Agreement). 2. REIMBURSEMENT OF EQUIPMENT INSTALLATION COSTS. At Closing, Buyer agrees that it will reimburse Seller for Seller's costs and expenses for phone and speaker system installation in the amount of EIGHTEEN THOUSAND THIRTY-FIVE AND 38/100 DOLLARS ($18,035.38). 3. 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. 4. 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. 5. 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: 5.1 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. 5.2 References to the plural include the singular, the singular the plural and the part the whole. 5.3 The words "include," "includes," and "including" are not limiting. 5.4 A reference to any law includes any amendment or modification to such law which is in effect on the relevant date. 5.5 A reference to any person or entity includes its successors, heirs and permitted assigns. 5.6 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. 5.7 All Schedules to this Agreement constitute material terms of this Agreement and are incorporated fully into the terms of this Agreement. 6. TIME IS OF THE ESSENCE. Time is of the essence in the performance and observance of all obligations and duties under this Agreement. 7. ATTORNEYS' 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. 2 8. 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. 9. ASSIGNMENT. This Agreement and the rights, duties and obligations hereunder may not be assigned or delegated by any party without the prior written consent of the other party or parties; provided that Buyer may, without the prior consent of Seller, assign this Agreement and/or its rights and obligations hereunder (a) as security to any lender providing financing for the transactions contemplated hereby (and any refinancing thereof), or (b) to an Affiliate of Buyer. Subject to the foregoing sentence, any assignment of rights or delegation of duties or obligations hereunder made without the written consent of the other party hereto shall be void and be of no effect. 10. SUCCESSORS AND ASSIGNS. This Agreement and the provisions hereof shall be binding upon each of the parties, their successors and permitted assigns. 11. SEVERABILITY. If any part of this Agreement for any reason shall be declared illegal, invalid or unenforceable, such decision shall not affect the validity of any remaining portion, which shall remain in full force and effect. In addition, in lieu of such provision, there shall automatically be added as a part of this Agreement a provision similar in terms to such illegal, invalid or unenforceable provision so that the resulting reformed Agreement is legal, valid and enforceable. 12. CONTINUED EFFECTIVENESS. Except as expressly amended hereby, this Agreement shall continue in full force and effect. Any references to the "Agreement" in the Agreement or to the words hereof, shall mean the Agreement as amended hereby. 3 IN WITNESS WHEREOF, the parties hereto have set their hands effective the date set forth above. SUNRISE EDUCATIONAL SERVICES, INC., a Delaware corporation By /s/ Michael A. Lynch ----------------------------------------- Name Michael A. Lynch --------------------------------------- Title CEO -------------------------------------- SELLER BORG HOLDINGS, INC., an Arizona corporation By /s/ Robert Orsi ----------------------------------------- Name Robert Orsi --------------------------------------- Title President ------------------------------------- BUYER 4 EX-99.1 5 ex99-1.txt ORDER OF THE U.S. STATES BANKRUPTCY COURT Exhibit 99.1 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ARIZONA In re: ) In Proceedings Under Chapter 17. ) ) Case No. 00-10938-ECF-RTB THE TESSERACT GROUP, INC., ) ) Case No. 00-10939-ECF-RTB ) Debtor. ) (Jointly Administered) ) - -------------------------- ) ORDERS (I) AUTHORIZING SALE 0F THE ) REMAINING SUNRISE PRESCHOOLS; AND ) (II) GRANTING SUNRISE OTHER RELATED ) RELIEF ) SUNRISE EDUCATIONAL ) Date of Hearings: 6/19/01; 6/22/01 SERVICES, INC., a Delaware ) corporation, ) ) Debtor. ) ) - -------------------------- ) This matter came before the Court pursuant to the "Motion FOR AUTHORITY TO: (I) SELL THE REMAINING SUNRISE PRESCHOOLS; AND (II) GRANT SUNRISE OTHER RELATED RELIEF" (the "Sale Motion") submitted by Sunrise Educational Services, Inc. ("Sunrise") off, May 21, 2001. Unless otherwise defined herein, capitalized texts in this Order shall be given the same meaning provided to such terms in the Sale Motion. The Court has now considered the entire record in this matter, including all of the arguments presented by counsel for the various parties reflected in the record AT the above-referenced hearings. FINDINGS OF FACT AND CONCLUSIONS OF LAW Based on the foregoing, the Court finds and concludes as follows: 1. This Court has jurisdiction to consider this matter under 28 U.S.C. ss.ss.1334 (a) and 157. This proceeding: (i) arises in the Chapter 11 cases of the above-captioned debtors (the "Debtors"); (ii) arises under the United States Bankruptcy Code (the "Bankruptcy Code") and, more particularly, under Bankruptcy Code ss.ss.105, 363, and 365; and (iii) is a "core" proceeding within the meaning of 28 U.S.C. ss.157(b), with respect to which this Court may enter final judgments and orders. 2. With respect to the Sale Motion and all matters addressed in this Order, due and proper notice has been given to all appropriate parties in accordance with applicable law and procedural rules thereunder. 3. The Sale Motion was submitted by sunrise, and is fully supported by the Joint Official Unsecured Creditors' Committee in the Debtors' cases (the "Committee") and by the CRO retained by the Committee in the Debtors' cases. 4. The Court ultimately conducted two (2) hearings on the Sale Motion. Pursuant to Sunrise's request, the Court held a hearing on June 19, 2001, to conduct an auction of the assets that were (and are) being sold by Sunrise to Borg pursuant to the Sale Motion (the "Sale Hearing"). On June 22, 2001, the Court held a hearing to address all nonresidential real property lease issues pertaining to the Sale Motion, including (without limitation) adequate assurance issues under Bankruptcy Code ss.365(b) (the "Landlord Hearing"). 5. At the Sale Hearing, the Court considered the approval of, and an auction sale with respect to, the transaction set forth in the following agreements between Sunrise and Borg: (i) the Purchase And Sale Agreement (Sunrise Preschools) dated May 11, 2001 (the "Original Agreement"); and (ii) the First Amendment To Purchase Agreement (Sunrise Preschools) dated June 5, 2001 (collectively, the "Agreement"). 6. Immediately prior to the Sale Hearing, Sunrise and Borg orally modified the Agreement in that: (i) Borg agreed to increase the purchase price under Section IV.1 of the Original Agreement from $2,800,000 to $3,000,000; and (ii) Borg waived Sunrise's obligation to pay $50,000 under Section VII.3 of the Original Agreement. 7. The terms of the Agreement (as modified) are incorporated into this order. 