Exhibit 10.2
PURCHASE AND SALE AGREEMENT
(AHWATUKEE SCHOOL)
This PURCHASE AND SALE AGREEMENT (the "Agreement") is entered into as of
the ___ day of December, 2000, by and between THE TESSERACT GROUP, INC., a
Minnesota corporation, in its corporate capacity and in its capacity as debtor
and debtor-in-possession in its Chapter 11 case pending in the United States
Bankruptcy Court for the District of Arizona ("Seller"), and TAI, LLC an Arizona
limited liability company ("Buyer").
RECITALS
A. Seller operates that certain private school ("School") commonly known as
the "Ahwatukee TesseracT School" located at 0000 Xxxx Xxxxxxxx, Xxxxxxx,
Arizona.
B. Seller has filed a voluntary petition for Chapter 11 relief under Title
11 of the United States Code ("Bankruptcy Code"), which is pending before the
United States Bankruptcy Court for the District of Arizona (the "Bankruptcy
Court").
C. Seller desires, subject to the approval of the Bankruptcy Court, to sell
and Buyer desires to purchase certain assets and assume certain liabilities of
Seller in connection with Seller's operations of the School on the terms and
conditions set forth in this Agreement and in accordance with Bankruptcy Code
ss.ss.363 and 365.
D. Buyer and Seller further desire, subject to the approval of the
Bankruptcy Court, to enter into such other agreements and arrangements that
effectuate the orderly transition of the School from Seller to Buyer.
E. Buyer has completed its due diligence of the School and all other
matters addressed in this Agreement.
F. The parties hereto acknowledge that: (i) they intend that the
transaction contemplated under this Agreement be an asset purchase and not a
sale of the stock of Seller; and (ii) Buyer is not buying the Business of Seller
as defined in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following capitalized terms, when used
in this Agreement, shall have the meanings assigned to them as follows:
1.1 ASSUMED CONTRACTS. The term "Assumed Contracts" shall mean those
unexpired leases and other executory contracts which Buyer will assume
hereunder, which are specifically set forth on SCHEDULE 1.1 attached hereto.
1.2 BUSINESS. The term "Business" shall mean Seller's operations conducted
under the name "TesseracT,""The TesseracT Group, Inc.," or "Ahwatukee TesseracT
School," at the School and at any other location within or outside the State of
Arizona.
1.3 CLAIM. The term "Claim" shall be given the same meaning as provided to
such term under Bankruptcy Code ss.101(5).
1.4 CLOSING. The term "Closing" shall mean the completed exchange of: (i)
Closing documents set forth in Articles XIV and XV below, together with the
simultaneous conveyance by Seller to Buyer of the Purchased Assets; (ii) the
payment by Buyer to Seller of the Purchase Price due under the terms of this
Agreement; and (iii) the assumption by Buyer of the obligations which it has
expressly agreed to assume hereunder.
1.5 CLOSING DATE. The term "Closing Date" shall mean the date on which the
Closing occurs which shall not be later than January 15, 2001, unless such date
is extended as mutually agreed in writing by the parties hereto.
1.6 CORPORATE LEASE. The term "Corporate Lease" shall mean that certain
Lease between Buyer and Seller pursuant to which Seller shall lease that portion
of the Real Property necessary to operate its corporate office through no later
than June 15, 2000. The Corporate Lease shall be in a form that is substantially
similar to the form enclosed behind SCHEDULE 1.6.
1.7 COURT. The term "Court" shall mean the United States Bankruptcy Court
for the District of Arizona.
1.8 EPI. The term "EPI" shall mean Education Property Investors, Inc., a
Nevada corporation.
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1.9 EQUIPMENT. The term "Equipment" shall mean all furniture, fixtures,
office equipment, computers, printers, and other tangible personal property
owned by Seller as specifically set forth on SCHEDULE 1.9 attached hereto.
1.10 LEASE. The term "Lease" shall mean that certain Lease dated as of
December 27, 1999 by and between Seller, as lessee, and EPI, as lessor, pursuant
to which Seller leases the Real Property and the North Scottsdale Property from
EPI.
1.11 NORTH SCOTTSDALE PROPERTY. The term "North Scottsdale Property" shall
mean that certain real property located in Scottsdale, Arizona, at which Seller
operates the private school commonly referred to as the "North Scottsdale
TesseracT School."
1.12 PREPAID TUITION AND DEPOSIT LIABILITIES. The term "Prepaid Tuition and
Deposit Liabilities" shall mean the liabilities of Seller for any and all
unearned, prepaid tuition and deposits of students at the School collected by
Seller as of the Closing Date, which total approximately $51,931. By no later
than the Closing Date, the parties will agree to the form of a SCHEDULE 1.12,
which will set forth the exact amount of the Prepaid Tuition and Deposit
Liabilities as of the actual Closing Date.
1.13 PRESCHOOL. The term "Preschool" shall mean the preschool presently
operated by Seller at the Real Property.
1.14 REAL PROPERTY PURCHASE AGREEMENT. The term "Real Property Purchase
Agreement" shall mean the written agreement between Buyer and EPI that provides
for EPI's sale, and Buyer's purchase, of the Real Property.
1.15 REAL PROPERTY. The term "Real Property" shall mean the real property
that is the subject of the Real Property Purchase Agreement, which also is the
real property on which the Seller operates the School.
1.16 SECTION 363 ORDER. The term "Section 363 Order" shall mean the order
entered by the Court pursuant to Bankruptcy Code ss.363 approving Seller's sale
of the Purchased Assets (as defined in Section 2.1 below) to Buyer free and
clear of any and all liens, security interests, and adverse interests of any
kind, the form of which shall be agreed to by the parties hereto.
