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 xx.xx. 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.
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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.
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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 xxxx "Tesseract" or (ii) any intellectual property
of the Seller specifically listed in SCHEDULE 2.2.2 herein.
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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.
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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.
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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
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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.
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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 Xxxx
Xxxxx, 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 Xxxxx Xxxx 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.
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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
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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
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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 XXXX OF SALE. A duly executed xxxx 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:
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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.
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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
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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: Xxxx Xxxxx, Chief Executive Officer
The TesseracT Group, Inc.
0000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Copy To: Xxxxx X. Xxxxxxx, Esq.
Xxxxx Xxxx LLP
Xxx Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
To Buyer: BORG HOLDINGS, INC.
c/o Xxxxxxx Xxxxxxxxx
Nine Montia
Xxxxxx, Xxxxxxxxxx 00000
BORG HOLDINGS, INC.
c/o Xxxxxx Xxxx
000 Xxx Xxxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Copy To: Xxxxxxx Xxxxxxxx, Esq.
Xxxxxxxxx Xxxxxxx LLP
0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
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.
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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.
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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
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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/ Xxxxxxx X. Xxxxx
-----------------------------------------
Name Xxxxxxx X. Xxxxx
---------------------------------------
Title CEO
--------------------------------------
SELLER
BORG HOLDINGS, INC., an Arizona corporation
By /s/ Xxxxxx Xxxx
-----------------------------------------
Name Xxxxxx Xxxx
---------------------------------------
Title President
-------------------------------------
BUYER
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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
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