3 8. At the Sale Hearing, the only party interested in submitting a bid against Borg was Mini-Skool Early Learning Centers Inc. ("Mini-Skool"). However, Sunrise and the Committee argued at the Sale Hearing that Mini-Skool should not be allowed to bid because: (i) Mini-Skool was not a qualified bidder based upon the financial information provided to Sunrise and the Committee; and (ii) Mini-Skool's bid had been rejected by Sunrise, after conferring with the Committee, in accordance with Paragraph 7 of this Court's order dated June 5, 2001.(1) 9. The Court agrees with the argument of Sunrise and the Committee, and finds that allowing Mini-Skool to bid on the subject assets is not in the best interests of Sunrise's bankruptcy estate. 10. The Court also finds that the approval of the Agreement (as modified) is in the best interests of Sunrise's bankruptcy estate. The terms of the Agreement (as modified), including the consideration to be provided by Borg thereunder, are fair and reasonable and represents the highest and best transaction that has a reasonable prospect of closing. 11. Sunrise's sale of the assets as provided in the Agreement (as modified), and the other terms and provisions thereof, constitute a reasonable exercise of Sunrise's business judgment. The sale of the assets and the - ---------- (1) See "Order Setting Bidding Procedures And Hearings On Sale Of Remaining Sunrise Preschools" dated June 5, 2001, pursuant to which the Court established the bidding procedures applicable to the Sale Hearing. 4 consummation of the other transactions contemplated in the Agreement (as modified) is in the best interests of Sunrise and its bankruptcy estate. 12. The Agreement (as modified) was negotiated at arm's length and in good faith, and the terms have been fully, completely, and adequately disclosed. Borg is purchasing the assets identified in the Agreement in good faith and is entitled to the protections afforded by Bankruptcy Code ss.363(m). 13. One or more of the disjunctive requirements of Bankruptcy Code ss.363 (f) have been met such that the assets may be sold by Sunrise pursuant to this Order and the Agreement (as modified) free and clear of any and all liens, claims, security interests, encumbrances, and adverse interests of any kind, including (without limitation) those claims arising from any taxing authority, or claims based upon alleged reclamation rights (collectively, "Liens"). 14. The Debtor is the sole and lawful owner of the assets listed in the Agreement. 15. Based on the record before the Court, Imperial. Hank is the only entity that asserts any Liens in the property being sold by Sunrise pursuant to the Sale Motion. Imperial Bank's only claim in the Debtors' cases is its secured claim against Sunrise (the "Imperial Debt"). Because the Imperial Debt was partially paid from the closing of the prior sale transaction in the Debtors' cases, Sunrise, the Committee, and Imperial Bank agree, and the Court so finds, 5 that the amount of the Imperial Debt is not less than $87,318.21, composed as follows: (i) Principal: $65,2160.66; (ii) Accrued and Unpaid Interest: $1,285.28 as of July 22, 2001, and $24.94 per diem thereafter until the closing; (iii) Late Fees: $0; (iv) Reasonable Attorneys' Fees and Costs: $20,772.27 through June 30, 2001, and unbilled amounts accruing thereafter through the Closing subject to the reserved right of Sunrise and the Committee to object on the basis of reasonableness to such unbilled fees and costs. Sunrise and the Committee believe, and the Court concurs, that it is in the best interests of the Debtors' estates to pay off the Imperial Debt at the Closing from the net proceeds generated from the subject transaction. 16. Pursuant to the Sale Motion, Sunrise sought approval of its decision to assume all of its remaining nonresidential real property leases (collectively, the "Unexpired Leases"), which are identified on Schedule 1.9 of the Original Agreement, effective as of the Closing. Thus, the Court conducted the Landlord Hearing on June 22, 2001, to address all landlord issues under Bankruptcy Code ss.365. 17. Prior to the Landlord Hearing, two (2) landlords filed written objections to the Sale Motion: (i) Shipp Ltd., LP ("Shipp"); and (ii) Santiago Villa and Van Wagner Properties (collectively, "Santiago"). Peoria Investments, Inc. ("Peoria") did not submit a written objection, but placed its objection on the record at the Landlord Hearing with the prior consent of Sunrise. 6 The objections of Shipp and Peoria have been resolved pursuant to the form of this Order. 18. The Sale Motion addresses fifteen (15) Unexpired Leases. While Sunrise requested approval of its decision to assume all of these Unexpired Leases, the Original Agreement contains a requirement that Sunrise obtain an aggregate ten percent (14%) rent reduction under the Unexpired Leases. SEE Original Agreement, ss.VII.3. Because Sunrise concedes the Bankruptcy Code does not provide a mechanism whereby a debtor may force a landlord to accept a rent reduction, Sunrise effectively is seeking to consensually modify the Unexpired Leases - except the Santiago Unexpired Leases. 19. The Santiago Leases are for Preschools #124 and #129, and Sunrise is not seeking to modify the Santiago Leases in any way. Sunrise is only seeking the Court's approval of its decision to assume the Santiago Leases, and assume these leases to Borg effective as of the Closing. 20. Among the objections raised by Santiago in opposition to the assumption and assignment of the Santiago Leases was lack of adequate assurance of future performance under Bankruptcy Code ss.365(b)(1)(C). For the reasons explained more fully in its Minute Entry dated June 27, 2001, the Court finds that Santiago has been provided with adequate assurance of future performance under the Santiago Leases by (among other things) the agreement by Borg's principals to provide Santiago with commercially reasonable personal guarantees of not less 7 than two (2) years' worth of the obligations under the Santiago Leases (the "Guarantees"). 21. With respect to all of the Unexpired Leases other than the Santiago Leases (the "Non-Santiago Leases"), Sunrise is authorized to enter into, and deliver to Borg, forms of assignment and modification of such leases effective as of the Closing. 22. Effective as of the Closing, Sunrise has made the business decision to assume and assign to Borg the Swift Contract and the other executory contracts identified on Schedule 1.3 of the Original Agreement (the "Unexpired Executory Contracts"). THESE decisions are in the best interests of Sunrise and its bankruptcy I estate. 23. When this Order has been entered: (i) Sunrise shall have the legal power, right and authority to consummate the transactions contemplated in the Agreement (as modified); arid (ii) the Agreement (as modified) and other related transactional DOCUMENTS (WHEN FULLY EXECUTED) WILL CONSTITUTE VALID AND BINDING agreements of the parties thereto, enforceable against the parties in accordance with their respective terms. 