1.17 SECTION 365 ORDER. The term "Section 365 Order" shall mean the Order
entered by the Court pursuant to Bankruptcy Code ss.365(a) approving Seller's
decision to: (i) reject the Lease as it relates to the Real Property; provided,
however, that the Section 365 Order shall not provide for the rejection of the
Lease as it relates to the North Scottsdale Property unless Seller, in its sole
and absolute discretion, hereafter decides to reject the Lease as it relates to
the North Scottsdale Property; and (ii) assume the Assumed Contracts, the form
of which shall be agreed to by the parties hereto.
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1.18 TEACHERS' ACCRUED LIABILITIES. The term "Teachers' Accrued
Liabilities" shall mean the liabilities of Seller for accrued compensation
arising under Seller's employment contracts with the School's teachers as of the
Closing Date, which are specifically set forth on SCHEDULE 1.19 attached hereto
and totals $18,395. The Teachers' Accrued Liabilities amounts set forth on
SCHEDULE 1.19 assume that this transaction closes on January 15, 2000, and at
the Closing the parties will agree to an amended SCHEDULE 1.19 which sets forth
the amount of the Teachers' Accrued Liabilities based upon the actual Closing
Date. The Teachers' Accrued Liabilities is based upon that portion of teachers'
compensation that has accrued, but has not yet been paid, as of the Closing Date
because teachers at the School work ten (10) months, but are paid over twelve
(12) months, under their employment contracts with Seller.
1.19 ADMINISTRATIVE LEASE CLAIM. The term "Administrative Lease Claim"
shall mean the Claim entitled to administrative priority pursuant to Bankruptcy
Code ss.503(b) arising under the Lease with respect to the Real Property and the
North Scottsdale Property for the period of October 6, 2000 through October 31,
2000. The parties hereto agree the amount of the Administrative Lease Claim is
$137,903.00.
ARTICLE II
PURCHASE AND SALE
2.1 ASSETS TO BE SOLD. Subject to the terms and conditions of this
Agreement, on the Closing Date, Seller agrees to sell, assign, transfer and
convey the following assets to Buyer (collectively, the "Purchased Assets"):
2.1.1 EQUIPMENT AND THE ASSUMED CONTRACTS. The Equipment and the
Assumed Contracts.
2.1.2 OTHER PROPERTY. In addition to the Equipment, any and all other
tangible property, inventory, and ancillary assets utilized by Seller in
connection with the Business conducted at the School and located at the School,
including, but not limited to, supplies-on-hand at the School.
2.1.3 RECORDS, FILES AND RELATED MATERIALS. Copies of all records,
files, invoices, student lists, customer data (including telephone numbers),
accounting records, business records, operating data and other data of Seller
relating to the School.
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2.1.4 CERTAIN RIGHTS. All rights under or pursuant to all warranties,
representations and guarantees made by suppliers in connection with the
Purchased Assets or services furnished to Seller pertaining to the School or
affecting the Purchased Assets, to the extent such warranties, representations
and guarantees: (i) are not required by Seller to fulfill its obligations under
this Agreement; and (ii) are assignable.
2.1.5 GOODWILL. All of Seller's goodwill that relates to the School.
2.2 EXCLUDED ASSETS. Notwithstanding Section 2.1 above, Seller shall not
sell, transfer, assign, convey or deliver to Buyer, any asset not specifically
addressed in Section 2.1 above, including but not limited to the following
assets (collectively the "Excluded Assets"):
2.2.1 CONSIDERATION. The consideration delivered by Buyer to Seller
pursuant to this Agreement.
2.2.2 INTELLECTUAL PROPERTY. All intellectual property of Seller,
including, but not limited to, Sellers' trademarks, trade names, curriculum, and
trade secrets.
2.2.3 INSURANCE POLICIES. Seller's insurance policies and rights
thereunder, including, but not limited to, general liability and workers'
compensation insurance held by Seller.
2.2.4 CORPORATE FRANCHISE . Seller's franchise to be a corporation,
its certificate of incorporation, corporate seal, stock books, minute books and
other corporate records having exclusively to do with the corporate organization
and capitalization of Seller.
2.2.5 PRESCHOOL LICENSE. Seller's license issued by the Arizona
Department of Education to operate the Preschool.
2.3 SELLER'S BUSINESS. The parties expressly acknowledge and agree that
this Agreement is not entered into for the sale of the stock of Seller or the
sale of Seller's Business. The Agreement addresses only those assets located on
the School's premises, or used by Seller solely in connection with the School,
and which are defined herein as the Purchased Assets.
ARTICLE III
ASSUMPTION OF LIABILITIES
3.1 ASSUMED LIABILITIES . At Closing, Seller shall assign, and Buyer shall
assume (collectively, the "Assumed Liabilities"): (i) the Assumed Contracts;
provided, however, that: (a) Seller shall be solely responsible to cure the
Assumed Contracts effective as of the Closing Date; and (b) Buyer shall only be
obligated to pay, perform, or discharge in accordance with their terms such
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obligations thereunder that first become performable on or after the Closing
Date; (ii) the Teachers' Accrued Liabilities; and (iii) the Prepaid Tuition and
Deposit Liabilities only to the extent such funds are turned over to Buyer
pursuant to Section 7.6 below. Buyer shall fully and faithfully perform all
duties and obligations, due or owing after Closing, of Seller with respect to
the Assumed Liabilities.
3.2 NO ASSUMPTION OF OTHER LIABILITIES. Except as expressly set forth in
this Agreement, Buyer does not by this Agreement, and will not be obligated to,
assume any obligation, liability or duty of Seller whether incurred in
connection with the Purchased Assets, whether known or unknown as of the Closing
Date, discovered or undiscovered as of the Closing Date, or otherwise. Unless
otherwise provided herein, Buyer shall not deemed by anything contained herein
to have assumed any of Seller's liabilities, including, but not limited to: (i)
any obligation or liability of Seller arising from any tort claims made by a
third party arising from actions or failures to act by the Seller or otherwise
relating to the School prior to the Closing; or (ii) any obligation or liability
of Seller relating to employees or independent contractors accruing on or prior
to the Closing Date, including, but not limited to, accrued salaries, other
compensation or benefits, severance payments, accrued vacations, pensions,
retirement plans, distributions or bonuses accruing on or prior to 3:00 p.m. on
the Closing Date; it being understood that, at or prior to the Closing, any
employment agreements between Seller and any employees relating to the operation
of the School will be terminated on or before the Closing Date and none of the
same will prevent any of such employees from becoming employees of Buyer after
the Closing.
