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Exhibit 10.1
AGREEMENT
This AGREEMENT is made as of December 29, 1999, by and between EDUCATION
PROPERTIES INVESTORS, INC., a Nevada corporation (formerly known as EduCorp
Properties, Inc., and hereinafter referred to as "EPI" and THE TESSERACT GROUP,
INC., a Minnesota corporation ("TesseracT"), with reference to the following
facts:
A. On or about November 19, 1998, EPI made a loan ("Loan") to TesseracT
for the purpose of funding the construction of certain improvements on property
located in North Scottsdale, Arizona, more particularly described on EXHIBIT
"A" attached hereto and incorporated herein ("North Scottsdale Property").
TesseracT has subdivided the North Scottsdale Property into two legal parcels,
one constituting the primary school and legally described on EXHIBIT "B"
attached hereto and incorporated herein ("Primary School Parcel"), and one
constituting the high school and legally described on EXHIBIT "C" attached
hereto and incorporated herein ("High School Parcel"). The original, maximum
principal amount of the Loan was Eight Million Three Hundred Ninety Thousand
and No/100 Dollars ($8,390,000.00).
B. EPI is the landlord, and TesseracT is the tenant, under and pursuant
to those certain three (3) leases; one dated June 9, 1998, pertaining to
certain property located in Eagan, Minnesota ("Eagan Lease"); one dated June 9,
1998, pertaining to two (2) certain properties located in Paradise Valley,
Arizona ("Paradise Valley Properties Lease"); and one dated September 18, 1998,
pertaining to certain property located in Ahwatukee, Phoenix, Arizona
("Ahwatukee Lease"). Pursuant to the Option Agreement (described in Paragraph E,
below), the property which is subject to the Ahwatukee Lease will become part
of the Ahwatukee/Primary School Lease.
C. Pursuant to that certain Collateral Pledge Agreement dated May 29,
1998, by and between EPI and TesseracT, as amended pursuant to that certain
Amendment to Collateral Pledge Agreement dated November 19, 1998 (collectively,
the "Pledge Agreement") and pursuant to certain provisions of the Eagan Lease,
Paradise Valley Properties Lease, and Ahwatukee Lease, TesseracT is required to
prepay twelve (12) months of "Minimum Rent" (as that term is defined in such
respective Leases) and, under certain conditions, prepay twelve (months) of
Impositions (as that term is defined in the respective Leases) on the first day
of September of each year during the term of each respective Lease.
D. Pursuant to the Leases and the Pledged Agreement, TesseracT was
required to deposit Two Million Four Hundred Ninety Four Thousand Four Hundred
Forty Dollars ($2,494,440.00) in the Pledged Account (as that term is defined
in the Pledge Agreement) on September 1, 1999, in respect of prepaid Minimum
Rent and prepaid Impositions, but TesseracT failed to do so. Accordingly, an
"Event of Default" has occurred under the Eagan Lease, Paradise Valley
Properties Lease and Ahwatukee Lease. On the Closing Date (defined below),
TesseracT is required to deposit prepaid
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Minimum Rent and prepaid Impositions pursuant to the Ahwatukee/Primary School
Lease (defined in Paragraph 2, below).
E. EPI and TesseracT are parties to that certain Option to Purchase and
Right of First Refusal dated November 19, 1998 ("Option Agreement") pursuant to
which EPI has the right to purchase the North Scottsdale Property. On or about
November 24, 1999, EPI exercised its option to purchase the North Scottsdale
Property pursuant to the Option Agreement. However, and as provided below, EPI
will purchase only the Primary School Parcel, and the High School Parcel will
not be subject to the Option Agreement.
F. EPI and TesseracT are parties to that certain Put Agreement dated
November 19, 1998, pursuant to which TesseracT may compel EPI to purchase the
North Scottsdale Property. The parties desire to terminate the Put Agreement.
G. TesseracT has agreed to fund the Pledged Account for the period
September 1, 1999 through August 31, 2000, pursuant to the terms more
specifically described below in this Agreement.
H. On or about ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇, ▇▇▇ and TesseracT executed that certain
non-binding letter of intent, which contemplates the transactions described in
this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. PURCHASE OF PRIMARY SCHOOL PARCEL.