24. The sale of the subject assets to Borg is a transfer pursuant to 11 U.S.C. ss.1146(c) and accordingly, shall not be taxed under any law imposing a stamp tax or similar tax. ORDER In light of the Court's findings and conclusions, IT IS HEREBY ORDERED AS FOLLOWS: 8 A. Pursuant to Bankruptcy Code ss.ss.105, 363, and 365, the sale Motion is granted and the Agreement (as modified) and the transactions contemplated thereby are approved in all respects. B. Santiago's objection shall be, and hereby is, overruled subject only to Sunrise's obligation to cure the Santiago Leases effective as of the Closing. All other objections to the Sale Motion have either been resolved pursuant to the terms of this Order, or are hereby overruled by the Court. C. The Agreement, as modified by Paragraph 6 above, shall be, and hereby is, binding on Sunrise and Borg. Sunrise and its officers, employees and agents are authorized and directed to consummate the transactions contemplated by, and to perform their obligations under, the Agreement (as modified), and to take or cause to be taken any and all actions necessary or appropriate in connection therewith, including (without limitation) executing and delivering all such documents and instruments as are necessary to consummate the transactions contemplated by the Agreement (as modified) or the other transactional documents. D. Pursuant to Bankruptcy Code ss.ss.105 (a) and 363 363(f), the sale and transfer of the assets by Sunrise to Borg pursuant to this Agreement (as modified) shall be free and clear of any and all Liens. The provisions of this Order authorizing the sale of the assets free and clear of Liens shall be self-executing, and neither Sunrise nor Borg shall be required to execute or file releases, termination statements, assignments, consents, or other 9 instruments in order to effectuate the transfer of the assets free and clear of such Liens. E. With respect to the Non-Santiago Leases, the Court hereby further orders that: (i) by no later than July 25, 2001, Sunrise shall provide written notice to the applicable landlord, with a copy to counsel, if Sunrise (after conferring with Borg and the Committee) has decided to reject any such lease; and (ii) Borg, SUNRISE AND THE LANDLORDS UNDER THE NON-SANTIAGO LEASES WORK IN good faith to negotiate and enter into appropriate forms of lease assignments, modifications and Guarantees. F. The Lien of Imperial Bank shall attach to the net proceeds from the sale of the Debtors' assets at the Closing; provided, however, that: (i) Imperial Bank shall, and hereby is ordered to, deliver such termination statements or other instruments reasonably required by Borg to release its Lien in the assets which are the subject of the Agreement (as modified) effective as of the Closing; and (ii) Sunrise shall, and hereby is ordered to, pay Imperial at Closing the sum of $87,318.21 (as adjusted through the Closing Date) by wire transfer, and Imperial Hank thereafter shall have no other or further claims) in the Debtors' cases. G. Sunrise's decisions to assume and assign the Santiago Leases and the Unexpired Executory Contracts as of the Closing, shall be, and hereby are, approved in all respects. Pursuant to Bankruptcy Code ss.365(k), Sunrise and its bankruptcy estate shall be relieved from any liability for any breach under such leases and other executory contracts after the Closing Date. H. The Court shall retain jurisdiction to implement and enforce the terms of the Agreement (as modified) and this Order, and to adjudge any disputes, claims or actions which may arise in connection with the implementation of the transactions contemplated hereby or thereby, including (without limitation) the sufficiency of the form of the Guarantees provided by Borg, and all disputes regarding the cure amount that may be due under any of the Unexpired Leases as of the Closing Date. I. Borg is a purchaser in good faith of the assets identified under the Original Agreement, and is entitled to the protection provided to a "good faith" purchaser under Bankruptcy Code ss.363(m). Absent a stay of this Order pending appeal, Sunrise and Borg may consummate their transactions. J. This Order is a final, appealable order. This Order shall be effective and enforceable immediately upon entry notwithstanding Rule 6004(g) of the Federal Bankruptcy Rules of Procedure. Dated: July 20, 2001 /s/ Redfield T. Baum ---------------------------------------- The Honorable Redfield T. Baum United States Bankruptcy Judge 11 APPROVED as to form and content this, day of July, 2001, by: BRYAN CAVE LLP By /s/ Robert J. Miller --------------------------------- Robert J. Miller Counsel for Debtors ENGELMAN HERDER, P.C. By /s/ David Wm. Engelman --------------------------------- David Wm. Engelman Counsel for Official Joint Committee of Unsecured Creditors /s/ Jane C. Fennelly - ------------------------------------ Jane C. Fennelly Counsel for Imperial Bank GREENBERG TRAURIG LLP By /s/ Michael Reynolds --------------------------------- Michael Reynolds, Esq. Counsel for Borg Holdings, Inc. 12 EX-99.2 6 ex99-2.txt BUSINESS AND INDUSTRY MONTHLY OPERATING REPORT Exhibit 99.2 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 JUNE ) 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: CEO - ---------------------------------------- ---------- ORIGINAL SIGNATURE OF RESPONSIBLE PARTY TITLE Michael Lynch - ---------------------------------------- ---------- PRINTED NAME OF RESPONSIBLE PARTY DATE PREPARER: 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: JUNE 2001 RECEIPTS AND DISBURSEMENTS
BANK ACCOUNTS ----------------------------------------------------------------------------------------------- Amounts reported should be NATIONAL GROUP GROUP GROUP TESSERACT GROUP TESSERACT per the debtor's books, DEPOSITORY DEPOSITORY MEDICAL PAYROLL OPERATING CHARTER not per the bank statement #944-010-7759 #022-922-6741 #022-922-6576 #022-922-6576 #022-978-8101 #022-922-6808 ------------- ------------- ------------- ------------- ------------- ------------- ACCOUNT BALANCE - BEGINNING OF MONTH -- 376,879.47 -- -- -- 31,863.49 RECEIPTS STUDENT FEES 982,513.09 210,153.45 CHARTER SCHOOL REVENUE -- ACCOUNTS RECEIVABLE -- INTEREST 6.10 SALE OF ASSETS TRANSFERS IN FROM OTHER ACCOUNTS 982,513.09 -- 744,796.62 119,518.20 -- OTHER (ATTACH LIST) TOTAL RECEIPTS 982,513.09 1,192,672.64 -- 744,796.62 119,518.20 -- DISBURSEMENTS BUSINESS - ORDINARY OPERATIONS -- 21,055.14 -- 288,767.36 60,674.82 4,111.81 CAPITAL IMPROVEMENTS PRE-PETITION DEBT TRANSFERS TO OTHER DIP ACCOUNTS 982,513.09 864,314.82 -- PAYMENTS MADE FOR SUNRISE EDU 398,788.18 456,029.26 59,658.38 OTHER (VOIDS) (815.00) REORGANIZATION EXPENSES: ATTORNEY FEES ACCOUNTANT FEES OTHER PROFESSIONAL FEES U.S. TRUSTEE QUARTERLY FEE COURT COSTS TOTAL DISBURSEMENTS 982,513.09 1,284,158.14 -- 744,796.62 119,518.20 4,111.81 ----------- ------------- ----------- ------------ ------------ ------------- ACCOUNT BALANCE - END OF MONTH -- 285,393.97 -- -- -- 27,751.68 =========== ============= =========== ============ ============ ============= BANK ACCOUNTS ------------------------------------------------------------------------------------- Amounts reported should be CHARTER FIRST FEDERAL CREDITOR PETTY CASH per the debtor's books, EXTRACURRICULAR CREDIT UNION RESERVE EAGAN MINNESOTA not per the bank statement #022-922-7442 #4002-0270-922 #052-980-2118 #1-801-9204-8049 TOTAL ------------- -------------- ------------- ---------------- ---------------- ACCOUNT BALANCE - BEGINNING OF MONTH -- -- 416,633.90 -- 825,376.86 RECEIPTS STUDENT FEES 1,192,666.54 CHARTER SCHOOL REVENUE -- ACCOUNTS RECEIVABLE -- INTEREST 561.97 568.07 SALE OF ASSETS -- -- TRANSFERS IN FROM OTHER ACCOUNTS 1,846,827.91 OTHER (ATTACH LIST) -- TOTAL RECEIPTS -- -- 561.97 -- 3,040,062.52 DISBURSEMENTS BUSINESS - ORDINARY OPERATIONS 374,609.13 CAPITAL IMPROVEMENTS -- PRE-PETITION DEBT -- TRANSFERS TO OTHER DIP ACCOUNTS -- -- 1,846,827.91 PAYMENTS MADE FOR SUNRISE EDU 914,475.82 OTHER (VOIDS) (815.00) REORGANIZATION EXPENSES: ATTORNEY FEES -- ACCOUNTANT FEES -- OTHER PROFESSIONAL FEES -- U.S. TRUSTEE QUARTERLY FEE -- COURT COSTS -- TOTAL DISBURSEMENTS -- -- -- -- 3,135,097.86 ------------ ------------- ------------- ------------- ------------- ACCOUNT BALANCE - END OF MONTH -- -- 417,195.87 -- 730,341.52 ============ ============= ============= ============= ============= THE FOLLOWING SECTION MUST BE FILLED OUT DISBURSEMENTS FOR CALCULATING QUARTERLY FEES: TOTAL DISBURSEMENTS FROM ABOVE 3,135,097.86 LESS: TRANSFERS OUT TO OTHER DIP ACCOUNTS (1,846,827.91) LESS: PAYMENTS MADE FOR SUNRISE EDUCATIONAL SERVICES, INC. (914,475.82) PLUS: ESTATE DISBURSEMENTS MADE BY OUTSIDE SOURCES (i.e. PAYMENTS FROM ESCROW OR 2-PARTY CHECKS) ---------------- TOTAL DISBURSEMENTS FOR CALCULATING QUARTERLY FEES: 373,794.13 ================
2 The Tesseract Group (excl. Sunrise) Statement of Operations For the Month Ending June 30, 2001 REVENUE Tuition and Fees Revenue $ 107,684.75 Charter Revenue -- Transportation Revenue -- Food Revenue -- Refunds/Returns (20.73) Discounts -- -------------- Total Revenue 107,664.02 -------------- OPERATIONAL COSTS Salaries and Wages 176,597.82 Taxes and Benefits 14,552.33 Classroom Expenses 80.39 Food Programs Expense -- Transportation Expenses -- Maintenance Expense -- Insurance Expense 46,316.98 Internet Expense -- Rent Expense 3,090.00 Security Services Expense 46.84 Personal Property Tax Expense -- Real Property Tax Expense -- Utilities Expense (5,441.04) -------------- Total Operational Costs 235,243.32 -------------- GENERAL & ADMINISTRATIVE COSTS Advertising, Mktg, Promo Exp -- Audit & Tax Expense -- Bad Debt Expense 19,586.47 Bank Charges/Processing Fees-A 631.30 Computer/Technology Expense -- Consultant Fees Expense -- Investor Relations Expense -- Licenses & Fees Expense -- Office/School Supplies Expense -- Penalties & Late Fees Expense -- Postage and Printing Expense -- Pre-Employment Expense -- Telephone Expense (1,470.67) Travel Expense 183.99 Closed School Expense -- Corporate Overhead 373,569.06 Corporate Overhead Allocated to Sunrise (186,785.00) Other Expenses 244,092.10 -------------- Total General and Administrative Expenses 449,807.25 -------------- Gain/Loss on Sales of Fixed Assets (1,143,892.68) Other Income 618.72 Interest Expense (80,537.09) -------------- Net Interest and Other Income (Expense) (1,223,811.05) -------------- Depreciation Expense -- -------------- Total Depreciation and Amortization -- -------------- REORGANIZATION EXPENSES Professional Fees 7,925.00 Professional Fees Allocated to Sunrise (3,963.00) -------------- Total Reorganization Expenses 3,962.00 -------------- Net Income $(1,805,159.60) ============== 3 The Tesseract Group (excl. Sunrise) Balance Sheet June 30, 2001 ASSETS Current Assets Cash and Cash Equivalents $ 718,127.32 Accounts Receivable, net 2,000.00 Note Receivable from Nobel -- Prepaid Rent -- Other Prepaid Expenses -- -------------- Total Current Assets 720,127.32 Investment in Sunrise 18,971,824.26 Property and Equipment, net -- Deposits and Other Assets 1,512,992.80 -------------- Total Assets $21,204,944.38 ============== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts Payable $ 13,360.22 Accrued Payroll and Benefits 1,021,490.20 Accrued Payroll Taxes 62,111.49 Deferred Revenue and Tuition Deposits 885,140.74 -------------- Total Current Liabilities 1,982,102.65 -------------- Pre-Petition Liabilities Line of Credit 5,848,822.65 Accounts Payable 3,989,515.21 Other Unsecured Notes Payable 865,500.00 Other Current Liabilities 4,348,790.44 Long-Term Debt 1,703,205.97 -------------- Total Pre-Petition Liabilities 16,755,834.27 -------------- Due to Sunrise 969,876.77 Reserve for Closed Schools 504,099.10 Other Long-Term Obligations 13,999.76 -------------- Total Long-Term Liabilities 1,487,975.63 -------------- Total Liabilities 20,225,912.55 -------------- Shareholders' Equity Pre-Petition Shareholders' Equity 5,309,828.65 Post Petition Retained Deficit (4,330,796.82) -------------- Total Shareholders' Equity 979,031.83 -------------- Total Liabilities and Shareholders' Equity $21,204,944.38 ============== 4 CASE NUMBER: B-00-10938-ECF-RTB STATUS OF ASSETS 0-30 31-60 60+ ACCOUNTS RECEIVABLE TOTAL DAYS DAYS DAYS - ------------------- ----- ---- ---- ---- TOTAL ACCOUNTS RECEIVABLE 30,921 2,000 -- 28,921 LESS: AMOUNT CONSIDERED UNCOLLECTIBLE 28,921 28,921 ACCOUNTS RECEIVABLE (NET) 2,000 2,000 -- -- SCHEDULED CURRENT FIXED ASSETS AMOUNT ADDITIONS DELETIONS AMOUNT - ------------ ------ --------- --------- ------ REAL PROPERTY 1,867,408 00 1,867,408 (0) BUILDING IMPROVEMENTS/PLANT 846,395 16,066 862,461 (0) ACCUMULATED DEPRECIATION (136,823) (33,112) (169,935) 0 NET BUILDINGS/PLANT 709,573 (17,047) 692,526 (0) EQUIPMENT 5,466,149 11,637 5,477,786 (0) ACCUMULATED DEPRECIATION (2,404,930) (533,426) (2,938,357) 0 NET EQUIPMENT 3,061,218 (521,789) 2,539,429 (0) AUTOS & VEHICLES 557,586 00 557,586 -- ACCUMULATED DEPRECIATION (259,791) (65,272) (325,063) 0 NET AUTOS & VEHICLES 297,795 (65,272) 232,523 0 NOTE: Reduction in assets due to sale of Private and Charter School assets. 5 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 13,360 (575) -- -- 13,935 TAXES PAYABLE 62,111 62,111 ACCRUED SALARIES AND BENEFITS 1,021,490 1,021,490 PREPAID TUITION AND DEPOSITS 885,141 885,141 SECURED DEBT OTHER (ATTACH LIST) --------- ---------- ---- ---- ------ TOTAL POST-PETITION LIABILITIES 1,982,102 1,968,168 -- -- 13,935 ========= ========== ==== ==== ====== PAYMENTS TO INSIDERS AND PROFESSIONALS INSIDERS AMOUNT PD TOTAL PD NAME REASON FOR PAYMENT THIS MONTH TO DATE - ---- ------------------ ---------- ------- Lucian Spataro Wages and Exp. Reimbursement -- 129,134.79 Ernie Recsetar Wages -- 22,000.00 Michael Lynch Wages and Exp. Reimbursement 15,839.79 138,313.35 Gary Lilyquist Wages and Exp. Reimbursement -- 80,239.99 ---------- ----------- TOTAL PAYMENTS TO INSIDERS 15,839.79 369,688.13 ========== =========== PROFESSIONALS DATE OF COURT TOTAL ORDER AUTHORIZING AMOUNT AMOUNT TOTAL PAID INCURRED NAME PAYMENT APPROVED PAID TO DATE & UNPAID - ---- ------- -------- ---- ------- -------- Bryan Cave 0 0 47,759.54 Engleman & Berger, PC 0 0 49,127.11 6 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: 78 INSURANCE CARRIER AND PERIOD EXPIRATION PAYMENT AMOUNT TYPE OF POLICY POLICY NUMBER COVERED DATE & FREQUENCY - -------------- ------------- ------- ---- ----------- Gen Liability CLI0020446 3/1/2001 7/31/2001 Paid in full Auto Liability 70APN164181 3/1/2001 7/31/2001 Paid in full Excess Liability UMI0000567 3/1/2001 7/31/2001 Paid in full Workers Comp 307512-4 12/1/2000 11/30/2001 Monthly as a % of PR Blanket Contents 59UUMUN3158 3/1/2001 7/31/2001 Paid in full 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? 