Exhibit 10.1
PURCHASE AND SALE AGREEMENT
BETWEEN
THE TESSERACT GROUP, INC.,
AN ARIZONA CORPORATION
AND
GAN YELADEEM LEARNING CENTER,
AN ARIZONA NON-PROFIT CORPORATION
FEBRUARY 6, 2001
TABLE OF CONTENTS
PAGE
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ARTICLE I - DEFINITIONS.................................................... 1
1.1 BUSINESS............................................................ 1
1.2 CHARTER OF SELLER................................................... 2
1.3 CLAIM............................................................... 2
1.4 CLOSING............................................................. 2
1.5 CLOSING DATE........................................................ 2
1.6 COURT............................................................... 2
1.7 LANDLORD............................................................ 2
1.8 EQUIPMENT........................................................... 2
1.9 LEASE............................................................... 2
1.10 PURCHASED ASSETS................................................... 2
1.11 REAL PROPERTY PURCHASE AGREEMENT................................... 2
1.12 REAL PROPERTY...................................................... 2
1.13 SECTION 363 ORDER.................................................. 2
1.14 SECTION 365 ORDER.................................................. 3
1.15 SHORT TERM LEASE................................................... 3
1.16 SNOWFLAKE..........................................................
ARTICLE II - PURCHASE AND SALE............................................. 3
2.1 ASSETS TO BE SOLD................................................... 3
2.1.1 THE PURCHASED ASSETS............................................ 3
2.1.2 RECORDS, FILES AND RELATED MATERIALS............................ 3
2.1.3 TELEPHONE AND FACSIMILE NUMBERS................................. 3
2.2 EXCLUDED ASSETS..................................................... 3
2.2.1 CONSIDERATION................................................... 3
2.2.2 CASH, CASH EQUIVALENTS AND ACCOUNTS RECEIVABLE.................. 3
2.2.3 CORPORATE FRANCHISE............................................. 3
2.2.4 LICENSES; PERMITS............................................... 4
2.2.5 THE LEASE....................................................... 4
2.3 SELLER'S BUSINESS................................................... 4
ARTICLE III - ASSUMPTION OF LIABILITIES.................................... 4
ARTICLE IV - TERMS OF PAYMENT.............................................. 4
4.1 PAYMENT DUE AT CLOSING.............................................. 4
4.2 DEPOSIT............................................................. 4
4.3 DETERMINATION....................................................... 5
ARTICLE V - REPRESENTATIONS, WARRANTIES, AND COVENANTS OF SELLER........... 5
5.1 CORPORATE STATUS.................................................... 5
5.2 CORPORATE AUTHORITY................................................. 5
5.3 TITLE TO PURCHASED ASSETS........................................... 5
5.4 DEPOSITS............................................................ 5
ARTICLE VI - REPRESENTATIONS, WARRANTIES, AND COVENANTS OF BUYER........... 6
6.1 ORGANIZATION........................................................ 6
6.2 AUTHORITY........................................................... 6
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6.3 THE LEASE........................................................... 6
6.4 CONDITION OF ASSETS................................................. 6
ARTICLE VII - POST-CLOSING COVENANTS....................................... 6
7.1 THE LEASE........................................................... 6
7.2 TRANSITION.......................................................... 6
7.3 DEFINITION.......................................................... 6
7.4 EMPLOYEE SOLICITATIONS.............................................. 7
7.5 WORKERS' COMPENSATION............................................... 7
7.6 CERTIFICATE OF OCCUPANCY............................................ 7
ARTICLE VIII - INDEMNITIES................................................. 7
8.1 SELLER.............................................................. 7
8.2 BUYER............................................................... 7
ARTICLE IX - CLOSING....................................................... 7
9.1 CLOSING............................................................. 7
9.2 TIME IS OF THE ESSENCE.............................................. 8
ARTICLE X - PRORATIONS..................................................... 8
ARTICLE XI - CONDITIONS PRECEDENT TO BUYER'S DUTY TO CLOSE................. 8
11.1 CONTINUED TRUTH OF WARRANTIES...................................... 8
11.2 PERFORMANCE OF OBLIGATIONS......................................... 8
11.3 DELIVERY OF CLOSING DOCUMENTS...................................... 8
11.4 LITIGATION......................................................... 8
11.5 COURT ORDERS....................................................... 9
ARTICLE XII - CONDITIONS PRECEDENT TO SELLER'S DUTY TO CLOSE............... 9
12.1 CONTINUED TRUTH OF WARRANTIES...................................... 9
12.2 PERFORMANCE OF OBLIGATIONS......................................... 9
12.3 DELIVERY OF CLOSING DOCUMENTS...................................... 9
12.4 LITIGATION......................................................... 9
12.5 COURT ORDERS....................................................... 9
ARTICLE XIII - ITEMS TO BE DELIVERED AT CLOSING BY SELLER.................. 9
13.1 XXXX OF SALE....................................................... 9
13.2 CERTIFIED RESOLUTION............................................... 9
13.3 REPRESENTATIONS AND WARRANTIES..................................... 9
13.4 THE SHORT TERM LEASE............................................... 9
ARTICLE XIV - ITEMS TO BE DELIVERED AT CLOSING BY BUYER.................... 10
14.1 CERTIFIED RESOLUTION............................................... 10
14.2 REPRESENTATIONS AND WARRANTIES..................................... 10
14.3 THE PURCHASE PRICE................................................. 10
14.4 THE NOTE........................................................... 10
14.5 THE SECURITY AGREEMENT............................................. 10
14.6 THE SHORT TERM LEASE............................................... 10
ARTICLE XV - MISCELLANEOUS................................................. 10
15.1 FURTHER ASSURANCES................................................. 10
15.2 NO OTHER AGREEMENTS................................................ 10
15.3 WAIVER............................................................. 10
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15.4 TERMINATION OF CONFIDENTIALITY AGREEMENT........................... 10
15.5 ACCESS TO REAL PROPERTY............................................ 11
15.6 NOTICES............................................................ 11
15.7 BROKER AND FINDERS................................................. 11
15.8 BOOKS AND RECORDS.................................................. 11
15.9 RISK OF LOSS....................................................... 12
15.10 THIRD PARTY BENEFICIARY........................................... 12
15.11 RELATIONSHIP OF PARTIES........................................... 12
15.12 CHOICE OF LAW..................................................... 12
15.13 PARAGRAPH HEADINGS................................................ 12
15.14 RULES OF INTERPRETATION........................................... 12
15.15 TIME IS OF THE ESSENCE............................................ 13
15.16 ATTORNEY FEES..................................................... 13
15.17 COUNTERPARTS; FACSIMILE SIGNATURES................................ 13
LIST OF EXHIBITS AND SCHEDULES
Exhibit A Form of Promissory Note
Exhibit B Form of Security Agreement
Exhibit C Form of Short Term Lease
Schedule 1.9 Equipment
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PURCHASE AND SALE AGREEMENT
(PARADISE LANE SCHOOL)
This PURCHASE AND SALE AGREEMENT (the "Agreement") is entered into as of
the ____ day of February, 2001, by and between THE TESSERACT GROUP, INC., a
Minnesota corporation, in its corporate capacity and in its capacity as debtor
and debtor-in-possession in its Chapter 11 case pending in the United States
Bankruptcy Court for the District of Arizona ("Seller"), and GAN YELADEEM
LEARNING CENTER, an Arizona non-profit corporation ("Buyer").
RECITALS
A. Seller operates that certain charter school ("School") commonly known as
the "Paradise Lane School" located at 0000 Xxxx Xxxxxxxx Xxxx, Xxxxxxx, Arizona.
B. Seller has filed a voluntary petition for Chapter 11 relief ("Chapter 11
Case") under Title 11 of the United States Code ("Bankruptcy Code"). The Chapter
11 Case is pending before the United States Bankruptcy Court for the District of
Arizona ("Bankruptcy Court").
C. Seller desires, subject to the approval by 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 Section 363 and
Section 365 of the Bankruptcy Code.
D. Buyer has completed its due diligence of the School and all other
matters addressed in this Agreement.
E. The parties hereto acknowledge that: (i) they intend that the
transaction contemplated under this Agreement be an asset purchase and not a
sale of the stock of Seller; and (ii) Buyer is not buying the Business of Seller
as defined in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
For purposes of this Agreement, the following capitalized terms, when used
in this Agreement, shall have the meanings assigned to them as follows:
1.1 BUSINESS. The term "Business" shall mean Seller's operations conducted
under the names "TesseracT" or "The TesseracT Group, Inc.," or the trade name
"TesseracT Charter School PPTO," at the School and at any other location within
or outside the State of Arizona.