3.3 ALLOCATIONS. At the Closing Date and/or within a reasonable period of
time after the Closing Date, as the case may be, and effective as of 3:00 p.m.
local time on the Closing Date, to the extent not otherwise provided for by any
other provision of this Agreement, Buyer and Seller shall allocate any
obligations or liabilities relating to the School (such as equipment and other
operating lease payments, real estate and personal property tax payments, and
the like) consistent with the terms of this Agreement.
ARTICLE IV
TERMS OF PAYMENT
4.1 PAYMENT DUE AT CLOSING. At Closing, Buyer shall provide, and Seller
shall receive consideration equal to $100,000 (the "Purchase Price") LESS the
amount of the Deposit delivered by Buyer to Seller in accordance with Section
4.2 below. The Purchase Price is composed of: (i) Buyer's release and waiver of
the Administrative Lease Claim (see Section 6.3 below) (the "Waived
Administrative Claim"); (ii) Buyer's assumption of the Teachers' Accrued
Liabilities; (iii) $12,653.50 in cash paid by certified funds or wire transfer
on the Closing Date (the "Cash Payment"); and (iv) the Corporate Lease.
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4.2 DEPOSIT. Contemporaneously with the execution of this Agreement, Buyer
shall deliver and the Seller shall accept a cash deposit in the amount of
$10,000.00 (the "Deposit"), which shall not be refundable to Buyer unless: (i)
the transactions contemplated in this Agreement do not close due to Seller's
failure to meet all of the conditions precedent set forth in Article XIV of this
Agreement; or (ii) Seller otherwise refuses to close the transactions
contemplated in this Agreement. If the Closing does not occur on or before
January 15, 2001, due to any event described in the immediately preceding (i)
and (ii), then Seller shall immediately transfer the Deposit to Buyer.
4.3 DETERMINATION. At or prior to thirty (30) days after the Closing, Buyer
and Seller shall mutually agree to an allocation of the Purchase Price among the
Purchased Assets in a reasonable manner that is in accordance with the
requirements of Section 1060 of the Internal Revenue Code of 1986, as amended,
and any applicable Treasury Regulations promulgated thereunder. Each party
agrees to file, at its own expense, all federal, state and local tax returns in
conformity with such allocation.
ARTICLE V
REPRESENTATIONS, WARRANTIES, AND COVENANTS OF SELLER
Seller hereby represents, warrants, and covenants to Buyer as follows, and
the warranties, representations, and covenants contained in this Article or
elsewhere in this Agreement shall be deemed to be made as of the Closing:
5.1 CORPORATE STATUS. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Minnesota and is
qualified to do business in the State of Arizona.
5.2 CORPORATE AUTHORITY. Subject only to approval of the Court, Seller has
full power and authority to execute and perform this Agreement and all corporate
action necessary to confirm such authority has been duly and lawfully taken.
Upon execution hereof, this Agreement shall be a valid, legally binding
obligation of Seller, enforceable in accordance with its terms subject only to
approval by the Court.
5.3 TITLE TO PURCHASED ASSETS. Seller has good and marketable title to the
Purchased Assets, and has full power and authority to transfer such title to
Buyer subject only to approval by the Court.
5.4 ASSUMED CONTRACTS. The Assumed Contracts are valid, binding and in full
force and effect; and there exists no default or event that with the giving of
notice, the passage of time or both, would constitute a default thereunder that
remains uncured as of the Closing Date.
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5.5 CONDITION OF THE PURCHASED ASSETS. The equipment, fixtures, furniture,
furnishings, office equipment and all other tangible personal assets and
properties of Seller (including the Purchased Assets) presently used in, or
necessary to the operation of, the School, are in good operating condition and
have been maintained in accordance with normal industry practice. There are no
material defects in the physical condition of the Purchased Assets, including,
but not limited to, structural elements, mechanical systems, roofs or parking
and loading areas. All water, sewer, gas, electric, telephone, drainage and
other utilities required by law or necessary for the operation of the Purchased
Assets have been connected pursuant to valid permits and are sufficient to
service the School.
5.6 COMPLIANCE WITH LAW AND OTHER REGULATIONS. Seller has operated the
School in compliance with all requirements (including, those relating to
environmental matters) of federal, state and local law, and all requirements of
all governmental bodies and agencies having jurisdiction over it with respect to
the School, the operation of the School, the use of the Purchased Assets, and
all premises occupied by Seller with respect to the School. Seller is not aware
of any charge, complaint, action, suit, proceeding, hearing, investigation,
claim, demand, or notice has been filed or commenced against Seller or the
School alleging any failure to comply with any such law or regulation.
5.7 STATEMENTS AND OTHER DOCUMENTS NOT MISLEADING. Neither this Agreement,
nor any schedule or exhibit hereto, contains any untrue statement of material
fact with respect to Seller or the School or omits to state a material fact with
respect to Seller or the School required to be stated in order to make such
statement, document or other instrument not misleading.