1.1 TesseracT shall sell, and EPI shall purchase, the Primary School
Parcel. The purchase price and the other terms and conditions of the sale of
the Primary School Parcel shall be consistent in every respect with the Option
Agreement; except that (i) EPI shall not purchase (nor have the right to
purchase) the High School Parcel; (ii) the "Closing Date" (as that term is
defined in the Option Agreement) shall be as soon as possible after full
execution of this Agreement; (iii) the "Escrow" (as that term is defined in the
Option Agreement) shall be opened as soon as reasonably practicable after the
full execution of this Agreement or, if the parties mutually agree, no formal
escrow will be opened and, instead, the parties shall each deposit the
documents and monies with the Escrow Holder (as that term is defined in the
Option Agreement) necessary to consummate the purchase and sale in accordance
with the Option Agreement and this Agreement; and (iv) the Nine Million Four
Hundred Thousand and No/100 Dollar ($9,400,000.00) purchase price to be paid by
EPI pursuant to the Option Agreement shall be paid as follows: (A) a portion of
the purchase price shall be used to pay off the entire balance of the Loan
(which amount shall not be funded through the Escrow, but shall merely be
credited against the purchase price); and (B) the balance of the purchase price
shall be deposited in the Pledged Account.
1.2 On or prior to the Closing Date, EPI shall deposit with the
Escrow Holder (as that term is defined in the Option Agreement) a release of
the Deed of Trust,
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and terminations of all UCC-1 Financing Statements given by TesseracT in
connection with the Loan, in form customarily used in the State of Arizona.
1.3 Upon the closing of the purchase and sale, EPI's right of first
refusal to purchase the North Scottsdale Property (pursuant to Paragraph 10 of
the Option Agreement) shall automatically, and without further notice or action
by any party, terminate.
1.4 TesseracT shall at TesseracT's expense (i) cause to be released
from record title to the Property that certain "City of Scottsdale Covenant And
Agreement To Hold Property As One Parcel," as set forth in instrument recorded
in Document No. ▇▇-▇▇▇▇▇▇▇ (the "Covenant and Agreement"), or (ii) cause the
Covenant and Agreement to be modified so as to allow for the subdivision of the
Property and for the separate ownership of the High School Parcel and the
Primary School Parcel, subject to EPI's review and approval.
2. LEASE OF PRIMARY SCHOOL PARCEL. Effective upon the closing of the
purchase and sale of the Primary School Parcel, EPI, as landlord, and
TesseracT, as tenant, shall enter into that certain Amended and Restated Lease,
more particularly described in Exhibit "C" of the Option Agreement
("Ahwatukee/Primary School Lease"). The said Amended and Restated Lease shall
constitute a lease of the Primary School Parcel, as well as a lease of the
property located in Ahwatukee, Arizona (which is described in and currently the
subject of the Ahwatukee Lease).
3. PUT AGREEMENT. Upon full execution of this Agreement, the Put
Agreement shall automatically terminate without further notice or action by any
party and TesseracT shall have no right to exercise any of its rights under the
Put Agreement.
4. PLEDGED ACCOUNT; CURE OF LEASE DEFAULTS: ACKNOWLEDGEMENT REGARDING
RENT.
4.1 On the Closing Date, that portion of the purchase price which is
not applied to satisfy and pay off the Loan shall be deposited by EPI into the
Pledged Account (to serve as prepaid Minimum Rent and prepaid Impositions (as
those terms are defined in the various Leases). However, the parties
acknowledge that, even after the balance of the purchase price is deposited
into the Pledged Account, the amount in the Pledged Account will still be
insufficient to satisfy the requirements of the Eagan Lease, Paradise Valley
Properties Lease and Ahwatukee/Primary School Lease (collectively, "Leases")
with respect to prepaid Minimum Rent and prepaid Impositions. EPI and TesseracT
have therefore agreed that, for the period from the Closing Date until such
time as there are sufficient sums remaining in the Pledged Account to then pay
the entire balance of prepaid Minimum Rent and prepaid Impositions through
August 31, 2000, TesseracT shall pay Minimum Rent in the amount provided in
Paragraph 4.2. Accordingly, the current Events of Default under the Leases with
respect to prepaid Minimum Rent and prepaid Impositions shall be deemed waived
by EPI as of the Closing Date. In addition, to the extent any default exists
under the Pledge Agreement by reason of TesseracT's failure to deposit prepaid
Minimum Rent and prepaid Impositions under
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the Leases as and when currently due, such default shall be deemed waived by
EPI to the same extent as EPI has waived the Events of Default presently
existing under the Leases by reason of TesseracT's failure to deposit prepaid
Minimum Rent and prepaid Impositions as and when presently required.