7 THE TESSERACT GROUP, INC. CONSOLIDATED CASH FLOW ANALYSIS Total For June 2001 ------------- BEGINNING FUNDS AVAILABLE: $ 825,376.87 ------------- Cash In: Telecheck $ 210,153.45 Credit Card Deposit (Preschools) 426,294.78 Credit Card Deposit (Private) 831.02 Credit Card Deposit (Charter) -- Regular Deposits (Preschools) 417,960.63 Regular Deposits (Private) 7,734.89 Regular Deposits (Charter) 120,169.38 Regular Deposits (Corporate) 9,851.39 Other Deposit (Charter) -- Interest 568.07 Interest on LTC Acct -- Voids 815.00 ------------- Daily Cash In: $1,194,378.61 ============= Cash Out: Preschool A/P $ 398,788.18 Charter A/P 5,128.25 Private A/P -- Corporate A/P 119,316.76 TesseracT Payroll 165,526.57 Preschool Payroll 456,029.26 Charter Payroll 123,240.79 College PR -- Preschool NSF 329.00 Medical Claims -- Banking and Payroll Fees 21,055.14 LTC Payment -- LTC Fees -- ------------- Daily Cash Out: $1,289,413.95 ============= Net Cash In/Out: $ (95,035.34) ------------- ENDING FUNDS AVAILABLE: $ 730,341.53 ============= 8 THE TESSERACT GROUP, INC. CASH FLOW ANALYSIS B-00-10938-ECF-RTB Total For June 2001 ------------ BEGINNING FUNDS AVAILABLE: $ 651,600.84 ------------ Cash In: Credit Card Deposit (Private) $ 831.02 Credit Card Deposit (Charter) -- Regular Deposits (Private) 7,734.89 Regular Deposits (Charter) 120,169.38 Regular Deposits (Corporate) 9,851.39 Other Deposit (Charter) -- Interest 568.07 ------------ Daily Cash In: $ 139,154.75 ============ Cash Out: Charter A/P $ 5,128.25 Private A/P -- Corporate A/P 119,316.76 Corporate A/P (allocated to Sunrise) (59,658.38) TesseracT Payroll 165,526.57 Charter Payroll 123,240.79 Medical Claims -- Banking Fees 21,055.14 LTC Payment -- Voids (815.00) ------------ Daily Cash Out: $ 373,794.13 ============ Net Cash In/Out: $(234,639.38) ------------ ENDING FUNDS AVAILABLE: $ 416,961.46 ============ 9 Corporate Company VENDOR CHECK REGISTER REPORT Payables Management * Voided Checks
Audit Check Number Vendor ID Vendor Check Name Check Date Checkbook ID Trail Code Amount - ------------ --------- ----------------- ---------- ------------ ---------- ------ 200012899 AT&T78522-B AT&T - 78225 6/1/01 OPERATING2 PMCHK00000265 $14.85 200012900 FEDEXP000-B FEDERAL EXPRESS 6/1/01 OPERATING2 PMCHK00000265 $158.48 200012901 WELFAR003-B WELLS FARGO (MN) 6/1/01 OPERATING2 PMCHK00000265 $710.53 200012902 AMEPRI000-B AMERIPRIDE LINEN AND APPAREL 6/4/01 OPERATING2 PMCHK00000266 $23.98 200012903 AT&TPHO00-B AT&T PHOENIX-78225 6/4/01 OPERATING2 PMCHK00000266 $3.23 200012904 ATTGA0000-B ATT-GA-277019 6/4/01 OPERATING2 PMCHK00000266 $752.40 200012905 SHAFOO000-B SHAMROCK FOODS COMPANY 6/4/01 OPERATING2 PMCHK00000266 $57.58 200012906 LYN000000-B LYNCH,MICHAEL 6/5/01 OPERATING2 PMCHK00000267 $726.04 200012907 UNIOMA000-B UNITED OF OMAHA 6/6/01 OPERATING2 PMCHK00000268 $6,455.17 200012908 FEDEXP000-B FEDERAL EXPRESS 6/8/01 OPERATING2 PMCHK00000269 $48.88 200012909 IKOOFF003-B IKON OFFICE SOLUTIONS (CA) 6/8/01 OPERATING2 PMCHK00000269 $118.89 200012910 KP0LIM000-B KP LIMITED INC 6/8/01 OPERATING2 PMCHK00000269 $77.18 200012911 RIVJUD000-B JUDI RIVERA 6/8/01 OPERATING2 PMCHK00000269 $15.22 200012912 SUMSCH000-B SUMMIT SCHOOL OF AHWATUKEE 6/8/01 OPERATING2 PMCHK00000269 $1,372.43 200012913 APS200000-B APS - 2907 6/8/01 OPERATING2 PMCHK00000270 $6,825.44 200012914 CITSCOUTI-B CITY OF SCOTTSDALE-UTILITIES 6/8/01 OPERATING2 PMCHK00000270 $1,169.32 200012915 DOCTEC000-B DOCUMENT TECHNOLOGIES 6/8/01 OPERATING2 PMCHK00000270 $1,123.93 200012916 PARWAS000-B PARADISE WASTE SERVICES 6/8/01 OPERATING2 PMCHK00000270 $52.86 200012917 US0WES003-B US WEST COMMUNICATIONS-29060 6/8/01 OPERATING2 PMCHK00000270 $1,023.47 200012918 MUTOMA001-B MUTUAL OMAHA-NE 6/11/01 OPERATING2 PMCHK00000271 $23,019.14 200012919 MUTOMA001-B MUTUAL OMAHA-NE 6/11/01 OPERATING2 PMCHK00000272 $10,901.03 200012920 BONJAM000-B JAMES BONFIGLIO 6/12/01 OPERATING2 PMCHK00000273 $2,925.00 200012921 PARCHR001-B CHRISTINE PARADIS 6/13/01 OPERATING2 PMCHK00000274 $500.00 200012922 MAN FIN000-B MANULIFE FINANCIAL 6/15/01 OPERATING2 PMCHK00000275 $2,693.52 200012923 MAN FIN000-B MANULIFE FINANCIAL 6/15/01 OPERATING2 PMCHK00000275 $2,236.77 200012924 CULWAT000-B CULLIGAN WATER COND 6/18/01 OPERATING2 PMCHK00000276 $24.91 200012925 KP0LIM000-B KP LIMITED INC 6/18/01 OPERATING2 PMCHK00000276 $483.44 200012926 PROONE000-B PROTECTION ONE - AZ 6/18/01 OPERATING2 PMCHK00000276 $46.84 200012927 FEDEXP000-B FEDERAL EXPRESS 6/18/01 OPERATING2 PMCHK00000277 $113.90 200012928 IMPFIN000-B IMPERIAL FINANCIAL PRINTING 6/18/01 OPERATING2 PMCHK00000277 $195.50 200012929 KP0LIM000-B KP LIMITED INC 6/18/01 OPERATING2 PMCHK00000277 $530.67 200012930 LANMAR000-B MARK LANE 6/18/01 OPERATING2 PMCHK00000277 $30.51 200012931 MOOBRI000-B MOORE, BRIAN 6/18/01 OPERATING2 PMCHK00000277 $64.49 200012932 THEHAR000-B THE HARTFORD 6/18/01 OPERATING2 PMCHK00000277 $1,203.19 200012933 US0WES003-B US WEST COMMUNICATIONS-29060 6/18/01 OPERATING2 PMCHK00000277 $238.21 200012935 ARC000000-B ARC 6/21/01 OPERATING2 PMCHK00000278 $705.39 200012936 EMPUNI000-B EMPLOYERS UNITIY INC 6/21/01 OPERATING2 PMCHK00000279 $643.75 200012937 LYN000000-B LYNCH,MICHAEL 6/21/01 OPERATING2 PMCHK00000279 $2,186.59 200012938 MUTOMA001-B MUTUAL OMAHA-NE 6/21/01 OPERATING2 PMCHK00000279 $351.03 200012939 FEDEXP000-B FEDERAL EXPRESS 6/22/01 OPERATING2 PMCHK00000280 $291.46 200012940 KP0LIM000-B KP LIMITED INC 6/22/01 OPERATING2 PMCHK00000280 $530.67 200012941 SHUAHW000-B SHRGARD OF AHWATUKEE 6/22/01 OPERATING2 PMCHK00000280 $296.91 200012942 CIGEMP000-B CIGNA EMPLOYEE BENE-PPO 6/26/01 OPERATING2 PMCHK00000281 $1,977.34 200012943 CONGEN000-B CONNECTICUT GENERAL LIFE 6/26/01 OPERATING2 PMCHK00000281 $39,251.67 200012944 CONGENLIF-B CONNECTICUT GENERAL LIFE-DENT 6/26/01 OPERATING2 PMCHK00000281 $3,138.19 200012945 MOOBRI000-B MOORE, BRIAN 6/29/01 OPERATING2 PMCHK00000282 $500.00 200012946 SHE000000-B SHEARER,DAN 6/29/01 OPERATING2 PMCHK00000282 $500.00 200012947 ADMRES000-B ADMINISTRATIVE RESOURCES & CO N 06/29/2001 OPERATING2 PMCHK00000283 $150.48 200012948 ADMRES000-B ADMINISTRATIVE RESOURCES & CO N 06/29/2001 OPERATING2 PMCHK00000283 $162.64 200012949 ARC000000-B ARC 6/29/01 OPERATING2 PMCHK00000283 $100.00 200012950 MAN FIN000-B MANULIFE FINANCIAL 6/29/01 OPERATING2 PMCHK00000283 $1,622.79 200012951 SPEINC000-B SPECTERA, INC. 6/29/01 OPERATING2 PMCHK00000283 $970.85 ----------- Total Checks: 52 Total Amount of Checks: $119,316.76 ===========
10 Owned Charters VENDOR CHECK REGISTER REPORT Payables Management * Voided Checks