5.8 LABOR RELATIONS. No employee of Seller at any of the School is
represented by a labor union, and no petition has been filed or proceedings
instituted by any employee or group of employees with any labor relations board
seeking recognition of a bargaining representative. There are no matters pending
before the National Labor Relations Board or any similar state or local labor
agency with respect to the employees at the School, and Seller is not engaged in
or subject to any penalties or enforcement action in respect of any unfair labor
practices with respect to the employees at the School. Seller is not delinquent
in payments to any of its employees for any wages, salaries, commissions,
bonuses or other direct compensation for any services performed for it to the
date hereof or amounts required to be reimbursed to such employees. Seller is in
compliance with all applicable laws and regulations respecting labor,
employment, fair employment practices, work place safety and health, terms and
conditions of employment, and wages and hours. There are no charges of
employment discrimination or unfair labor practices, nor are there any strikes,
slowdowns, stoppages of work, or any other concerted interference with normal
operations existing, pending or threatened against or involving Seller.
5.9 ENVIRONMENTAL MATTERS. Seller has not received notice of violation of
any Environmental Law (as defined in this Section 5.9) or land use laws
applicable to the School. For purposes of this Agreement, the term
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"Environmental Law" shall mean any current statute or regulation pertaining to:
(i) the protection of health, safety and outdoor environment; (ii) the
protection or use of surface water and groundwater; (iii) the management,
manufacture, possession, presence, use, generation, transportation, treatment,
storage, disposal, release, threatened release, abatement, removal, remediation
or handling of, or exposure to, any solid waste or "Hazardous Material" (as
defined in this Section 5.9); or (iv) pollution (including any release to air,
land, surface water, and groundwater), and includes, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act ("CERCLA"), 42 USC
9601 et seq., the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendments
of 1984 ("RCRA"), 42 USC 6901 et seq., the Federal Water Pollution Control Act,
as amended by the Clean Water Act of 1977, 33 USC 1251 et seq., the Clean Air
Act of 1966, as amended, 42 USC 7401 et seq., the Toxic Substances Control Act
of 1976, 15 USC 2601 et seq., the Hazardous Materials Transportation Act, 49 USC
App. 1801 et seq., the Oil Pollution Act of 1990, 33 USC 2701 et seq., the
Emergency Planning and Community Right to Know Act of 1986, 42 USC 11001 et
seq., the National Environmental Policy Act of 1969, 42 USC 4321 et seq., the
Safe Drinking Water Act of 1974, as amended, 42 USC 300(f) et seq., any similar
implementing law, and any current amendment, rule, regulation or order issued
thereunder. For purposes of this Agreement, the term "Hazardous Material" shall
mean any substance that is hazardous or toxic and includes, without limitation:
(a) asbestos, polychlorinated biphenyls, and petroleum (including crude oil or
any fraction thereof); and (b) any such material classified or regulated as
"hazardous" or "toxic" pursuant to any Environmental Law.
5.10 LICENSES. Seller has all approvals, authorizations, consents,
licenses, and permits (collectively, "Licenses") of any governmental or
regulatory agency, whether federal, state, local or foreign, required to permit
it to carry on the business as presently conducted at the School, all of which
are in full force and effect, except where the failure to possess any such
Licenses would not have a material adverse effect on the operation of the School
or ownership of the Purchased Assets. A valid certificate of occupancy has been
issued with respect to the School, and Seller lawfully occupies the School
premises under said certificate of occupancy.
ARTICLE VI
REPRESENTATIONS, WARRANTIES, AND COVENANTS OF BUYER
Buyer hereby represents and warrants to Seller as follows and the
warranties and representations contained in this Article or elsewhere in this
Agreement shall be deemed to be made as of Closing:
6.1 ORGANIZATION. Buyer is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Arizona.
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6.2 AUTHORITY. Buyer has full power and authority to execute and perform
this Agreement and all action necessary to confirm such authority has been duly
and lawfully taken. Upon execution hereof, this shall be a valid and legally
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms subject only to approval by the Court.
6.3 ADMINISTRATIVE LEASE CLAIM. As of the Closing Date: (i) Buyer owns a
fifty percent (50%) undivided interest in the Administrative Lease Claim (the
"Administrative Lease Claim"); (ii) Buyer shall not have previously sold,
assigned, or transferred the Administrative Lease Claim; and (iii) the amount of
the Administrative Lease Claim shall be not less than $68,951.50.
ARTICLE VII
OTHER COVENANTS
7.1 CURRICULUM. Buyer shall have the fully paid up, non-exclusive right to
use Seller's curriculum in its post-Closing operation of the School at the Real
Property, including, without limitation, materials and instruction techniques.
7.2 PRESCHOOL. If Buyer has not obtained a license from the Arizona
Department of Education to operate the Preschool at the Real Property (the
"Preschool License") as of the Closing Date, then Seller shall continue to
manage and operate the Preschool for Buyer until such time as Buyer obtains the
Preschool License; provided, however, that: (i) Seller shall be entitled to be
reimbursed from Buyer, and Buyer shall pay Seller, for all reasonable costs and
expenses associated with Seller's management and operation of the Preschool
under this Section 7.2 if Buyer has not received the Preschool License within
sixty (60) days of the Closing Date; and (ii) Buyer will use its best efforts to
obtain the Preschool License from and after the date hereof, and will keep
Seller regularly apprised of the status of its licensure efforts until the
Preschool License is issued to Buyer; and (iii) Seller's obligation to manage
and operate the Preschool pursuant to this Section 7.2 shall terminate the later
of: (i) the date the Arizona Department of Education issues the Preschool
License to Buyer; and (ii) June 30, 2001, unless otherwise agreed to in writing
by Seller. All debts and liabilities to third persons incurred by Seller
pursuant to this Section 7.2, in the course of its operation and management of
the Preschool shall be the debts and liabilities of Buyer only, and Seller shall
not be liable for (and is shall be indemnified in respect of) any such debts or
liabilities. If ADE objects to the management and operation procedures set forth
in this Section 7.2, then the parties will mutually cooperate to arrive at an
alternative arrangement that provides one another with the benefit of their
bargain hereunder.