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1.2 CHARTER OF SELLER. The term "Charter of Seller" shall mean that certain
Charter Contract between Preschool Services, Inc. dba Sunray Charter School and
the Snowflake Unified School District No. 5 of Navajo County, Arizona dated June
24, 1997.
1.3 CLAIM. The term "Claim" shall mean the term "claim" as it is defined
under 11 U.S.C.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 March 15, 2001, unless such date is
extended as mutually agreed upon in writing signed by both parties.
1.6 COURT. The term "Court" shall mean the United States Bankruptcy Court
for the District of Arizona, which is the Court before which Seller presently is
a Chapter 11 debtor.
1.7 LANDLORD. The term "Landlord" shall mean Education Property Investors,
Inc., a Nevada corporation.
1.8 EQUIPMENT. The term "Equipment" shall mean all furniture, fixtures,
office equipment, office supplies, computers, printers, and other tangible
personal property owned by Seller as specifically set forth on SCHEDULE 1.9
attached hereto.
1.9 LEASE. The term "Lease" shall mean that certain Amended and Restated
Lease dated June 9, 1998 by and between Seller, as lessee, and Landlord.
1.10 PURCHASED ASSETS. The term "Purchased Assets" shall mean the
Equipment.
1.11 REAL PROPERTY PURCHASE AGREEMENT. The term "Real Property Purchase
Agreement" shall mean the Agreement to Purchase and Sale dated August 2, 2000,
by and between Buyer and Landlord (as amended).
1.12 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.
1.13 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 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.
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1.14 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 reject the Lease as it relates to the Real Property effective as of
when Buyer is the owner of the Real Property.
1.15 SHORT TERM LEASE. The "Short Term Lease" shall mean the Lease as
modified by First Amendment to Lease, dated the date of Closing and in the form
and substance attached hereto as EXHIBIT C, that leases the Real Property and
the Purchased Assets to Seller until May 31, 2001.
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:
2.1.1 THE PURCHASED ASSETS. The Purchased Assets.
2.1.2 RECORDS, FILES AND RELATED MATERIALS. All records, files,
invoices, student lists, accounting records, business records, student records
(including, but not limited, special education student records), teacher
records, operating data and other data of Seller relating solely to the School.
2.1.3 TELEPHONE AND FACSIMILE NUMBERS. All telephone and facsimile
numbers currently used at the Real Property to the extent such are transferable
at no additional cost to Seller.
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 CASH, CASH EQUIVALENTS AND ACCOUNTS RECEIVABLE. All cash, cash
equivalents, and obligations by any third party to make payment to Buyer as of
the Closing Date.
2.2.3 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, the Charter.
2.2.4 LICENSES; PERMITS. All licenses, permits and approvals of Seller
relating in any way to the School or the Business including, without limitation,
the Charter.
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2.2.5 THE LEASE. The Lease relating to the Real Property.
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
Except as expressly set forth in this Agreement, Buyer does not by this
Agreement, and will not be obligated to, assume any obligation, liability or
duty of Seller whether incurred in connection with the Purchased Assets, or
otherwise.
ARTICLE IV.
TERMS OF PAYMENT
4.1 PAYMENT DUE AT CLOSING. At Closing, Buyer shall pay to Seller an amount
equal to Two Hundred and Fifty Thousand Dollars ($250,000) LESS the amount of
the Deposit delivered by Buyer to Seller in accordance with Section 4.2 below,
in the following manner:
(a) Buyer shall pay Seller an amount equal to One Hundred Twenty-Five
Thousand and No/100 Dollars ($125,000.00) in immediately
available funds at Closing.
(b) The balance of the Purchase Price shall be evidenced by Buyer
delivering to Seller Buyer's promissory note (the "Note") dated
the date of the Closing, in the principal amount of One Hundred
Thousand and No/100 Dollars ($100,000.00) and conforming
substantially in content with the form of promissory note
attached hereto as EXHIBIT A.
(c) The Note shall be secured by a first priority security interest
pursuant to the terms of a security agreement (the "Security
Agreement") on all of the Purchased Assets. At the Closing, Buyer
shall deliver to Seller the Security Agreement, dated the date of
the Closing and substantially conforming in content with the form
of security agreement attached hereto as EXHIBIT B.
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
Twenty-Five Thousand and No/100 Dollars ($25,000.00) (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; (ii) if Buyer's
transaction with Landlord to purchase the Real Property does not close, unless
such failure to close is the result of a default by Buyer under the Real
Property Purchase Agreement; or (iii) Seller otherwise refuses to close the
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transactions contemplated in this Agreement. If the Closing does not occur on or
before March 15, 2001, due to any event described in the immediately preceding
(i), (ii) and (iii), and provided that Buyer has satisfied all of the conditions
set forth in Article XV of this Agreement on or before March 15, 2001, 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, and each party agrees to file all
federal, state and local tax returns in conformity with such allocation.
ARTICLE V.
REPRESENTATIONS, WARRANTIES, AND COVENANTS OF SELLER
Seller hereby represents, warrants, and covenants to Buyer as follows, and
the warranties, representations, and covenants contained in this Article or
elsewhere in this Agreement shall be deemed to be made as of the Closing:
5.1 CORPORATE STATUS. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Minnesota and is
qualified to do business in the State of Arizona.
5.2 CORPORATE AUTHORITY. Subject only to approval of the Court, Seller has
full power and authority to execute and perform this Agreement and all corporate
action necessary to confirm such authority has been duly and lawfully taken.
Upon execution hereof, this Agreement shall be a valid, legally binding
obligation of Seller, enforceable in accordance with its terms subject 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 DEPOSITS. Seller has no liability to parents of its students at the
School for any prepaid tuition or deposit obligations.
ARTICLE VI.
REPRESENTATIONS, WARRANTIES, AND COVENANTS OF BUYER
Buyer hereby represents and warrants to Seller as follows and the
warranties and representations contained in this Article or elsewhere in this
Agreement shall be deemed to be made as of Closing:
6.1 ORGANIZATION. Buyer is a non-profit corporation duly organized, validly
existing and in good standing under the laws of the State of Arizona.
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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.
6.3 THE LEASE. Other than the Real Property Purchase Agreement whereby
Buyer shall acquire fee title to the Real Property, Buyer has not entered into
any agreement, written or otherwise, with Landlord relating to the Lease,
including, but not limited to, any agreement to acquire any Claims which might
presently exist, or arise in the future under the Lease.
6.4 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.
POST-CLOSING COVENANTS
7.1 THE LEASE. Buyer shall not be entitled to, and shall not receive, any
of the contractual rights provided to Landlord or Seller under the Lease,
including, but not limited to, any right to assert any Claims that may arise
under or relate to the Lease, irrespective of which person or entity contends
that it has the right to asserts such Claims.
7.2 TRANSITION. Buyer and Seller will mutually cooperate with one another
to provide for an orderly surrender of the Purchased Assets and Real Property by
Seller to Buyer on May 31, 2001 (the "Transition Date") in accordance with the
Short Term Lease.
7.3 DEFINITION. On or before the Transition Date, Seller shall provide
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 within 10
days of receipt of Buyer's request. For purposes of this Article, the term
"Employees" shall mean all persons on such list including those listed who may
be curtailed and disabled employees and employees on leave of absence.
7.4 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.
7.5 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 the Transition Date
or which arose out of incidents that occurred prior to the Transition Date.
Buyer shall be responsible for all claims which arise out of, or are based upon,
incidents which occur subsequent to the Transition Date.
7.6 CERTIFICATE OF OCCUPANCY. Buyer acknowledges that a type E-1
certificate of occupancy has not been obtained for the building on the Real
Property commonly referred to as Building #3 (the "Certificate"). Seller hereby
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agrees to use its best efforts to obtain, prior to Closing, a third-party bid
setting forth its good faith estimate of the total cost to obtain the
Certificate. If Buyer elects after Closing to obtain the Certificate, Seller
agrees to pay one-half of the cost of obtaining the Certificate; provided,
however, the total cost to Seller shall not exceed Thirty Thousand and No/100
Dollars ($30,000.00). Any amounts in excess of Sixty Thousand and No/100 Dollars
($60,000.00) shall be paid entirely by Buyer.
ARTICLE VIII.
INDEMNITIES
8.1 SELLER. Seller agrees to hold harmless, indemnify and defend Buyer from
and against any and all loss, claim, damage, liability or expense arising out of
or occurring as the result of any breach by Seller of any of its covenants,
representations or warranties hereunder. Such indemnification shall include any
claims pertaining to events or actions occurring prior to the date of Closing.
In no event shall the liability of Seller under this Section collectively exceed
$10,000.