Audit Check Number Vendor ID Vendor Check Name Check Date Checkbook ID Trail Code Amount - ------------ --------- ----------------- ---------- ------------ ---------- ------ 800050505 APS200000-B APS - 2907 6/4/01 OPERATING PMCHK00000078 $1,047.02 800050506 MANLIF000-B MANULIFE FINNANCIAL 6/4/01 OPERATING PMCHK00000078 $344.21 800050507 SLAJAC000-B JACK SLATE 6/4/01 OPERATING PMCHK00000078 $111.86 800050508 US0WES003-B US WEST COMMUNICATIONS-29060 6/4/01 OPERATING PMCHK00000078 $447.79 800050509 DOCTEC000-B DOCUMENT TECHNOLOGIES 6/8/01 OPERATING PMCHK00000080 $388.60 800050510 PROOFF000-B PRO OFFICE EQUIPMENT, INC. 6/8/01 OPERATING PMCHK00000080 $223.59 800050511 SOUGAS000-B SOUTHWEST GAS CORPORATION 6/8/01 OPERATING PMCHK00000080 $21.68 800050513 MANLIF000-B MANULIFE FINNANCIAL 6/15/01 OPERATING PMCHK00000082 $118.06 800050514 CITPHOWAT-B CITY OF PHOENIX (WATER SVCS)2 6/18/01 OPERATING PMCHK00000083 $432.14 800050515 KP0LIM000-B KP LIMITED INC 6/18/01 OPERATING PMCHK00000083 $470.61 800050516 THEHAR000-B THE HARTFORD 6/18/01 OPERATING PMCHK00000083 $1,203.19 800050518 MANLIF000-B MANULIFE FINNANCIAL 6/22/01 OPERATING PMCHK00000085 $118.06 800050519 CITSIEVI2-B CITY OF SIERRA VISTA 6/22/01 OPERATING PMCHK00000086 $17.45 800050520 CRAVER000-B VERONICA CRAMER 6/22/01 OPERATING PMCHK00000086 $35.19 800050521 HUNLIL000-B HUNT, LILLIAN 6/22/01 OPERATING PMCHK00000086 $24.80 800050522 MAHBAR000-B BARBARA MAHOOD 6/22/01 OPERATING PMCHK00000086 $124.00 --------- Total Checks: 16 Total Amount of Checks: $5,128.25 =========
11 EX-99.3 7 ex99-3.txt BUSINESS AND INDUSTRY MONTHLY OPERATING REPORT Exhibit 99.3 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 JUNE ) 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: CEO - --------------------------------------- ---------- ORIGINAL SIGNATURE OF RESPONSIBLE PARTY TITLE Michael Lynch - --------------------------------------- ---------- PRINTED NAME OF RESPONSIBLE PARTY DATE PREPARER: 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: JUNE 2001 RECEIPTS AND DISBURSEMENTS BANK ACCOUNTS ------------------------------------------ Amounts reported should be SUNRISE SUNRISE PMTS per the debtor's books, OPERATING MADE BY not per the bank statement #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 398,788.18 515,687.64 914,475.82 TRANSFERS IN FROM OTHER ACCOUNTS -- TOTAL RECEIPTS 398,788.18 515,687.64 914,475.82 DISBURSEMENTS BUSINESS - ORDINARY OPERATIONS 398,788.18 398,788.18 CAPITAL IMPROVEMENTS -- PRE-PETITION DEBT -- TRANSFERS TO OTHER DIP ACCOUNTS -- PAYMENTS MADE FOR SUNRISE EDU 515,687.64 515,687.64 OTHER (ATTACH LIST) -- REORGANIZATION EXPENSES: ATTORNEY FEES -- ACCOUNTANT FEES -- OTHER PROFESSIONAL FEES -- U.S. TRUSTEE QUARTERLY FEE -- COURT COSTS -- TOTAL DISBURSEMENTS 398,788.18 515,687.64 914,475.82 ---------- ---------- ---------- ACCOUNT BALANCE - END OF MONTH -- -- -- ========== ========== ========== THE FOLLOWING SECTION MUST BE FILLED OUT DISBURSEMENTS FOR CALCULATING QUARTERLY FEES: TOTAL DISBURSEMENTS FROM ABOVE 914,475.82 LESS: TRANSFERS OUT TO OTHER DIP ACCOUNTS -- PLUS: ESTATE DISBURSEMENTS MADE BY OUTSIDE SOURCES ---------- TOTAL DISBURSEMENTS FOR CALCULATING QUARTERLY FEES: 914,475.82 ========== 2 Sunrise Educational Services, Inc. Statement of Operations For the Month Ending June 30, 2001 Revenue Tuition and Fees Revenue $1,045,548.14 Government Revenue 92,061.84 Food Revenue 3,334.90 Discounts (142,286.85) Refunds/Returns (275.30) ------------- Total Revenue 998,382.73 ------------- Operational Costs Salaries and Wages 453,574.65 Taxes and Benefits 54,597.01 Classroom Expenses 6,834.01 Food Programs Expense 37,495.20 Grants/Fee Expense 585.20 Transportation Expenses 14,373.39 Maintenance Expense 65,941.28 Insurance Expense 22,614.54 Rent Expense 207,690.54 Security Services Expense 3,483.88 Personal Property Tax Expense 1,542.84 Real Property Tax Expense 6,007.62 Utilities Expense 23,266.21 ------------- Total Operational Costs 898,006.37 ------------- General & Administrative Costs Advertising, Mktg, Promo Exp 2,628.32 Bad Debt Expense 13,854.58 Bank Charges/Processing Fees-A 17,000.63 Computer/Technology Expense 7,817.69 Licenses & Fees Expense 1,402.41 Office/School Supplies Expense 2,716.30 Penalties and Late Fee Charges -- Postage and Printing Expense 284.75 Pre-Employment Expense 1,027.00 Telephone Expense 7,546.48 Travel Expense 1,357.06 Allocated Corporate Overhead 186,785.00 Other Expenses 1,084.21 ------------- Total General and Administrative Expenses 243,504.43 ------------- Gain (Loss) on Disposal of Assets -- Interest Expense -- Other Income (Expense) -- ------------- Net Interest and Other Income (Expense) -- ------------- Depreciation Expense 14,214.80 ------------- Total Depreciation and Amortization 14,214.80 ------------- Reorganization Expenses Bankruptcy Fees -- Professional Fees Allocated -- ------------- Total Reorganization Expenses -- ------------- Net Income $ (157,342.87) ============= 3 Sunrise Educational Services, Inc. Balance Sheet June 30, 2001 ASSETS Current Assets Cash and Cash Equivalents $ 9,991.29 Accounts Receivable, net 397,149.81 Prepaid Rent 216,750.02 Other Current Assets 14,294.44 ------------- Total Current Assets 638,185.56 Due From Tesseract 969,876.77 Property and Equipment, net 825,501.67 Deposits and Other Assets 163,288.42 ------------- Total Assets $2,596,852.42 ============= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts Payable $ 48,064.70 Checks in Process of Collection 255,573.69 Payroll and Related Accruals 428,950.06 Deferred Revenue and Tuition Deposits 59,298.63 ------------- Total Current Liabilities 791,887.08 ------------- Pre-Petition Liabilities Accounts Payable 664,382.01 Other Current Liabilities 138,968.45 Long-Term Debt 5,546.62 ------------- Total Pre-Petition Liabilities 808,897.08 ------------- Reserve for Closed Schools 143,661.34 Other Long-Term Obligations 274,439.09 ------------- Total Long-Term Liabilities 418,100.43 ------------- Total Liabilities 2,018,884.59 ------------- Shareholders' Equity Pre-Petition Shareholders' Equity 1,156,067.94 Post Petition Retained Deficit (578,100.11) ------------- Total Shareholders' Equity 577,967.83 ------------- Total Liabilities and Shareholders' Equity $2,596,852.42 ============= 4 CASE NUMBER: B-00-10939-ECF-RTB STATUS OF ASSETS 0-30 31-60 60+ ACCOUNTS RECEIVABLE TOTAL DAYS DAYS DAYS - ------------------- ----- ---- ---- ---- TOTAL ACCOUNTS RECEIVABLE 397,150 377,807 12,790 6,553 LESS: AMOUNT CONSIDERED UNCOLLECTIBLE ACCOUNTS RECEIVABLE (NET) 397,150 377,807 12,790 6,553 SCHEDULED CURRENT FIXED ASSETS AMOUNT ADDITIONS DELETIONS AMOUNT - ------------ ------ --------- --------- ------ REAL PROPERTY BUILDING IMPROVEMENTS/PLANT 1,020,140 56,214 293,926 782,429 ACCUMULATED DEPRECIATION (413,993) (115,058) (156,974) (372,077) NET BUILDINGS/PLANT 606,147 (58,844) 136,952 410,352 EQUIPMENT 755,300 24,266 290,389 489,178 ACCUMULATED DEPRECIATION (511,115) (130,029) (318,916) (322,228) NET EQUIPMENT 244,186 (105,763) (28,527) 166,950 AUTOS & VEHICLES 953,839 953,839 ACCUMULATED DEPRECIATION (625,670) (79,967) (705,637) NET AUTOS & VEHICLES 328,170 (79,967) -- 248,202 5 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 48,065 43,494 -- -- 4,571 TAXES PAYABLE 36,545 36,545 ACCRUED PAYROLL AND BENEFITS 392,405 392,405 PREPAID TUITION 59,299 59,299 SECURED DEBT OUTSTANDING A/P CHECKS 255,574 255,574 OTHER (ATTACH LIST) ------- ------- --- --- ----- TOTAL POSTPETITION LIABILITIES 791,887 787,316 -- -- 4,571 ======= ======= === === ===== 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 6 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: 458 INSURANCE CARRIER AND PERIOD EXPIRATION PAYMENT AMOUNT TYPE OF POLICY POLICY NUMBER COVERED DATE & FREQUENCY - -------------- ------------- ------- ---- ----------- Gen Liability CLI0020446 3/1/2001 7/31/2001 Paid in full Auto Liability 70APN164181 3/1/2001 7/31/2001 Paid in full Excess Liability UMI0000567 3/1/2001 7/31/2001 Paid in full Workers Comp 307512-4 12/1/2000 11/30/2001 Monthly as a % of PR Blanket Contents 59UUMUN3158 3/1/2001 7/31/2001 Paid in full 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? 