7.3 SCHOOL OPERATIONS UNTIL THE CLOSING. Between the date of this
Agreement and the Closing Date, Seller shall operate the School only in the
regular, ordinary, and usual course and manner of Seller's general business
practices, maintain its existing insurance (or similar coverage) covering the
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Purchased Assets and maintain its liability insurance coverage with respect to
the School and the operations conducted therein, maintain the level of supplies,
inventory and consumables customarily maintained by Seller in its ordinary
course of business at the School, maintain, replace when required to continue
the regular operations of the School, and keep in repair and regular working
order, except for ordinary wear and tear, the Purchased Assets, use its
commercially reasonable best efforts to keep available the services of its
current employees at the School, use its commercially reasonable best efforts to
maintain and preserve the good will of the suppliers, customers, employees, and
other having business relations with the School, and comply with all of its
agreements, licenses, permits and authorizations.
7.4 ACCESS. Seller shall provide to Buyer access to or copies of such
additional books, contracts, documents, and records related to the operation of
the School as Buyer may reasonably request to enable it to complete its review
of the School's operations. In addition, Buyer shall permit Seller to physically
inspect the School, complete a physical inventory of the items located at the
School and interview and consult with any employees who render services with
respect to the School.
7.5 TRANSITION. Buyer and Seller will mutually cooperate with one another
to provide for an orderly transition of the School to minimize to the extent
reasonably possible disruption to the students at the School. Buyer anticipates
closing its transaction with EPI for the purchase of the Real Property prior to
the Closing Date. To the extent that Seller surrenders possession of the School
to Buyer, as owner of the Real Property, prior to the Closing Date, the parties
agree that Buyer's right to an administrative claim under the Lease shall cease
to accrue effective as of the date of such surrender.
7.6 PREPAID TUITION AND DEPOSIT LIABILITIES. On the Closing Date, Seller
shall turn over to Buyer cash equal to the amount of the Prepaid Tuition and
Deposit Liabilities set forth on SCHEDULE 1.12 and such post-Closing funds which
are Prepaid Tuition and Deposit Liabilities received by Seller (the "Prepaid
Cash"). The Prepaid Cash shall be a liability of Buyer to the party who paid
such cash to Seller ("Payor") until such time as Buyer has earned the Prepaid
Cash by providing the related educational services to Payor; provided, however,
that Buyer shall be required to return the unearned amount of such Prepaid Cash
to Payor upon written demand if Payor decides not to do business with Buyer any
time after the Closing Date.
ARTICLE VIII
EMPLOYEES
8.1 DEFINITION. Seller has provided Buyer with a complete list of all
persons regularly employed on either a part-time or full-time basis by Seller in
connection with the School ("Employees"), a copy of which is attached hereto as
SCHEDULE 8.1.
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8.2 EMPLOYMENT OF SELLER'S EMPLOYEES AT THE SCHOOL. Simultaneously with
the Closing, Seller shall terminate all employees employed at the School by
Seller, excluding any employees whose employment responsibilities extend to
schools owned or operated by Seller other than the School. Buyer agrees to offer
to hire all of Seller's Employees as of the Closing Date set forth on SCHEDULE
8.1 (the "Continuing Employees") and such offers of employment to the Continuing
Employees shall be on substantially equivalent terms as existed with Seller as
of the date hereof; provided, however, that nothing in this Agreement or
otherwise shall (i) constitute an agreement by Buyer to assume any of Seller's
liabilities with respect to such Continuing Employees for vacation, or such pay,
bonuses or the like, or (ii) prevent Buyer from terminating the employment of
any Continuing Employee after the Closing Date. Seller hereby agrees to
indemnify, defend and hold Buyer harmless from and against any liabilities,
claims, losses, fines or liabilities with respect to, and against the claims of
any persons alleging violations of any pension, retirement, profit sharing,
compensation, fringe benefit, health or other insurance, or any other employee
benefit plans, including any "employee benefit plan" as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended, arising with
respect to such persons' employment at the School on or before 3:00 p.m. local
time on the Closing Date, and no facts or circumstances exist that would cause
Buyer to be liable to any person in connection with any such plans of Seller.
From and after the Closing Date, Buyer shall be solely responsible for payment
of: (i) the Teachers' Accrued Liabilities when and if due; and (ii) when and if
due, all claims by or obligations to Transferred Employees arising after the
Closing Date, including, but not limited to, any accrued vacation pay, sick
leave, or bonuses, arising after the Closing Date.
8.3 EMPLOYEE SOLICITATIONS. Buyer shall be entitled to reasonable access
to all employees related to the School for purposes of interviewing these
individuals; provided, however, that all such access shall be coordinated
through the Chief Executive Officer of Seller.
8.4 WORKERS' COMPENSATION. Seller agrees to assume all responsibility for
liability arising from workers' compensation claims, both medical and
disability, which have been filed at or prior to the time of Closing or which
arose out of incidents that occurred prior to Closing. Buyer shall be
responsible for all claims which arise out of, or are based upon, incidents
which occur subsequent to Closing.
ARTICLE IX
INDEMNITIES
9.1 SELLER. Seller agrees to hold harmless, indemnify and defend Buyer
from and against any and all loss, claim, damage, liability or expense
(including, but not limited to, reasonable attroneys' fees and costs) arising
out of or occurring as the result of any breach by Seller of any of its
covenants, representations or warranties hereunder. Such indemnification shall
12
include any claims pertaining to events or actions occurring prior to the date
of Closing. In no event shall the liability of Seller under this Section 9.1
collectively exceed $5,000.
9.2 BUYER. Buyer agrees to hold harmless, indemnify and defend Seller from
and against any and all loss, claim, damage, liability or expense (including,
but not limited to, reasonable attorneys' fees and costs) arising out of or
occurring in connection with any breach by Buyer of any of its covenants,
representations or warranties hereunder, or any liability of Buyer. Such
indemnification shall include any claims pertaining to events or actions
occurring after the date of Closing.