8.2 BUYER. Buyer agrees to hold harmless, indemnify and defend Seller from
and against any and all loss, claim, damage, liability or expense arising out of
or occurring in connection with any breach by Buyer of any of its covenants,
representations or warranties hereunder. Such indemnification shall include any
claims pertaining to events or actions occurring after the Transition Date.
ARTICLE IX.
CLOSING
9.1 CLOSING. Closing shall occur at the law offices of Xxxxx 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 concurrently with the closing of the
transaction pursuant to which Buyer is purchasing the Real Property from
Landlord and by no later than March 15, 2001.
9.2 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 X.
PRORATIONS
The following revenues, costs and expenses shall be prorated as of the
Transition Date:
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10.1 Personal property taxes and any other assessments related to the
Purchased Assets;
10.2 Charges for utilities servicing the School, including, without
limitation, charges or gas, electricity, water, sewer, cable television, and
telephone services; and
10.3 Any other reasonable expenses approved in writing by Buyer and prepaid
by Seller related to the operation of the School.
The amount of any prorations shall be computed by Buyer with the assistance
of Seller. On or before the Transition Date, Buyer shall pay to Seller or Seller
shall pay to Buyer, as the case may be, an amount equal to the net proration so
determined.
ARTICLE XI.
CONDITIONS PRECEDENT TO BUYER'S DUTY TO CLOSE
Buyer shall have no duty to close, shall be entitled to a refund of the
Deposit, and shall have 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.
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.
11.5 COURT ORDERS. The Court shall have entered the Section 363 Order and
the Section 365 Order.
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:
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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.
12.5 COURT ORDERS. The Court shall have entered the Section 363 Order and
the Section 365 Order.
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 warranty 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.
13.4 THE SHORT TERM LEASE. The Short Term Lease as defined in Section 1.17.
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 of the Executive
Director of Buyer or other appropriate representative(s) authorizing the
execution and performance of this Agreement.
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14.2 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.
14.3 THE PURCHASE PRICE. The Purchase Price pursuant to Section 4.1.
14.4 THE NOTE. The Note pursuant to Section 4.1.
14.5 THE SECURITY AGREEMENT. The Security Agreement pursuant to Section
4.1.
14.6 THE SHORT TERM LEASE. The Short Term Lease as defined in Section 1.17.
ARTICLE XV.
MISCELLANEOUS
15.1 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.
15.2 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, including, but not
limited to the Letter of Intent between the parties dated November 27, 2000, are
superseded by this Agreement. Any changes to this Agreement must be agreed to in
writing signed by both parties.
15.3 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.
15.4 TERMINATION OF CONFIDENTIALITY AGREEMENT. Upon execution of this
Agreement by the parties, the Confidentiality Agreement dated September 8, 2000,
by and between Buyer and Seller shall be terminated; provided that, through the
Transition Date, Buyer shall obtain Seller's prior written consent, which
consent shall not be unreasonably withheld, as to all Buyer activities relating
to the recruiting and/or contact of Seller's employees or students and such
activities shall not interfere with Seller's operation of the School.
15.5 ACCESS TO REAL PROPERTY. Provided Buyer does not interfere with
Seller's operation of the School and, to the extent required by Section 15.5,
Seller's prior consent is obtained, Buyer may, upon reasonable prior notice,
have access to the Real Property for purposes of constructing improvements and
conducting meetings and student sign-up fairs.
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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.
Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Copy To: Xxxxxx X. Xxxxxx, Esq.
Xxxxx Xxxx LLP
Xxx Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
To Buyer: Xxxxx X. Xxxxxx, Ph.X.
Xxx Yeladeem Learning Center
00000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Copy To: Xxxxxxx X. Xxxxx, Esq.
Xxxxx Xxxx LLP
Xxxxx Xxxxxxxxxx Xx., Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
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 BOOKS AND RECORDS. Copies of all customer, employee and accounting
records for the School and all records with respect to the Purchased Assets will
be provided by Seller to Buyer on or before the Transition Date.
15.9 RISK OF LOSS. The risk of loss, damage, or destruction of the
Purchased Assets shall be borne by Seller until the Transition Date. In the
event any material loss or damage to or taking of any such Purchased Assets
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.
11
15.10 THIRD-PARTY BENEFICIARY. Nothing contained herein shall create or
give rise to any third-party beneficiary rights for any individual or entity as
a result of the terms and provisions of this Agreement.
15.11 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.
15.12 CHOICE OF LAW. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Arizona and, as applicable, title 11 of
the United States Code.
15.13 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.
15.14 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:
15.14.1 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.
15.14.2 References to the plural include the singular, the singular the
plural and the part the whole.
15.14.3 The words "include," "includes," and "including" are not
limiting.
15.14.4 A reference to any law includes any amendment or modification
to such law which is in effect on the relevant date.
15.14.5 A reference to any person or entity includes its successors,
heirs and permitted assigns.
15.14.6 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.
15.14.7 All Schedules to this Agreement constitute material terms of
this Agreement and are incorporated fully into the terms of this Agreement.
15.15 TIME IS OF THE ESSENCE. Time is of the essence in the performance and
observance of all obligations and duties under this Agreement.
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15.16 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.
15.17 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
------------------------------------------------
Name
----------------------------------------------
Its
-----------------------------------------------
GAN YELADEEM LEARNING CENTER,
a Arizona non-profit corporation
By
------------------------------------------------
Name
----------------------------------------------
Its
----------------------------------------------
13
EXHIBIT A
PROMISSORY NOTE
U.S. $100,000.00 _________, 2001
Phoenix, Arizona
FOR VALUE RECEIVED, GAN YELADEEM LEARNING CENTER, an Arizona non-profit
corporation ("BORROWER"), hereby promises to pay to the order of THE TESSERACT
GROUP, INC., a Minnesota corporation ("LENDER"), at the office of Lender located
at 0000 Xxxx Xxxxxxxx Xxxxx, Xxxxxxx Xxxxxxx 00000, the principal amount of One
Hundred Thousand and No/100 Dollars ($100,000.00), together with, to the extent
applicable, the Default Interest Rate specified below, in accordance with the
following terms and conditions:
1. DEFAULT INTEREST RATE. The Default Interest Rate shall be equal to
twelve percent (12%) per annum. The principal balance outstanding hereunder from
time to time shall bear interest at the Default Interest Rate from the date of
the occurrence of an Event of Default (as hereinafter defined) hereunder until
the earlier of: (a) the date on which the principal balance outstanding
hereunder, together with all accrued interest and other amounts payable
hereunder, are paid in full; or (b) the date on which such Event of Default is
timely cured in a manner satisfactory to Lender in the exercise of its
reasonable judgment, (i) if Borrower is specifically granted a right to cure
such Event of Default in any of the Loan Documents (as hereinafter defined) or
(ii) if no such right to cure is specifically granted, then Lender, in its sole
and absolute discretion, permits such Event of Default to be cured.
2. LATE CHARGE. If Lender has not received the full amount of any payment
by the end of five (5) calendar days after the date it is due under this Note,
Borrower will pay a late charge to Lender in the amount of five percent (5%) of
the overdue payment. Borrower will pay this late charge only once on any late
payment.
3. PAYMENTS. This Note shall be payable as follows:
(i) Commencing on ____________________, and continuing on the first
day of each month thereafter, equal monthly installments of principal in
the amount of Twenty-Five Thousand and No/100 Dollars ($25,000.00) shall be
due and payable, together with any accrued and unpaid interest at, to the
extent applicable, the Default Interest Rate; provided, however, that such
payments shall be subject to offset by Borrower in an amount equal to the
monthly rental payable by Lender to Borrower pursuant to the terms of the
Short Term Lease of even date herewith by and between Borrower, as
landlord, and Lender, as tenant.
(ii) The entire outstanding principal sum and all accrued and unpaid
interest, less the amount of any rental offsets as provided in Section
4.(i) above, shall be due and payable on or before May 25, 2001 (the "FINAL
PAYMENT DATE").
1
4. APPLICATION AND PLACE OF PAYMENTS. Payments received by Lender with
respect to the indebtedness evidenced hereby shall be applied in such order and
manner as Lender in its sole and absolute discretion may elect. Unless otherwise
elected by Lender, all such payments shall first be applied to any accrued and
unpaid costs or added charges provided for herein or in any of the Loan
Documents, next to accrued and unpaid interest at, to the extent applicable, the
Default Interest Rate, and the remainder to the principal balance then
outstanding hereunder. Payments hereunder shall be made at the address for
Lender first set forth above, or at such other address as Lender may specify to
Borrower in writing.