7 SUNRISE EDUCATIONAL SERVICES, INC. CASH FLOW ANALYSIS B-00-10939-ECF-RTB BEGINNING FUNDS AVAILABLE: $ 173,776.03 ------------- Cash In: Telecheck $ 210,153.45 Credit Card Deposit (Preschools) 426,294.78 Regular Deposits (Preschools) 417,960.63 ------------- Daily Cash In: $1,054,408.86 ============= Cash Out: Preschool A/P $ 398,788.18 Preschool Payroll 456,029.26 Corporate A/P (allocated) 59,658.38 Preschool NSF 329.00 ------------- Daily Cash Out: $ 914,804.82 ============= Net Cash In/Out: $ 139,604.04 ------------- ENDING FUNDS AVAILABLE: $ 313,380.07 ============= 8 Sunrise Preschools, Inc. VENDOR CHECK REGISTER REPORT Payables Management * Voided Checks
Audit Check Number Vendor ID Vendor Check Name Check Date Checkbook ID Trail Code Amount - ------------ --------- ----------------- ---------- ------------ ---------- ------ 100013332 AMKINC000 AMKORE INC. 6/1/01 OPERATING PMCHK00000140 $7,817.69 100013333 ARIAIR000 ARIZONA AIR-SCENT 6/1/01 OPERATING PMCHK00000141 $390.22 100013334 ARIREP000 ARIZONA REPUBLIC 6/1/01 OPERATING PMCHK00000141 $208.00 100013335 AT&T78522 AT&T - 78225 6/1/01 OPERATING PMCHK00000141 $62.14 100013336 CENLEA000 CENTENNIAL LEASING & SALES INC 6/1/01 OPERATING PMCHK00000141 $408.65 100013338 CITPEO001 CITY OF PEORIA 6/1/01 OPERATING PMCHK00000141 $75.00 100013339 CITTEM000 CITY OF TEMPE 6/1/01 OPERATING PMCHK00000141 $255.00 100013340 FRYFOO000 FRY'S FOOD STORES 6/1/01 OPERATING PMCHK00000141 $204.29 100013341 KNO000000 KNOTT,MARILYN 6/1/01 OPERATING PMCHK00000141 $285.20 100013342 LAKLEA000-B LAKESHORE LEARNING MATERIALS 6/1/01 OPERATING PMCHK00000141 $1,175.41 100013343 LAUMAR000 MARK LAUER 6/1/01 OPERATING PMCHK00000141 $90.00 100013344 MANLIF000 MANULIFE FINANCIAL 6/1/01 OPERATING PMCHK00000141 $3,949.10 100013345 MARINF000-B MARKET INFORMATION CENTER 6/1/01 OPERATING PMCHK00000141 $133.75 100013346 MARWIL000 WILLIAM MAROE 6/1/01 OPERATING PMCHK00000141 $560.00 100013347 NICJUD000 Judy Niccum 6/1/01 OPERATING PMCHK00000141 $385.00 100013348 PURPOW000 PURCHASE POWER 6/1/01 OPERATING PMCHK00000141 $50.76 100013349 SLAJAC000 JACK SLATE 6/1/01 OPERATING PMCHK00000141 $1,264.66 100013350 SRP2950 SRP2950 6/1/01 OPERATING PMCHK00000141 $2,682.59 100013351 STAFUN000 STATE FUND COMPENSATION 6/1/01 OPERATING PMCHK00000141 $5,674.00 100013352 WELFAR001 WELLS FARGO 6/1/01 OPERATING PMCHK00000141 $352.00 100013353 WESINN000 WESTERN INNOVATIONS INC 6/1/01 OPERATING PMCHK00000141 $6,000.00 100013354 CITGLN001 CITY OF GLENDALE 6/5/01 OPERATING PMCHK00000142 $40.00 100013355 CITGLN001 CITY OF GLENDALE 6/5/01 OPERATING PMCHK00000142 $40.00 100013356 CITGLN001 CITY OF GLENDALE 6/5/01 OPERATING PMCHK00000142 $104.00 100013357 CITGLN001 CITY OF GLENDALE 6/5/01 OPERATING PMCHK00000142 $160.00 100013358 LITPAR Litchfield Parks & Recreation 6/5/01 OPERATING PMCHK00000142 $416.00 100013359 LITPAR Litchfield Parks & Recreation 6/5/01 OPERATING PMCHK00000142 $416.00 100013360 US0FOO000 US FOODSERVICE 6/7/01 OPERATING PMCHK00000143 $9,939.39 100013361 ACTENT000 ACTION ENTRANCE, INC. 6/8/01 OPERATING PMCHK00000144 $259.01 100013362 APS200000 APS-2907 6/8/01 OPERATING PMCHK00000144 $1,509.06 100013363 ARIAIR000 ARIZONA AIR-SCENT 6/8/01 OPERATING PMCHK00000144 $839.57 100013365 CACJEN000 JENNIFER CACAO 6/8/01 OPERATING PMCHK00000144 $123.00 100013366 CITPHO788 CITY OF PHOENIX-78815 6/8/01 OPERATING PMCHK00000144 $74.00 100013367 CITPHOWAT CITY OF PHOENIX (WATER SVCS)29 6/8/01 OPERATING PMCHK00000144 $713.01 100013368 CLS000000 CLS/CLEANWAY 6/8/01 OPERATING PMCHK00000144 $150.00 100013369 DOCTEC000 DOCUMENT TECHNOLOGIES 6/8/01 OPERATING PMCHK00000144 $32.30 100013370 EXTCLE000 EXTRACTION CLEANING COMPANY 6/8/01 OPERATING PMCHK00000144 $1,320.00 100013371 FEDEXP000 FEDERAL EXPRESS 6/8/01 OPERATING PMCHK00000144 $29.50 100013372 GECAP0003 GE CAPITAL 6/8/01 OPERATING PMCHK00000144 $283.34 100013373 HEASAV000 HEART SAVERS 6/8/01 OPERATING PMCHK00000144 $240.00 100013374 JETCON000 JET CONNECTION 6/8/01 OPERATING PMCHK00000144 $196.00 100013375 LAKLEA000-B LAKESHORE LEARNING MATERIALS 6/8/01 OPERATING PMCHK00000144 $1,286.75 100013376 NICJUD000 Judy Niccum 6/8/01 OPERATING PMCHK00000144 $700.00 100013377 NOP000000 NOPPENBERG,KAREN 6/8/01 OPERATING PMCHK00000144 $92.57 100013378 NUVROB000 ROBIN NUVAMSA 6/8/01 OPERATING PMCHK00000144 $176.30 100013379 PETSTA000 STACEY PETO 6/8/01 OPERATING PMCHK00000144 $123.69 100013380 PROUSA000 PROFORCE USA 6/8/01 OPERATING PMCHK00000144 $16,141.86 100013381 Q0MINC000 Q-MATRIX INC 6/8/01 OPERATING PMCHK00000144 $124.00 100013382 REDSER000 REDDI SERVICES 6/8/01 OPERATING PMCHK00000144 $781.74 100013383 SOUGAS000 SOUTHWEST GAS CORPORATION 6/8/01 OPERATING PMCHK00000144 $18.52 100013384 SRP2950 SRP2950 6/8/01 OPERATING PMCHK00000144 $1,612.29 100013385 STRPLU000 STRUSE PLUMBING INC. 6/8/01 OPERATING PMCHK00000144 $60.00 100013386 TOOLOR000 LORI TOOLEY 6/8/01 OPERATING PMCHK00000144 $49.29 100013387 US0WES003 US WEST COMMUNICATIONS-29060 6/8/01 OPERATING PMCHK00000144 $2,334.14 100013388 VEL000000 VELA,DANA 6/8/01 OPERATING PMCHK00000144 $214.21 100013390 MOTVEH000 MOTOR VEHICLE DIVISION 6/8/01 OPERATING PMCHK00000145 $129.46 100013391 MOTVEH000 MOTOR VEHICLE DIVISION 6/8/01 OPERATING PMCHK00000145 $255.57 100013392 MOTVEH000 MOTOR VEHICLE DIVISION 6/8/01 OPERATING PMCHK00000145 $255.57 100013393 MOTVEH000 MOTOR VEHICLE DIVISION 6/8/01 OPERATING PMCHK00000145 $255.57 100013394 MOTVEH000 MOTOR VEHICLE DIVISION 6/8/01 OPERATING PMCHK00000145 $85.24 100013395 VIP000000 VIP 6/8/01 OPERATING PMCHK00000145 $12.50 100013396 VIP000000 VIP 6/8/01 OPERATING PMCHK00000145 $12.50 100013397 VIP000000 VIP 6/8/01 OPERATING PMCHK00000145 $12.50 100013398 BANKAR000 KAREN BANNEN 6/11/01 OPERATING PMCHK00000146 $97.83 100013399 KRATER000 TERRILYNN KRAMER 6/11/01 OPERATING PMCHK00000146 $65.41 100013400 MAR000000 MARRO,GINNY 6/11/01 OPERATING PMCHK00000146 $56.20 100013401 SANSHE000 SHEILA SANVILLE 6/11/01 OPERATING PMCHK00000146 $60.52
9 Sunrise Preschools, Inc. VENDOR CHECK REGISTER REPORT Payables Management * Voided Checks