ARTICLE X
CLOSING
10.1 CLOSING. Closing shall occur at the law offices of Xxxxxxx & Xxxxx
Xxxxxxx Xxxx, LLP, in Phoenix, Arizona, on a date that is not later than ten
(10) business days after the Court enters the Section 363 Order and the Section
365 Order; provided, however, that the Closing must occur by no later than
January 15, 2001.
10.2 TIME IS OF THE ESSENCE. Time is of the essence for the Closing of this
transaction and if such Closing does not occur as provided in Section 10.1
above, a new Closing Date may be set if, and only if, mutually agreed upon in a
writing signed by both parties. If a new Closing Date is not so set, then
neither Seller nor Buyer shall have any further obligation under this Agreement.
ARTICLE XI
CONDITIONS PRECEDENT TO BUYER'S DUTY TO CLOSE
Buyer shall have no duty to close, and no obligation hereunder, unless and
until each and every one of the following conditions precedent have been fully
and completely satisfied:
11.1 CONTINUED TRUTH OF WARRANTIES. All of the representations and
warranties of Seller contained herein shall continue to be true and correct at
Closing.
11.2 PERFORMANCE OF OBLIGATIONS. Seller shall have fully performed or
tendered performance of each and every one of its obligations hereunder which by
its terms is capable of performance before Closing.
11.3 DELIVERY OF CLOSING DOCUMENTS. Seller shall have tendered delivery to
Buyer of all the documents, in form and substance reasonably satisfactory to
Buyer, required to be delivered to Buyer by Seller on or before Closing pursuant
to this Agreement.
13
11.4 LITIGATION. No lawsuit, administrative proceedings or other legal
action shall have been filed against Seller as of the Closing Date which seeks
to restrain or enjoin Buyer's acquisition of the Purchased Assets, or the
assumption of the Assumed Contracts.
11.5 NO MATERIAL ADVERSE CHANGE. The School shall not have suffered any
material adverse change since the date of this Agreement.
11.6 COURT ORDERS. The Court shall have entered the Section 363 Order and
the Section 365 Order; provided, however, that Buyer shall not have the right to
not close this transaction solely because the Section 365 Order approves
Seller's decision to reject the Lease as it relates to the North Scottsdale
Property in addition to the Real Property.
ARTICLE XII
CONDITIONS PRECEDENT TO SELLER'S DUTY TO CLOSE
Seller shall have no duty to close this transaction unless and until each
and every one of the following conditions precedent have been fully and
completely satisfied:
12.1 CONTINUED TRUTH OF WARRANTIES. All of the representations and
warranties of Buyer contained herein shall continue to be true and correct at
Closing.
12.2 PERFORMANCE OF OBLIGATIONS. Buyer shall have fully performed or
tendered substantial performance of each and every one of its obligations
hereunder which by its terms is capable of performance before Closing.
12.3 DELIVERY OF CLOSING DOCUMENTS. Buyer shall have tendered delivery to
Seller of all the documents, in form and substance reasonably satisfactory to
Buyer, required to be delivered to Seller by Buyer on or before Closing pursuant
to this Agreement.
12.4 LITIGATION. No lawsuit, administrative proceedings or legal action
other than the Chapter 11 Case shall have been filed by or against Seller as of
the Closing Date which seeks to restrain or enjoin Seller's sale of the
Purchased Assets or the assumption of the Assumed Contracts.
12.5 COURT ORDERS. The Court shall have entered the Section 363 Order and
the Section 365 Order; provided, however, that Buyer shall not have the right to
not close this transaction solely because the Section 365 Order approves
Seller's decision to reject the Lease as it relates to the North Scottsdale
Property in addition to the Real Property.
14
ARTICLE XIII
ITEMS TO BE DELIVERED AT CLOSING BY SELLER
At Closing, Seller shall, unless waived in writing by Buyer, deliver to
Buyer the following items, each in form and substance reasonably acceptable to
Buyer and Buyer's counsel:
13.1 XXXX OF SALE. A duly executed xxxx of sale selling, assigning,
transferring, and conveying the Purchased Assets.
13.2 CERTIFIED RESOLUTION. A copy of the resolution of the Board of
Directors of Seller, certified by the Secretary of Seller, authorizing the
execution and performance of this Agreement.
13.3 REPRESENTATIONS AND WARRANTIES. A certificate signed by an appropriate
representative of Seller to the effect that all the representations and
warranties of Seller contained herein are true and correct as of Closing.
ARTICLE XIV
ITEMS TO BE DELIVERED AT CLOSING BY BUYER
At Closing, Buyer shall, unless waived in writing by Seller, deliver the
following items, each in form and substance reasonably acceptable to Seller and
Seller's counsel, to Seller:
14.1 CERTIFIED RESOLUTION. A copy of the resolutions appropriate
representative(s) of Buyer authorizing the execution and performance of this
Agreement.
14.2 THE CORPORATE LEASE. The Corporate Lease.
14.3 THE ADMINISTRATIVE LEASE CLAIM. Buyer's written release and waiver of
the Administrative Claim.
14.4 REPRESENTATIONS AND WARRANTIES. A certificate signed by an appropriate
representative of Buyer to the effect that all the representations and
warranties of Buyer contained herein are true and correct as of Closing.
14.5 THE PURCHASE PRICE. The Purchase Price.
15
ARTICLE XV
MISCELLANEOUS
15.1 RIGHT TO BID. Buyer acknowledges and understands that the Court may
consider higher and better offers for the Purchased Assets. Notwithstanding any
other language to the contrary herein, Buyer acknowledges and agrees that, even
if Buyer is outbid for the Purchased Assets, Seller will remain entitled to all
of the benefits and consideration provided by Buyer to Seller under this
Agreement other than the Deposit, the Waived Administrative Claim and the Cash
Payment.
15.2 FURTHER ASSURANCES. Each party shall, at any time after Closing,
execute and deliver to the other party all such additional instruments of
conveyance and assignments, certificates or similar documents and take all such
further actions as such other party may reasonably request.