5. PREPAYMENTS. Payments of principal hereof may be made at any time, or
from time to time, in whole or in part, without penalty, provided that all other
charges accrued to the date of prepayment are also paid in full. Notwithstanding
any partial prepayment of principal hereof, there will be no change in the due
date or amount of scheduled payments due hereunder unless Lender, in its sole
and absolute discretion, agrees in writing to such change. At the option of
Lender, partial prepayments shall be applied in the inverse order of maturity.
6. EVENTS OF DEFAULT; ACCELERATION. The occurrence of any one or more of
the following events shall constitute an "Event of Default" hereunder, and upon
such Event of Default, the entire principal balance outstanding hereunder,
together with all accrued interest and other amounts payable hereunder, at the
election of Lender, shall become immediately due and payable, without any notice
to Borrower:
(i) The failure of Borrower to pay any installment of principal or
other amounts due hereunder when due and the continuation of such failure
for five (5) days after written notice thereof from Lender to Borrower;
(ii) The failure of Borrower to comply with any other provision of
this Note not provided for in subparagraph (i) above and subparagraph (v)
below where such failure continues for thirty (30) days after written
notice thereof by Lender to Borrower, provided that if the nature of such
breach is such that although curable, the breach cannot reasonably be cured
within a thirty (30) day period, an Event of Default shall not exist if
Borrower shall commence to cure such breach and thereafter rectifies and
cures such breach with due diligence, but in no event later than ninety
(90) days after written notice thereof;
(iii) The failure of Borrower to comply with any provision of any
document, instrument or agreement executed in connection with the
indebtedness evidenced hereby including, without limitation, the Security
Agreement of even date herewith by and between Borrower and Lender or any
other security document executed in connection with this Note
(collectively, the "LOAN DOCUMENTS");
(iv) The dissolution, winding-up or termination of the existence of
Borrower or any other person or entity who is or may become liable
hereunder;
(v) The calling of a meeting of the creditors of Borrower or any other
person or entity who is or may become liable hereunder;
2
(vi) The making by Borrower or any other person or entity who is or
may become liable hereunder of an assignment for the benefit of its
creditors; or
(vii) The appointment of (or application for appointment of) a
receiver of Borrower or any other person or entity who is or may become
liable hereunder which is not dismissed in thirty (30) days, or the
involuntary filing against Borrower which is not dismissed within forty
five (45) days or voluntary filing by Borrower, or any other person or
entity who is or may become liable hereunder, of a petition or application
for relief under federal bankruptcy law or any similar state or federal
law, or the issuance of any writ of garnishment, execution or attachment
for service with respect to Borrower or any person or entity who is or may
become liable hereunder, or any property of Borrower or property of any
person or entity who is or may become liable hereunder.
7. COLLATERAL. Borrower's obligations under this Note are additionally
secured by the property described in Security Agreement of even date herewith
(the "PROPERTY"), between Borrower, as debtor, and Lender, as secured party.
8. WAIVERS. Except as set forth in this Note or the Loan Documents, to the
extent permitted by applicable law, Borrower, and each person who is or may
become liable hereunder, severally waive and agree not to assert: (a) any
homestead or exemption rights; (b) demand, diligence, grace, presentment for
payment, protest, notice of nonpayment, nonperformance, extension, dishonor,
maturity, protest and default; and (c) recourse to guaranty or suretyship
defenses (including, without limitation, the right to require the Lender to
bring an action on this Note). Lender may extend the time for payment of or
renew this Note, release collateral as security for the indebtedness evidenced
hereby or release any party from liability hereunder, and any such extension,
renewal, release or other indulgence shall not alter or diminish the liability
of Borrower or any other person or entity who is or may become liable on this
Note except to the extent expressly set forth in a writing evidencing or
constituting such extension, renewal, release or other indulgence.
9. COSTS OF COLLECTION. Borrower agrees to pay all reasonable costs of
collection, including, without limitation, attorneys' fees, whether or not suit
is filed, and all costs of suit and preparation for suit (whether at trial or
appellate level), in the event any payment of principal or other amount is not
paid when due, or in case it becomes necessary to protect the collateral which
is security for the indebtedness evidenced hereby, or to exercise any other
right or remedy hereunder or in the Loan Documents, or in the event Lender is
made party to any litigation because of the existence of the indebtedness
evidenced hereby, or if at any time Lender should incur any attorneys' fees in
any proceeding under any federal bankruptcy law (or any similar state or federal
law) in connection with the indebtedness evidenced hereby. In the event of any
court proceeding, attorneys' fees shall be set by the court and not by the jury
and shall be included in any judgment obtained by Lender.
10. NO WAIVER BY LENDER. No delay or failure of Lender in exercising any
right hereunder shall affect such right, nor shall any single or partial
exercise of any right preclude further exercise thereof.
3
11. GOVERNING LAW. This Note shall be construed in accordance with and
governed by the laws of the State of Arizona.
12. TIME OF ESSENCE. Time is of the essence of this Note and each and every
provision hereof.
13. AMENDMENTS. No amendment, modification, change, waiver, release or
discharge hereof and hereunder shall be effective unless evidenced by an
instrument in writing and signed by the party against whom enforcement is
sought.
14. SEVERABILITY. If any provision hereof is invalid or unenforceable, the
other provisions hereof shall remain in full force and effect and shall be
liberally construed in favor of Lender in order to effectuate the other
provisions hereof.
15. BINDING NATURE. The provisions of this Note shall be binding upon
Borrower and the heirs, personal representatives, successors and assigns of
Borrower, and shall inure to the benefit of Lender and any subsequent holder of
all or any portion of this Note, and their respective successors and assigns.
Lender may from time to time transfer all or any part of its interest in this
Note and the Loan Documents, without notice to Borrower.
16. NOTICE. Any notice or other communication with respect to this Note
shall: (a) be in writing; (b) be effective on the day of hand-delivery thereof
to the party to whom directed, one day following the day of deposit thereof with
delivery charges prepaid, with a national overnight delivery service, or two
days following the day of deposit thereof with postage prepaid, with the United
States Postal Service, by regular first class, certified or registered mail; (c)
if directed to Lender, be addressed to Lender at 0000 Xxxx Xxxxxxxx Xxxxx,
Xxxxxxx, Xxxxxxx 00000, or to such other address as Lender shall have specified
to Borrower by like notice; and (d) if directed to Borrower, be addressed to
Borrower at the address for Borrower set forth below Borrower's name, or to such
other address as Borrower shall have specified by like notice.
17. SECTION HEADINGS. The section headings set forth in this Note are for
convenience only and shall not have substantive meaning hereunder or be deemed
part of this Note.
18. CONSTRUCTION. This Note shall be construed as a whole, in accordance
with its fair meaning, and without regard to or taking into account any
presumption or other rule of law requiring construction against the party
preparing this Note.
4
IN WITNESS WHEREOF, Borrower has executed this Note as of the date first
set forth above. "BORROWER"
GAN YALEDEEM LEARNING CENTER, an
Arizona non-profit corporation
By:
-------------------------------------------
Name:
-----------------------------------------
Its:
-----------------------------------------
Address of Borrower:
00000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
5
EXHIBIT B
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "AGREEMENT") is made and entered into as of
the ____ day of January, 2001, by and between GAN YELADEEM LEARNING CENTER, an
Arizona non-profit corporation ("DEBTOR"), whose mailing address is 00000 Xxxxx
00xx Xxxxxx, Xxxxxxxxxx, Xxxxxxx 00000, and THE TESSERACT GROUP, INC., a
Minnesota corporation ("SECURED PARTY"), whose mailing address is 0000 Xxxx
Xxxxxxxx Xxxxx, Xxxxxxx Xxxxxxx 00000.
1. DEFINITIONS. The following words shall have the following meanings when
used in this Agreement:
(a) COLLATERAL. The word "Collateral" means the following described
property and interests in such property of Debtor, whether now owned or
hereafter acquired by Debtor, whether now existing or hereafter arising, and
wherever located: all of Debtor's right, title, and interest, in and to the
furniture, fixtures, and equipment described on EXHIBIT A attached hereto,
including, without limitation, the following:
(1) all attachments, accessions, parts, and additions to and all
replacements of and substitutions for any of the property described in this
Collateral section.
(2) all products of any of the property described in this
Collateral section.
(3) all accounts, contract rights, general intangibles, and monies
arising out of a sale, lease, contract of sale, service or lease, or other
disposition of any of the property described herein as Collateral.
(4) all proceeds (including insurance proceeds) of any of the
property described in this Collateral section.
(5) all records relating to any of the property described in this
Collateral section, whether in the form of a writing, microfilm, microfiche, or
electronic media.