Audit Check Number Vendor ID Vendor Check Name Check Date Checkbook ID Trail Code Amount - ------------ --------- ----------------- ---------- ------------ ---------- ------ 100013402 THORAE000 THOMAS, RAE ANN 6/11/01 OPERATING PMCHK00000146 $74.21 100013403 SANBAR001 SANTA BARBARA BANK & TRUST 6/14/01 OPERATING PMCHK00000147 $578.34 100013404 US0FOO000 US FOODSERVICE 6/14/01 OPERATING PMCHK00000148 $9,457.13 100013405 MANLIF000 MANULIFE FINANCIAL 6/15/01 OPERATING PMCHK00000149 $3,373.42 100013406 MAR000000 MARRO,GINNY 6/15/01 OPERATING PMCHK00000149 $100.00 100013407 MARJOE000 JOELY MARTIN 6/15/01 OPERATING PMCHK00000149 $358.67 100013408 ARIAIR000 ARIZONA AIR-SCENT 6/18/01 OPERATING PMCHK00000150 $70.95 100013409 ARIREP000 ARIZONA REPUBLIC 6/18/01 OPERATING PMCHK00000150 $280.00 100013410 BELVIS000 BELLA VISTA WATER COMPANY 6/18/01 OPERATING PMCHK00000150 $185.86 100013411 CHEUSA000 CHEVRON USA INC 6/18/01 OPERATING PMCHK00000150 $5,324.95 100013412 CITGLEUTI CITY OF GLENDALE - UTILITIES 6/18/01 OPERATING PMCHK00000150 $379.58 100013413 CITPEOUTI CITY OF PEORIA - UTILITIES 6/18/01 OPERATING PMCHK00000150 $592.80 100013414 CITPHO788 CITY OF PHOENIX-78815 6/18/01 OPERATING PMCHK00000150 $296.00 100013415 CITPHOWAT CITY OF PHOENIX (WATER SVCS)29 6/18/01 OPERATING PMCHK00000150 $406.02 100013416 CITTEM000 CITY OF TEMPE 6/18/01 OPERATING PMCHK00000150 $170.00 100013417 CITTEM296 CITY OF TEMPE - 29617 6/18/01 OPERATING PMCHK00000150 $1,041.46 100013418 CLS000000 CLS/CLEANWAY 6/18/01 OPERATING PMCHK00000150 $450.00 100013419 COLLOC000 COLLINS LOCKSMITH 6/18/01 OPERATING PMCHK00000150 $65.00 100013420 CON000000 CONCENTRA 6/18/01 OPERATING PMCHK00000150 $858.00 100013421 GECAP0003 GE CAPITAL 6/18/01 OPERATING PMCHK00000150 $1,800.90 100013422 GREPLA000 Great Plains 6/18/01 OPERATING PMCHK00000150 $100.75 100013423 HEASAV000 HEART SAVERS 6/18/01 OPERATING PMCHK00000150 $84.00 100013424 HOMDEP000 HOME DEPOT 6/18/01 OPERATING PMCHK00000150 $2,612.49 100013425 HORDIS000 HORIZON DISTRIBUTION 6/18/01 OPERATING PMCHK00000150 $67.91 100013426 IROMOU000 IRON MOUNTAIN 6/18/01 OPERATING PMCHK00000150 $866.30 100013427 JAKBRE000 JAKE BREAK CAFE 6/18/01 OPERATING PMCHK00000150 $1,615.01 100013428 KINMGM000 KINNEY MANAGEMENT SERVICES 6/18/01 OPERATING PMCHK00000150 $40.00 100013429 MARBRO000 BRONWYN MARMO 6/18/01 OPERATING PMCHK00000150 $239.50 100013430 MARINF000-B MARKET INFORMATION CENTER 6/18/01 OPERATING PMCHK00000150 $726.50 100013431 MESPAR000 MESA PARKS,RECREATION 6/18/01 OPERATING PMCHK00000150 $52.00 100013432 MPRCD000 MPRCD 6/18/01 OPERATING PMCHK00000150 $52.00 100013433 NEWTIM000 NEW TIMES 6/18/01 OPERATING PMCHK00000150 $134.64 100013434 OPACS000 OPACS, INC 6/18/01 OPERATING PMCHK00000150 $28.00 100013435 OPECLE000 OPEN WORKS 6/18/01 OPERATING PMCHK00000150 $1,170.00 100013436 PACALA000 PACIFIC ALARMS COMPANY 6/18/01 OPERATING PMCHK00000150 $65.00 100013437 PENSAV000 PENNYSAVER 6/18/01 OPERATING PMCHK00000150 $2,500.00 100013438 PHODIR/000 Phone Directories Company Inc. 6/18/01 OPERATING PMCHK00000150 $304.50 100013439 Q0MINC000 Q-MATRIX INC 6/18/01 OPERATING PMCHK00000150 $2,294.71 100013440 RAIARI000 RAISING ARIZONA KIDS 6/18/01 OPERATING PMCHK00000150 $347.71 100013441 RANKAT000 RANDALL, KATHY 6/18/01 OPERATING PMCHK00000150 $518.63 100013442 ROAFIR000 ROADRUNNER FIRE & SAFETY 6/18/01 OPERATING PMCHK00000150 $743.00 100013443 SRP2950 SRP2950 6/18/01 OPERATING PMCHK00000150 $2,213.57 100013444 TERINT000 TERMINEX INTERNATIONAL 6/18/01 OPERATING PMCHK00000150 $764.00 100013445 THEHAR000 THE HARTFORD 6/18/01 OPERATING PMCHK00000150 $1,203.19 100013446 TOOLOR000 LORI TOOLEY 6/18/01 OPERATING PMCHK00000150 $305.99 100013447 U0CWIN000 U-C WINDOW CLEANING 6/18/01 OPERATING PMCHK00000150 $731.40 100013448 US0WES003 US WEST COMMUNICATIONS-29060 6/18/01 OPERATING PMCHK00000150 $766.06 100013449 ENCOMP000 ENCOMPASS 6/20/01 OPERATING PMCHK00000151 $789.49 100013450 US0FOO000 US FOODSERVICE 6/21/01 OPERATING PMCHK00000152 $9,938.84 100013451 FODAND000 ANDREA FODOR 6/22/01 OPERATING PMCHK00000153 $400.00 100013452 TARJOZ000 JOZSEF TARSOLY 6/22/01 OPERATING PMCHK00000153 $1,000.00 100013453 MANLIF000 MANULIFE FINANCIAL 6/22/01 OPERATING PMCHK00000154 $3,123.46 100013454 APS200000 APS-2907 6/22/01 OPERATING PMCHK00000155 $7,315.52 100013455 AT&TWIR06 AT&T WIRELESS SERVICES-PHOENIX 6/22/01 OPERATING PMCHK00000155 $2,796.98 100013456 BANONE003 BANK ONE ARIZONA NA 6/22/01 OPERATING PMCHK00000155 $206.32 100013457 BELSAM000 SAM BELNAP 6/22/01 OPERATING PMCHK00000155 $125.00 100013458 CITCHAUT1 CITY OF CHANDLER - UTILITIES 6/22/01 OPERATING PMCHK00000155 $686.37 100013459 CITGLN001 CITY OF GLENDALE 6/22/01 OPERATING PMCHK00000155 $60.00 100013460 CITMESUTI CITY OF MESA - UTILITIES - 187 6/22/01 OPERATING PMCHK00000155 $129.36 100013461 CITPHOWAT CITY OF PHOENIX (WATER SVCS)29 6/22/01 OPERATING PMCHK00000155 $305.77 100013462 CLS000000 CLS/CLEANWAY 6/22/01 OPERATING PMCHK00000155 $10,436.91 100013463 FAMTIM000 FAMILY TIMES, INC. 6/22/01 OPERATING PMCHK00000155 $625.65 100013464 IKOOFF003 IKON OFFICE SOLUTIONS (CA) 6/22/01 OPERATING PMCHK00000155 $36.75 100013465 JETCON000 JET CONNECTION 6/22/01 OPERATING PMCHK00000155 $253.00 100013466 LAKLEA000-B LAKESHORE LEARNING MATERIALS 6/22/01 OPERATING PMCHK00000155 $789.09 100013467 LITPAR Litchfield Parks & Recreation 6/22/01 OPERATING PMCHK00000155 $241.88 100013468 PACALA000 PACIFIC ALARMS COMPANY 6/22/01 OPERATING PMCHK00000155 $335.00 100013469 Q0MINC000 Q-MATRIX INC 6/22/01 OPERATING PMCHK00000155 $1,900.34 100013470 SRP2950 SRP2950 6/22/01 OPERATING PMCHK00000155 $2,426.03 100013471 US0WES003 US WEST COMMUNICATIONS-29060 6/22/01 OPERATING PMCHK00000155 $1,515.61 100013472 NOPMIK000 MIKE NOPPENBERG 6/26/01 OPERATING PMCHK00000156 $320.00 100013474 PANPRO000 PANTANO PRODUCE COMPANY 6/26/01 OPERATING PMCHK00000158 $1,148.95 100013475 NOPMIK000 MIKE NOPPENBERG 6/27/01 OPERATING PMCHK00000159 $640.00 100013476 US0FOO000 US FOODSERVICE 6/29/01 OPERATING PMCHK00000160 $8,398.63
10 Sunrise Preschools, Inc. VENDOR CHECK REGISTER REPORT Payables Management * Voided Checks
Audit Check Number Vendor ID Vendor Check Name Check Date Checkbook ID Trail Code Amount - ------------ --------- ----------------- ---------- ------------ ---------- ------ 100013477 4DPROP000 4D PROPERTIES 6/29/01 OPERATING PMCHK00000161 $12,316.01 100013478 ANCVIL000 ANCALA VILLAGE SHOPPING CENTER 6/29/01 OPERATING PMCHK00000161 $18,523.17 100013479 BLD7ZEL000 BLDG7UNION HILLS LLC 6/29/01 OPERATING PMCHK00000161 $9,420.78 100013480 DERENT000 DER ENTERPRISES LLP 6/29/01 OPERATING PMCHK00000161 $15,131.93 100013481 DIVINS000 DIVALL INSURED INCOME PROP INC 6/29/01 OPERATING PMCHK00000161 $11,418.37 100013482 MCCVEN003 MCCLINTOCK VENTURE LC 6/29/01 OPERATING PMCHK00000161 $13,067.25 100013483 MELUS0000 MELLON US LEASING 6/29/01 OPERATING PMCHK00000161 $5,761.19 100013484 MESDEV000 MESA DEVELOPMENT INC 6/29/01 OPERATING PMCHK00000161 $12,568.84 100013485 PEOINV000 PEORIA INVESTMENTS INC 6/29/01 OPERATING PMCHK00000161 $18,202.23 100013486 SANVIL003 SANTIAGO VILLA (#129) 6/29/01 OPERATING PMCHK00000161 $13,836.33 100013487 SANVIL005 SANTIAGO VILLA (#124) 6/29/01 OPERATING PMCHK00000161 $14,980.76 100013488 SC0WAR000 SC WARNER TEMPE, INC. 6/29/01 OPERATING PMCHK00000161 $13,475.11 100013489 SDMFAM000 SDM FAMILY CORP 6/29/01 OPERATING PMCHK00000161 $13,794.27 100013490 SUNPRE000 SUNRISE PRESCHOOL VI INVESTME 6/29/01 OPERATING PMCHK00000161 $18,533.62 100013491 WELFAR002 WELLS FARGO BANK 6/29/01 OPERATING PMCHK00000161 $18,541.69 100013492 WILPRE000 WILLIS PRESCHOOL VI 6/29/01 OPERATING PMCHK00000161 $12,939.66 ----------- Total Checks: 157 Total Amount of Checks: $398,788.18 ===========
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