15.3 NO OTHER AGREEMENTS. This Agreement, and all agreements delivered as
part of the Closing contemplated herein, constitute the entire agreement between
the parties with respect to its subject matter. All prior and contemporaneous
negotiations, proposals and agreements between the parties are superseded by
this Agreement. Any changes to this Agreement must be agreed to in writing
signed by both parties.
15.4 WAIVER. Either party may waive the performance of any obligation owed
to it by the other party hereunder for the satisfaction of any condition
precedent to the waiving party's duty to perform any of its covenants, including
its obligations to Close. Any such waiver shall be valid only if contained in a
writing signed by the waiving party.
15.5 PUBLIC ANNOUNCEMENTS. Through the Closing, no public announcements of
this Agreement shall have been made unless Buyer and Seller shall have mutually
agreed on the timing, distribution, and contents of such announcements, except
as may be required by law. The parties hereto acknowledge and understand that
this Agreement will be filed with the Court promptly upon its execution by the
parties hereto.
15.6 NOTICES. Any notices required or allowed in this Agreement shall be
effectively given if placed in a sealed envelope, postage prepaid, and deposited
in the United States mail, registered or certified, addressed as follows:
To Seller: Xxxxxx Xxxxxxx, Ph.D.
The TesseracT Group, Inc.
0000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
16
Copy To: Xxxxxx X. Xxxxxx, Esq.
Xxxxxxx & Xxxxx Xxxxxxx Xxxx, LLP
Xxx Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
To Buyer: TAI, LLC
c/o Squire, Xxxxxxx & Xxxxxxx L.L.P.
00 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxx, Esq.
X.X. Xxxxxxx, Esq.
15.7 BROKER AND FINDERS. Each of the parties hereto represents and warrants
to the other that it has not employed or retained any broker or finder in
connection with the transactions contemplated by this Agreement nor has it had
any dealings with any person which may entitle such person to a fee or
commission from any party hereto. Each of the parties shall indemnify and hold
the other harmless for, from and against any claim, demand or damage whatsoever
by virtue of any arrangement or commitment made by it with or to any person that
may entitle such person to any fee or commission from the other party to this
Agreement.
15.8 RISK OF LOSS. The risk of loss, damage, or destruction of the
Purchased Assets shall be borne by Seller until Closing. In the event any loss
or damage to or taking of any such Purchased Assets is material in the context
of this transaction and occurs before Closing, Seller shall immediately notify
Buyer of the nature and extent of such loss, damage or taking, and Buyer shall,
at its option, by written notice to Seller, either terminate this Agreement
without further liability or obligation to Seller and Seller shall return the
Deposit, or Buyer may proceed with this transaction on the terms and conditions
mutually agreeable to the parties, including any adjustment in the Purchase
Price.
15.9 THIRD-PARTY BENEFICIARY. Nothing contained herein shall create or give
rise to any third-party beneficiary rights for any individual or entity as a
result of the terms and provisions of this Agreement.
15.10 RELATIONSHIP OF PARTIES. The relationship of Seller and Buyer shall
be that of independent entities and neither shall be deemed to be the agent of
the other.
15.11 CHOICE OF LAW. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Arizona and, as applicable, the
Bankruptcy Code.
17
15.12 PARAGRAPH HEADINGS. The Section, Article and paragraph headings
contained herein are for convenience only and shall have no substantive bearing
on the interpretation of this Agreement.
15.13 RULES OF INTERPRETATION . The following rules of interpretation shall
apply to this Agreement, the Schedules hereto and any certificates, reports or
other documents or instruments made or delivered pursuant to or in connection
with this Agreement, unless otherwise expressly provided herein or therein and
unless the context hereof or thereof clearly requires otherwise:
15.13.1 A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to time in
accordance with its terms, and if a term is said to have the meaning assigned to
such term in another document or agreement and the meaning of such terms therein
is amended, modified or supplemented, then the meaning of such term herein shall
be deemed automatically amended, modified or supplemented in a like manner.
15.13.2 References to the plural include the singular, the singular
the plural and the part the whole.
15.13.3 The words "include," "includes," and "including" are not
limiting.
15.13.4 A reference to any law includes any amendment or modification
to such law which is in effect on the relevant date.
15.13.5 A reference to any person or entity includes its successors,
heirs and permitted assigns.
15.13.6 The words "hereof," "herein," "hereunder," and similar terms
in this Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement.
15.13.7 All Schedules to this Agreement constitute material terms of
this Agreement and are incorporated fully into the terms of this Agreement.
15.14 TIME IS OF THE ESSENCE. Time is of the essence in the performance and
observance of all obligations and duties under this Agreement.
15.15 ATTORNEY FEES. Each party shall bear its own legal fees and costs
incurred in the negotiation and closing of this transaction. In the event of a
dispute arising between the parties under this Agreement, the prevailing party
shall be entitled to reasonable attorneys' fees and costs of suit from the
non-prevailing party.
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15.16 COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be executed in
any number of counterparts, each of which shall be an original, but all of such
counterparts shall together constitute but one and the same instrument. Delivery
of an executed counterpart of this Agreement by telefacsimile shall be equally
as effective as delivery of a manually executed counterpart of this Agreement.
Any party delivering an executed counterpart of this Agreement by telefacsimile
also shall deliver a manually executed counterpart of this Agreement but the
failure to deliver a manually executed counterpart shall not affect the
validity, enforceability, and binding effect of this Agreement.
IN WITNESS WHEREOF, the parties hereto have set their hands effective the
date set forth above.