(b) INDEBTEDNESS. Indebtedness includes all indebtedness and
liabilities of Debtor to Secured Party, due or to become due, whether or not now
existing or hereafter contracted for or arising, including, but not limited to:
(1) the indebtedness for principal of Debtor to Secured Party
evidenced by a Promissory Note of even date herewith executed by Debtor in favor
of Secured Party, in the original principal sum of One Hundred Thousand and
No/100 Dollars ($100,000.00), and any and all extensions, renewals, refinancing,
and other amounts owing thereon (the "Note");
1
(2) any and all present and future advances made or to be made by
Secured Party to Debtor under this Agreement, or any other agreement now or
hereafter executed between Debtor and Secured Party, whether or not evidenced by
any promissory note or other instrument, and all other obligations,
indebtedness, or liabilities of Debtor to Secured Party, due or to become due,
joint or several, absolute or contingent, now existing or hereafter created or
arising out of this Agreement, or any other agreement or guaranty now or
hereafter executed between Debtor and Secured Party, including, without
limitation, all interest, service charges, collection and attorneys' fees which
are payable by Debtor to Secured Party, including any debt, liability, or
obligation owing at any time from Debtor to others which Secured Party may have
obtained by assignment or otherwise;
(3) all expenses incurred by Secured Party in the perfection of
its security interest in the Collateral and in the preservation and collection
of any of the Collateral, including, but not limited to, all sums advanced by
Secured Party to preserve the Collateral; and
(4) in the event of any proceeding to enforce the collection of
any of the Indebtedness, the reasonable expenses of retaking, holding, preparing
for sale, or otherwise disposing of any or all of the Collateral upon any
exercise by Secured Party of its rights under this Security Agreement, and
attorneys' fees, court costs, and other expenses in connection therewith,
including, without limitation, the matters set forth in PARAGRAPH 12 hereof.
(c) RELATED DOCUMENTS. The words "Related Documents" shall mean and
include the Note, the Lease as modified by the Short Term Lease of even date
herewith between Debtor and Secured Party, and all other documents executed in
connection with this Agreement or the Indebtedness, whether now or hereafter
existing.
2. GRANT OF SECURITY INTEREST. For valuable consideration, Debtor hereby
grants to Secured Party a continuing security interest in the Collateral to
secure the Indebtedness and agrees that Secured Party shall have the rights
stated in this Agreement with respect to the Collateral, in addition to all
other rights which Secured Party may have pursuant to Related Documents or by
law.
3. RIGHT OF SETOFF. In the event of a default pursuant to PARAGRAPH 7
hereof, Debtor authorizes Secured Party, to the extent permitted by applicable
law, to charge or setoff all Indebtedness against any and all accounts of Debtor
now existing or hereafter established with Secured Party.
4. OBLIGATIONS OF DEBTOR. Debtor warrants to and covenants with Secured
Party as follows:
(a) PERFECTION OF SECURITY INTEREST. Debtor agrees to execute financing
statements and to take whatever other actions are requested by Secured Party to
perfect and continue Secured Party's security interest in the Collateral.
Secured Party may at any time, and without further authorization from Debtor,
file a copy of this Agreement as a financing statement.
2
(b) REMOVAL OF COLLATERAL. Except as otherwise provided in the Lease as
modified by the Short Term Lease, Debtor will keep the Collateral (or to the
extent the Collateral consists of intangible property such as accounts, the
records concerning the Collateral) at 0000 Xxxx Xxxxxxxx Xxxx, Xxxxxxx, Arizona.
Debtor shall not remove the Collateral from its existing location without the
prior written consent of Secured Party.
(c) TRANSACTIONS INVOLVING COLLATERAL. Except as otherwise provided in
the Lease as modified by the Short Term Lease, Debtor shall not sell, offer to
sell, lease or offer to lease, or otherwise transfer or dispose of the
Collateral. Debtor shall not pledge, mortgage, encumber, or otherwise permit the
Collateral to be subject to any lien, security interest, encumbrance, or charge,
whether or not subordinate or junior to the lien evidenced by this Security
Agreement, other than the security interest provided for in this Agreement,
without the prior written consent of Secured Party. Unless waived by Secured
Party, all proceeds from any disposition of the Collateral shall be held in
trust for Secured Party, and shall not be commingled with any other funds;
provided, however, that this requirement shall not constitute consent by Secured
Party to any sale or other disposition of any of the Collateral. Upon receipt,
Debtor shall immediately deliver any such proceeds to Secured Party.
(d) DEBTOR'S NAME. Debtor has not, during the preceding six years, been
known as or used any other corporate or fictitious name, except as otherwise
disclosed in writing to Secured Party, and Debtor shall not use any other
corporate or fictitious name, except upon prior written notice to Secured Party.
(e) VERIFICATION OF ACCOUNT, INSPECTION, AUDIT. Upon an Event of
Default, Secured Party or any of its employees or agents shall have the right,
at any time hereafter, upon reasonable notice to Debtor, in Secured Party's
name, or in the name of Debtor, to discuss Debtor's affairs and finances and the
Collateral with any attorney, accountant, account debtor or creditor of Debtor.
5. DEBTOR'S RIGHT TO POSSESSION. Except as otherwise provided in the Lease
as modified by the Short Term Lease, until default, Debtor may have possession
of the tangible personal property and beneficial use of all of the Collateral
and may use it in any lawful manner not inconsistent with this Agreement or the
Related Documents.
6. EXPENDITURES BY SECURED PARTY. Except to the extent already required to
be discharged or paid by Secured Party under the Lease as modified by the Short
Term Lease, if not discharged or paid when due, Secured Party, at its option but
without obligation, may discharge taxes, liens, security interests, or other
encumbrances at any time levied or placed on the Collateral, may pay for
insurance with respect to the Collateral, and may pay for maintenance and
preservation of the Collateral. To the extent not already required to be
discharged or paid by Secured Party under the Lease as modified by the Short
Term Lease, any and all such payments shall become a part of the Indebtedness
and shall be payable on demand, with interest at the default rate as set forth
in the Note from date of expenditure until repaid. Such right shall be in
addition to any other rights or remedies to which Secured Party may be entitled
on account of default.
3
7. EVENTS OF DEFAULT. The following are events of default under this
Agreement ("Event of Default"):
(a) DEFAULT ON INDEBTEDNESS. Debtor fails to make any payment when due
on the Indebtedness, subject to any grace period provided in the document
evidencing such indebtedness.
(b) OTHER BREACHES. Failure to comply with or to perform any other
term, obligation, covenant or condition contained in this Agreement or in the
Related Documents; provided, however (except as to a default in payment referred
to in PARAGRAPH 7(A) above), that if such a failure is with respect to a term,
obligation, or condition contained in this Agreement and such failure is
curable, and if Debtor has not been given a prior notice of a breach of the same
provision of this Agreement, such default may be cured by Debtor (and no event
of default will have occurred) if Debtor, after receiving written notice from
Secured Party demanding cure of such failure: (a) cures the failure within
thirty (30) days; or (b) if the cure requires more than thirty (30) days, if
Debtor immediately initiates steps sufficient to cure the failure and thereafter
continues and completes all reasonable and necessary steps sufficient to produce
compliance as soon as reasonably practical.
(c) FALSE STATEMENTS. Any material warranty, representation or
statement made or furnished to Secured Party by or on behalf of Debtor under
this Agreement or any of the Related Documents, is or at the time made or
furnished was, false in any material respect.
(d) INSOLVENCY. Dissolution of Debtor, termination of Debtor's
existence as a going business, cessation of Debtor's operations, insolvency by
Debtor, appointment of a receiver for any part of Debtor's property, any
assignment for the benefit of creditors by Debtor, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Debtor.
(e) CREDITOR PROCEEDINGS. Commencement of foreclosure, whether by
judicial proceeding, self-help, repossession or any other method, by any
creditor of Debtor against any of the property of Debtor, including, without
limitation, the Collateral. However, this subsection shall not apply in the
event of a good faith dispute by Debtor as to the validity or reasonableness of
the claim which is the basis of the foreclosure suit, provided that Debtor gives
Secured Party written notice of such claim and furnishes adequate reserves or
security for the claim, as determined by Secured Party.
8. RIGHTS OF SECURED PARTY. Upon any Event of Default, Secured Party shall
have all the rights of a secured party under the Arizona Uniform Commercial
Code. In addition and without limitation, Secured Party may exercise any one or
more of the following rights and remedies:
(a) ACCELERATE INDEBTEDNESS. Secured Party, may, at its option, and
without demand, notice or legal process of any kind, declare the entire
Indebtedness immediately due and payable. Anything herein contained to the
contrary notwithstanding, in the event of a default referred to in PARAGRAPHS
7(E) OR (F) above, the Indebtedness, without demand, notice or legal process of
4
any kind (all of which are hereby waived by Debtor), automatically shall be
deemed to be declared immediately due and payable.
(b) ASSEMBLE COLLATERAL. To the extent the Collateral is not already in
Secured Party's possesion and control pursuant to the Lease as modified by the
Short Term Lease, Secured Party may require Debtor to deliver to Secured Party
all or any portion of the Collateral and any and all certificates of title and
other documents relating to the Collateral. Secured Party may require Debtor to
assemble the Collateral and make it available to Secured Party at a place or
places to be designated by Secured Party which is reasonably convenient to both
parties. Secured Party also shall have full power to enter upon the property of
Debtor to take possession of and remove the Collateral. If the Collateral
contains other goods not covered by this Agreement at the time of repossession,
Debtor agrees Secured Party may take such other goods, provided that Secured
Party makes reasonable efforts to return them to Debtor after repossession.
(c) SELL THE COLLATERAL. Secured Party shall have full power to sell,
lease, transfer, and otherwise deal with the Collateral or proceeds thereof in
its own name or that of Debtor. Secured Party may sell the Collateral at public
auction or private sale. Unless the Collateral threatens to decline rapidly in
value or is of a type customarily sold on a recognized market, Secured Party
will give Debtor reasonable notice of the time after which any private sale or
any other intended disposition of the Collateral is to be made. The requirements
of reasonable notice shall be met if such notice is given at least ten (10) days
before the time of the sale or disposition. All expenses relating to the
disposition of the Collateral, including without limitation the expenses of
retaking, holding, preparing for sale and selling the Collateral shall become a
part of the Indebtedness secured by this Agreement, and shall be payable on
demand, with interest at the default rate provided in the Note from date of
expenditure until repaid.
(d) APPOINTMENT OF RECEIVER. Secured Party may have a receiver
appointed as a matter of right. The receiver may be an employee of Secured Party
and may serve without bond. All fees of the receiver and his attorney shall be
secured by this Agreement.
(e) COLLECT REVENUES. Secured Party may revoke Debtor's right to
collect any rents and revenues from the Collateral, and may, either itself or
through a receiver, collect any rents and revenues. To facilitate collection,
Secured Party may notify Debtor's account debtors and obligors on any instrument
to make payments directly to Secured Party. Debtor irrevocably designates,
makes, constitutes and appoints Secured Party (and all persons designated by
Secured Party) as Debtor's true and lawful attorney in fact and Secured Party,
or Secured Party's agent, may, without notice to Debtor: (i) at such time or
times hereafter as Secured Party or its agent, in its sole discretion, may
determine, in Debtor's or Secured Party's name, endorse Debtor's name on any
checks, notes, drafts or other payments relating to and/or proceeds of the
Collateral which come into the possession of Secured Party or under Secured
Party's control; and (ii) sign the name of Debtor on any agreements,
instruments, documents, financing statements, warehouse receipts, bills of
lading, notices of assignment of accounts, schedules and other written matter
necessary or required by Secured Party to perfect and maintain perfected Secured
Party's security interest in the Collateral (the "Supplemental Documentation")
and to deliver any of the foregoing to such person or entity as Secured Party,
in its sole discretion, may elect.
5
(f) OBTAIN DEFICIENCY. Secured Party may obtain a judgment for any
deficiency remaining on the Indebtedness due to Secured Party after application
of all amounts received from the exercise of the rights provided in this
Agreement. Debtor shall be liable for a deficiency even if the underlying
transaction is a sale of accounts or chattel paper.
(g) OTHER RIGHTS AND REMEDIES. In addition to Secured Party's rights
and remedies as a secured creditor under the provisions of the Arizona Uniform
Commercial Code, Secured Party shall have and may exercise any or all of the
rights and remedies it may have available at law, in equity, or otherwise.
(h) APPLY ACCOUNTS. Secured Party may hold all of Debtor's Collateral
consisting of accounts with Secured Party, and Secured Party may apply the funds
in these accounts to pay all or part of the Indebtedness.
9. CUMULATIVE REMEDIES. All of Secured Party's rights and remedies, whether
evidenced by this Agreement or by any other writing, shall be cumulative and may
be exercised singularly or concurrently. Election by Secured Party to pursue any
remedy shall not exclude pursuit of any other remedy, and an election to make
expenditures or to take action to perform an obligation of Debtor under this
Agreement, after Debtor's failure to perform, shall not affect Secured Party's
right to declare a default and to exercise its remedies.
10. WAIVER. Secured Party shall not be deemed to have waived any rights
under this Agreement (or under the Related Documents) unless such waiver is in
writing and signed by Secured Party. No delay or omission on the part of Secured
Party in exercising any right shall operate as a waiver of such right or any
other right. A waiver by any party of a provision of this Agreement shall not
constitute a waiver of or prejudice the party's right otherwise to demand strict
compliance with that provision or any other provision. No prior waiver, nor any
course of dealing between Secured Party and Debtor, shall constitute a waiver of
any of Secured Party's rights or Debtor's obligations as to any future
transactions. Whenever consent by Secured Party is required in this Agreement,
the granting of such consent by Secured Party in any instance shall not
constitute continuing consent to subsequent instances where such consent is
required.
11. NOTICES. All notices required to be given by either party to the other
under this Agreement shall be in writing and shall be effective when actually
delivered or three (3) days after deposit with the United States Postal Service
mail, first class postage prepaid, addressed to the other party at the address
shown above or to such other addresses as either party may designate to the
other in writing which change of address shall be effective upon receipt. Debtor
agrees not to change its name or operate under any fictitious name without
giving Secured Party at least ten (10) days prior written notice of such change
and agrees, for notice purposes, to keep Secured Party informed at all times of
Debtor's current address.
12. EXPENSES, COSTS AND ATTORNEYS' FEES. Debtor shall reimburse Secured
Party on demand for all its expenses (including, but not limited to, reasonable
attorneys' fees) of, or incidental to: (a) any litigation, contest, dispute,
suit, proceeding or action (whether instituted by Secured Party, Debtor or any
other person or entity) in any way relating to the Collateral, this Agreement,
the Related Documents or Debtor's affairs, including, without limitation,
6
bankruptcy proceedings and efforts to modify or vacate any automatic stay or
injunction except as may relate to an actual breach of this Security Agreement
by Secured Party, in which event Secured Party shall reimburse Debtor for its
expenses; (b) any attempt to enforce any rights of Secured Party against Debtor
or any other person or entity which may be obligated to Secured Party by virtue
of this Agreement or the Related Documents, including, without limitation, any
account debtor and whether or not a lawsuit or proceeding is filed; and/or (c)
any attempt to inspect, verify, protect, collect, sell, liquidate or otherwise
dispose of the Collateral. All such sums and expenses shall constitute a portion
of the Indebtedness hereunder secured by the Collateral.
13. INTERPRETATION. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions of
this Agreement. If any provision of this Agreement is held to be invalid,
illegal or unenforceable by any court for any reason, the remaining provisions
of this Agreement shall nevertheless be binding, and this Agreement shall be
enforceable as if the void or unenforceable provision or provisions had not been
included in this Agreement. Any terms used in this Agreement, including, without
limitation, "account", "account debtor", "chattel paper", "document",
"equipment", "instrument", "general intangible", which are not specifically
defined in this Agreement but are specifically defined in the Arizona Uniform
Commercial Code, shall have the meanings ascribed in the Arizona Uniform
Commercial Code.
14. APPLICABLE LAW. This Agreement is accepted in the State of Arizona. In
addition, this Agreement shall be governed by and construed in accordance with
the laws of the State of Arizona. Secured Party and Debtor agree that if there
is a lawsuit, Secured Party and Debtor will submit to the jurisdiction of the
courts in Maricopa County, State of Arizona, and at Secured Party's option, to
the jurisdiction of the courts in any county where any Collateral is located.
15. ASSIGNMENT; MODIFICATION. This Agreement and the Related Documents may
not be modified, altered or amended, except by an agreement in writing signed by
Secured Party and Debtor. Debtor may not sell, assign or transfer this Agreement
or the Related Documents or any portion thereof, including, without limitation,
Debtor's rights, title, interest, revenues, powers and/or duties hereunder or
thereunder. Debtor hereby consents to Secured Party's participation, sale,
assignment, transfer or other disposition at any time or times hereafter, of
this Agreement or the Related Documents or any portion hereof or thereof,
including, without limitation, Secured Party's rights, titles, interests,
remedies, powers and/or duties hereunder or thereunder. Subject to the
foregoing, this Agreement and the Related Documents shall be binding upon and
inure to the benefit of the successors and assigns of Secured Party and Debtor.