THE TESSERACT GROUP, INC., a Minnesota
corporation
By
-------------------------------------
Its
------------------------------------
SELLER
TAI, LLC, an Arizona limited liability
company
By
-------------------------------------
Its
------------------------------------
BUYER
19
================================================================================
PURCHASE AND SALE AGREEMENT
BETWEEN
THE TESSERACT GROUP, INC.,
A MINNESOTA CORPORATION
AND
FOOTHILLS EDUCATIONAL FOUNDATION,
AN ARIZONA NON-PROFIT CORPORATION
DECEMBER ___, 2000
================================================================================
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS ................................................. 1
1.1 Business .................................................... 1
1.2 Closing ..................................................... 1
1.3 Closing Date ................................................ 2
1.4 Assumed Contracts ........................................... 2
1.5 Deposit ..................................................... 2
1.6 Equipment ................................................... 2
1.7 Lease ....................................................... 2
1.8 Other Liabilities ........................................... 2
1.9 Purchase Price .............................................. 2
1.10 Purchased Assets ............................................ 2
1.11 Termination Date ............................................ 2
ARTICLE II PURCHASE AND SALE ........................................... 2
2.1 Assets to be Sold ........................................... 2
2.2 School Name ................................................. 3
2.3 TesseracT's Curriculum ...................................... 3
2.4 Seller's Business ........................................... 3
ARTICLE III ASSUMPTION OF LIABILITIES ................................... 3
3.1 Contracts ................................................... 3
3.2 No Assumption of Other Liabilities .......................... 3
ARTICLE IV TERMS OF PAYMENT ............................................ 3
4.1 Payment of Purchase Price ................................... 3
4.2 Determination ............................................... 4
ARTICLE V REPRESENTATIONS, WARRANTIES, AND COVENANTS OF SELLER ........ 4
5.1 Corporate Status ............................................ 4
5.2 Corporate Authority ......................................... 4
5.3 Title to Purchased Assets ................................... 4
5.4 Contracts ................................................... 4
ARTICLE VI REPRESENTATIONS, WARRANTIES, AND COVENANTS OF BUYER ......... 4
6.1 Organization ................................................ 4
6.2 Authority ................................................... 4
i
Page
----
ARTICLE VII EMPLOYEES ................................................... 5
7.1 Definition .................................................. 5
7.2 Termination ................................................. 5
7.3 Employment .................................................. 5
7.4 Workers' Compensation ....................................... 5
ARTICLE VIII PROPERTY .................................................... 5
8.1 Fee Simple .................................................. 5
ARTICLE IX INDEMNITIES ................................................. 6
9.1 Seller ...................................................... 6
9.2 Buyer ....................................................... 6
ARTICLE X CLOSING ..................................................... 6
10.1 Closing ..................................................... 6
10.2 Time is of the Essence ...................................... 6
ARTICLE XI PRORATIONS .................................................. 6
11.1 Costs: Advance Payments ..................................... 6
11.2 Prorations .................................................. 7
11.3 Transfer Taxes .............................................. 7
ARTICLE XII CONDITIONS PRECEDENT TO BUYER'S DUTY TO CLOSE ............... 7
12.1 Continued Truth of Warranties ............................... 7
12.2 Performance of Obligations .................................. 7
12.3 Delivery of Closing Documents ............................... 7
12.4 Litigation .................................................. 8
12.5 No Material Adverse Change .................................. 8
12.6 The Lease ................................................... 8
12.7 License ..................................................... 8
12.8 No Defaults ................................................. 8
ARTICLE XIII CONDITIONS PRECEDENT TO SELLER'S DUTY TO CLOSE .............. 8
13.1 Continued Truth of Warranties ............................... 8
13.2 Performance of Obligations .................................. 8
13.3 Delivery of Closing Documents ............................... 8
13.4 Litigation .................................................. 8
13.5 License ..................................................... 9
ii
Page
----
ARTICLE XIV ITEMS TO BE DELIVERED AT CLOSING BY SELLER .................. 9
14.1 Xxxx of Sale ................................................ 9
14.2 Assignment Of Contracts ..................................... 9
14.3 Certified Resolution ........................................ 9
ARTICLE XV ITEMS TO BE DELIVERED AT CLOSING BY BUYER ................... 9
15.1 Assumption Of Contracts ..................................... 9
15.2 Certified Resolution ........................................ 9
15.3 Representations and Warranties .............................. 9
15.4 The Purchase Price .......................................... 9
15.5 Corporate Documents. ........................................ 9
ARTICLE XVI MISCELLANEOUS ............................................... 10
16.1 Further Assurances .......................................... 10
16.2 No Other Agreements ......................................... 10
16.3 Waiver ...................................................... 10
16.4 Public Announcements ........................................ 10
16.5 Notices ..................................................... 10
16.6 Broker and Finders .......................................... 11
16.7 Books and Records ........................................... 11
16.8 Risk of Loss ................................................ 11
16.9 Third-Party Beneficiary ..................................... 11
16.10 Relationship of Parties ..................................... 11
16.11 Choice of Law ............................................... 11
16.12 Paragraph Headings .......................................... 11
16.13 Rules of Interpretation ..................................... 12
16.14 Time is of the Essence ...................................... 12
16.15 Attorney Fees ............................................... 12
16.16 Arbitration ................................................. 12
16.17 Counterparts; Facsimile Signatures .......................... 13
iii
LIST OF EXHIBITS
Schedule 1.1 Assumed Contracts
Schedule 1.6 Corporate Lease
Schedule 1.9 Equipment
Schedule 1.12 Prepaid Tuition and Deposit Liabilities
Schedule 1.19 Teachers' Accrued Liabilities
Schedule 8.1 Employees
SCHEDULE 1.1
(ASSUMED CONTRACTS)
SCHEDULE 1.6
(CORPORATE LEASE)
EXHIBIT 1.9
(EQUIPMENT)
SCHEDULE 1.12
(PREPAID TUITION AND DEPOSIT LIABILITIES)
SCHEDULE 1.19
(TEACHERS' ACCRUED LIABILITIES)
SCHEDULE 8.1
(EMPLOYEES)