16. CONTINUING AGREEMENT. This is a continuing Agreement which shall remain
in full force and effect until actual receipt by Secured Party of written notice
of the Agreements revocation as to future transactions and shall remain in full
force and effect thereafter until all of the Indebtedness incurred before the
receipt of such notice, and all of the Indebtedness incurred thereafter under
commitments extended by Secured Party before receipt of such notice, shall have
been paid and performed in full.
7
17. FURTHER ASSURANCES. At Secured Party's request, Debtor shall execute
and deliver to Secured Party, at any time hereafter, any Supplemental
Documentation that Secured Party may reasonably request, in form and substance
acceptable to Secured Party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first above written.
DEBTOR:
GAN YALEDEEM LEARNING CENTER, an
Arizona non-profit corporation
By:
-------------------------------------------
Name:
-----------------------------------------
Its:
-----------------------------------------
8
EXHIBIT C
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE (the "Amendment") made as of
_______________________, 2001, by and between GAN YELADEEM, an Arizona
non-profit corporation ("Lessor"), and THE TESSERACT GROUP, INC., a Minnesota
corporation ("Lessee"), hereby amends that certain Amended and Restated Lease
between Educorp Properties, Inc., ("Original Lessor") and Lessee dated as of
June 9, 1998 (the "Lease"), with respect to certain real property, together with
all buildings, structures, fixtures and improvements located thereon, in
Phoenix, Maricopa County, Arizona, a legal description of which is contained in
EXHIBIT A attached hereto (the "Premises"). Any capitalized terms not herein
defined shall have the meanings ascribed thereto in the Lease.
WITNESSETH:
WHEREAS, Lessor, has purchased fee title to the Premises from Original
Lessor;
WHEREAS, Lessee has filed a voluntary petition for Chapter 11 relief
("Chapter 11 Case") under Title 11 of the United States Code ("Bankruptcy
Code"). The Chapter 11 Case is pending before the United States Bankruptcy Court
for the District of Arizona ("Bankruptcy Court");
WHEREAS, Lessee has obtained the approval of the Bankruptcy Court to (i)
sell certain assets of Lessee, defined in the Lease as Lessee's Personal
Property, on the terms and conditions set forth in that certain Purchase and
Sale Agreement (Paradise Lane School) dated February _____, 2001 (the "Purchase
Agreement") and (ii) enter into this Amendment;
WHEREAS, Lessee, with the approval from the Bankruptcy Court has rejected
and terminated the Lease as of the Closing Date (as such term is defined in the
Purchase Agreement). Lessor hereby acknowledges that it shall not be entitled to
and shall not receive any of the contractual rights provided to Original Lessor
under the Lease, including but not limited to any right to assert any "Claims"
(as that term is defined in the Purchase Agreement) that may arise and/or relate
to the Lease, provided that the Lessor shall be entitled to all contractual
rights of Lessor under the terms of this Amendment from and after the Closing
Date;
WHEREAS, the Lease is hereby incorporated into this Amendment in its
entirety and deemed effective as a lease of the real property described on the
attached Exhibit A, enforceable by and between Lessor and Lessee, subject to the
foregoing limitations and subject to the amended provisions set forth herein;
and
WHEREAS, Lessor and Lessee desire to amend certain provisions of the Lease
as set forth in this Amendment.
1
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Amendment, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee
agree as follows:
1. The terms and provisions of this Amendment shall be deemed effective and
the terms of the Lease shall be deemed effective and enforceable against Lessor
and Lessee on and as of the date set forth in the first paragraph above (the
"Effective Date").
2. All references in the Lease to the Paradise Valley Montessori Property
and to Exhibit A-1 are deleted from the Lease.
3. Section 1.1.2 of the Lease is hereby modified to add the following
subsection (vi):
"(vi) All of the personal property defined in the Lease as Lessee's
Personal Property."
4. Section 1.1.2 of the Lease is further amended by deleting the first
sentence of the last paragraph of said section which reads:
"Notwithstanding the foregoing, the Paradise Valley Property shall not
include any property not acquired by Lessor pursuant to the Paradise Valley
Purchase Agreement."
5. Section 1.2 of the Lease is hereby amended by deleting the existing
Section 1.2 and substituting in lieu thereof the following:
1.2 TERM. The term of the Lease (the "Term") shall be the period
commencing on the Effective Date and expiring on May 30, 2001.
6. Section 1.3 of the Lease is hereby deleted in its entirety.
7. Article II, Section 2 of the Lease is hereby amended by deleting the
following definitions: "C.P.I.", "Extended Term," "Lease Year," "Paradise Valley
Montessori Purchase Agreement," "Related Leases," "Security Agreements,"
"Security Documents," "Unsuitable for Its Primary Intended Use" and "Unavoidable
Delays."
8. Article II, Section 2 of the Lease is hereby amended by modifying the
definition of Lessor to read as follows:
"LESSOR." Gan Yeladeem, an Arizona corporation and its successors and
assigns. Unless Lessee is notified by Lessor otherwise, Lessor's address
is: 00000 Xxxxx 00xx Xxxxxx, Xxxxxxxxxx, XX 00000.
9. Article II, Section 2 of the Lease is hereby amended by modifying the
definition of Term to read as follows:
"TERM. As defined in Section 1.2."
2
10. Sections 3.1.1.(a), 3.1.1.(b) and 3.1.2 of the Lease are hereby
modified by deleting those sections and replacing those sections with the
following:
3.1.1 (a) INITIAL TERM. The monthly "Minimum Rent" is $16,000.00. The
Minimum Rent shall be paid by Lessee to Lessor on or before the first day
of each calendar month during the Term (each a "Minimum Rent Payment
Date"); Minimum Rent shall be prorated for any partial month at the
beginning or the end of the Term. Lessor has agreed in the Purchase
Agreement, among other things, to pay to Lessee four payments of
$25,000.00. Notwithstanding anything in the Lease to the contrary, Lessor
agrees to permit Lessee to offset Lessee's monthly Minimum Rent payments
against such $25,000 payments due Lessee from Lessor under the Purchase and
Sale Agreement.
3.1.1 (b) EXTENDED TERMS. Intentionally deleted.
3.1.2 PRE-PAYMENT OF MINIMUM RENT. Intentionally deleted.
3.2 ANNUAL ESCALATION OF MINIMUM RENT. Intentionally deleted.
11. The last sentence of Section 3.4 of the Lease is hereby deleted in its
entirety and is replaced with the following:
"Lessee agrees to indemnify and defend Lessor against any and all
claims or other amounts due under this Lease for any period prior to the
Term."
12. The last sentence of Section 4.5 of the Lease is hereby deleted in its
entirety and is replaced with the following:
"Lessee agrees to indemnify and defend Lessor against any and all
liabilities and obligations concerning the Facilities which have arisen
prior to the Effective Date."
13. Section 4.6 of the Lease is hereby deleted in its entirety.
14. Section 6.1 of the Lease is hereby amended to read as follows:
"6.1 OWNERSHIP OF LEASED PROPERTY. Lessee acknowledges and agrees that
the Leased Property (including that property defined as the Lessee's
Personal Property) is the property of Lessor and that Lessee has only the
right to the exclusive possession and use of the Leased Property upon the
terms and conditions and during the term of this Lease.
15. Sections 6.2, 6.3 and 6.4 of the Lease are hereby deleted in their
entirety.
16. Section 7.3 of the Lease is hereby deleted in its entirety.
3
17. Section 8.1 of the Lease is hereby amended to add the following at the
end of said section:
"Lessor acknowledges that Lessee has not yet obtained a certificate of
occupancy for the building commonly referred to as Building #3. Subject to
the terms and conditions of the Purchase Agreement, Lessee has agreed to
obtain such certificate of occupancy prior to the end of the Term.
18. The first sentence of Section 9.1.3 of the Lease is hereby deleted in
its entirety and replaced with the following:
"Lessee shall not make any modifications, alterations or improvements
to the Leased Improvements or any portion thereof, whether by addition or
deletion, without Lessor's prior written consent, which consent may be
given or withheld in Lessor's sole and absolute discretion. Lessor
acknowledges that, subject to Section 7.6 of the Purchase Agreement, Lessee
may make modifications to the building commonly referred to as Building #3
to obtain a certificate of occupancy and Lessor consents to Lessee's
modification."
19. Section 9.2 of the Lease is hereby amended to add the following at the
end of said section:
"Notwithstanding anything contained herein to the contrary, Lessee
shall not be required to expend any amounts under this Section 9.2 in
excess of those amounts set forth in Section 7.6 of the Purchase
Agreement."
20. Section 9.3 of the Lease is hereby deleted in its entirety.
21. Section 13.1.6 of the Lease is hereby deleted in its entirety.
22. Section 13.6 of the Lease is hereby deleted in its entirety.
23. Section 14.1 of the Lease is hereby deleted in its entirety and
replaced with the following:
"14.1 INSURANCE PROCEEDS. All insurance proceeds payable by reason of
any loss of or damage to the Leased Property, or any portion thereof, which
is insured under any policy of insurance required by Article XIII of the
Lease shall be paid to the Lessor. In the event Lessor does not elect to
repair and restore the Leased Premises, the Minimum Rent shall xxxxx in
accordance with Section 5.2. In the event of any loss or damage that
renders the Leased Property unsuitable for its Primary Intended Use (in the
reasonable business judgment of Lessor and Lessee) the Lease shall be
terminated."
24. Section 14.2 through and including Section 14.6 of the Lease are hereby
deleted in their entirety.
4
25. Sections 15.3 through 15.6 of the Lease are hereby deleted in their
entirety and replaced with the following:
"15.3 ALLOCATION OF CONDEMNATION AWARDS. All Condemnation Awards
payable by reason of any loss of, damage to or taking of the Leased
Property or any portion thereof shall be paid to the Lessor. In the event
Lessor does not elect to use such Award to repair and restore the Leased
Premises, the Minimum Rent shall xxxxx in accordance with Section 5.2. In
the event of any loss of, damage to or taking of the Leased Property that
renders the Leased Property unsuitable for its Primary Intended Use (in the
reasonable business judgment of Lessor and Lessee) the Lease shall be
terminated.
26. Section 16.1 (b) through and including Section 16.1 (f) of the Lease
are hereby deleted in their entirety and replaced with the following:
"(b) if Lessee fails to observe or perform any term, covenant or
condition of this Lease other than those described under Paragraphs 1.3.3,
16.1(a) and 16.1(g) through and including 16.1(n) of this Lease, and such
failure is not cured by Lessee within a period of thirty (30) days after
Notice thereof from Lessor, unless such failure cannot with due diligence
be cured within a period of thirty (30) days, in which case such failure
shall not be deemed an Event of Default if Lessee proceeds promptly and
with due diligence to cure the failure and diligently completes the curing
thereof within ninety (90) days; or
(c) Intentionally deleted.
(d) Intentionally deleted.
(e) Intentionally deleted.
(f) Intentionally deleted."
27. Article XVIII of the Lease is hereby deleted in its entirety.
28. The last sentence of Section 20 of the Lease is hereby deleted in its
entirety and replaced with the following:
"Lessor shall, however, remain liable for any damages arising from
Lessor's own negligence or willful misconduct."
29. Subsection 21(b) of the Lease is hereby deleted in its entirety and
replaced with the following:
"(b) any third party claims of any kind relating to the Leased
Property, the Facilities or the operation thereof, whether sounding in
contract or tort, and whether arising directly or indirectly from the acts
or omissions of Lessee, or any of Lessee's teachers, administrators,
students, employees, agents, invitees, guests, permittees or trespassers."
5
30. Subsection 21(g) of the Lease is hereby deleted in its entirety and
replaced with the following:
"(g) any Hazardous Materials, as defined in Paragraph 10.2, above that
now or hereafter during the Term may be located in, on or around, or may
potentially affect, any part of the Land or Leased Improvements unless such
exposure to or presence of Hazardous Materials has been caused by any act
or omission of Lessor;"
31. The sentence immediately preceding the last sentence of Section 21 of
the Lease is hereby deleted in its entirety and replaced with the following:
"Nothing herein shall be construed as indemnifying Lessor against its
negligence or willful misconduct."
32. Section 23 of the Lease is hereby deleted in its entirety.
33. Subsection 25.1(h) of the Lease is hereby deleted in its entirety and
replaced with the following:
"all telephone numbers and facsimile numbers presently in use."
34. Section 25.3.2 of the Lease is hereby deleted in its entirety.
35. Section 32 (a) of the Lease is hereby amended to add the following:
"with a copy to: Xxxxxx X. Xxxxxx, Esq.
Xxxxx Xxxx, LLP
Xxx Xxxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
36. Section 32 (b) is hereby deleted in its entirety and replaced with the
following:
"(b) If to Lessor: Gan Yeladeem
00000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Ph.D.
With a copy to: Xxxxx Xxxx, LLP
0000 Xxxxx Xxxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
6
37. The following ARTICLE XXXV is hereby added to the Lease:
"ARTICLE XXXV
35.1 CONSTRUCTION. Lessee agrees that Lessor shall be entitled to
enter onto the Leased Property for purposes of completing any construction,
maintenance, replacement and/or repair deemed desirable by Lessor
(including, without limitation, the construction of additional buildings
and improvements). Lessor agrees to provide to Lessee three days notice of
such construction, maintenance, replacement or repair and agrees to take
all reasonable action to (i) minimize interference with the operation of
Lessee's business, and (ii) prevent Lessee's students from access to any
construction area. Lessee agrees to take all reasonable measures to (a)
accommodate Lessor's access to the Leased Property, and (b) prevent
Lessee's students from entering into any area which Lessor or Lessor's
agents, employees or independent contractors are completing construction,
maintenance, replacement or repair.
35.2 TOURS, MEETINGS, STUDENT ORIENTATION AND RECRUITING. Lessee
agrees to allow Lessor access to the Leased Property for purposes related
to recruiting and orientation of students. Lessor may conduct student
"fairs", orientations, and other recruiting activities at the Leased
Property upon reasonable notice to Lessee. Lessor will take all reasonable
actions necessary to prevent disruption to the conduct of Lessee's
business. Lessor and Lessee agree to cooperate in the scheduling of any
such events which may potentially result in a disruption of Lessee's
business operation."
35.3 INDEMNITY. Lessor hereby indemnifies and agrees to defend and
hold Lessee harmless from any and all claims, demands, obligations, losses,
liabilities, damages, recoveries and deficiencies which Lessee may suffer
as the result of Lessor's access to and activities on the Leased Property
pursuant to the terms of this Article XXXV including, without limitation
reasonable attorneys' fees and costs arising out of or in any way connected
with any construction, maintenance, replacement or repair by Lessor, its
agents or contractors.
38. Unless credited or delivered to Lessor at the closing of the purchase
of fee title to the Leased Property, Lessor is not in possession of any escrowed
money, security deposits, prepaid rent or sums other than the amounts agreed to
be paid to Lessee by Lessor under the Purchase and Sale Agreement dated February
____, 2001. In the event any such escrowed money, security deposits, prepaid
rents or other sums are due and payable to Lessee which have not been credited
or paid to Lessor, Lessee agrees to obtain payment from the Original Lessor.
39. Lessee warrants and represents to Lessor that (i) all necessary actions
have been taken to authorize the execution of this Amendment by Lessee, (ii) the
persons who have executed this Amendment on behalf of Lessee are duly authorized
to do so, and (iii) the Lease, as modified by this Amendment, constitutes the
legal, valid and binding obligation of Lessee, enforceable against Lessee in
accordance with its terms.
7
Lessor warrants and represents to Lessee that (i) all necessary actions
have been taken to authorize the execution of this Amendment by Lessor, (ii) the
persons who have executed this Amendment on behalf of Lessor are duly authorized
to do so, and (iii) the Lease, as modified by this Amendment, constitutes the
legal, valid and binding obligation of Lessor, enforceable against Lessor in
accordance with its terms.
40. This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original.
41. In all other respects the Lease shall remain unchanged and in full
force and effect. The Lease, as amended by this Amendment, shall continue to be
binding upon the Lessor and Lessee and their permitted successors and assigns.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Amendment as of
the date first above written.
LESSOR:
GAN YELADEEM,
an Arizona non-profit corporation
By /s/ Xxxxx Xxxxxx
----------------------------------------
Xxxxx Xxxxxx, President
LESSEE:
THE TESSERACT GROUP, INC.,
a Minnesota corporation
By /s/ Xxxxxx Xxxxxxx
----------------------------------------
Xxxxxx Xxxxxxx, President
8
STATE OF ARIZONA )
) SS.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me on February ____,
2001, by Xxxxx Xxxxxx, as president of Gan Yeladeem, an Arizona non-profit
corporation on behalf of the corporation..
---------------------------------------
Notary Public
My Commission Expires:
------------------------------
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me on February ____, 2001,
by Lucian Spatoro, as president of The Tesseract Group, a Minnesota corporation
on behalf of the corporation.
---------------------------------------
Notary Public
My Commission Expires:
------------------------------
9
EXHIBIT A
LEGAL DESCRIPTION