4.2 TesseracT shall pay aggregate monthly Minimum Rent under all of
the Leases in the amount of One Hundred Fifty Thousand and No/100 Dollars
($150,000.00) per month on the first day of each and every month commencing
January 1, 2000 until such time as there are sufficient sums remaining in the
Pledged Account to pay the entire Minimum Rent and Impositions through August
31, 2000. The parties acknowledge that aggregate monthly Minimum Rent for all
of the Leases shall, on January 1, 2000, be Two Hundred Seven Thousand Eight
Hundred Seventy and 36/100 Dollars ($207,870.36). Accordingly, commencing
January 1, 2000, TesseracT shall pay One Hundred Fifty Thousand No/100 Dollars
($150,000.00) directly to EPI as a portion of the said aggregate monthly
Minimum Rent, with the balance of such aggregate monthly Minimum Rent (to wit,
Fifty-Seven Thousand Eight Hundred Seventy and 36/100 Dollars ($57,870.36))
being distributed from the Pledged Account directly to EPI. Until there are
sufficient funds remaining in the Pledged Account to cover prepaid Minimum Rent
and prepaid Impositions through August 31, 2000, TesseracT shall continue to
pay EPI (as a partial payment toward the then applicable monthly Minimum Rent)
the sum of One Hundred Fifty Thousand and No/100 Dollars ($150,000.00) per
month. (The said $150,000.00 shall be deemed to apply to monthly Minimum Rent
under each Lease, pro-rata, in the ratio that Minimum Rent under each Lease
bears to the other.) Notwithstanding the foregoing, and irrespective of
anything else in this Agreement, on or prior to September 1, 2000, TesseracT
shall deposit in the Pledged Account all prepaid Minimum Rent and prepaid
Impositions for all Leases for the twelve (12) month period from September 1,
2000 through August 31, 2001. Accordingly, except as specifically provided
above in this Paragraph 4, nothing shall be deemed to modify TesseracT's
obligation to pay annual prepaid Minimum Rent and prepaid Impositions on
September 1 of each year pursuant to the specific requirements of the Leases.
4.3 The provisions of this Paragraph 4 regarding the waiver by EPI
of Events of Default constitute a limited waiver, specifically limited to the
provisions of Paragraph 4.1 and 4.2 above, then no other waiver of any
provision of any of the Leases (or any other agreement between EPI and
TesseracT) shall be implied. Among other things, to the extent that Minimum
Rent under any of the Leases is increased pursuant to the Leases, such
increases shall remain applicable to adjust the Minimum Rent. In addition, and
without limiting anything set forth above in this ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇ shall
not be entitled to have any monies disbursed from the Pledged Account in
respect of any Impositions until such time as there are sufficient sums
remaining in the Pledged Account to then pay the entire Minimum Rent and
Impositions through August 31, 2000. As soon as reasonably practicable after
the date hereof, the parties shall agree upon a written schedule reflecting the
amounts existing in the Pledged Account and the anticipated month during which
there shall be sufficient funds in the Pledged Account to pay Impositions and
Minimum Rent for the then balance of the Lease year ending August 31, 2000.
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5. TRANSFER OF 120,000 SHARES OF TESSERACT COMMON STOCK TO EPI. At least
one (1) day prior to the Closing, TesseracT shall deliver to EPI, a certificate
or certificates representing 120,000 shares of the issued and outstanding common
stock of TesseracT, .01 par value, issued in the name of Education Property
Investors, Inc. ("Shares"), in the form attached hereto as Exhibit "D." The
shares shall be duly authorized, validly issued and fully paid. No additional
consideration shall be paid or given by EPI for the transfer for the aforesaid
shares, it being acknowledged and agreed by TesseracT and EPI that the shares
are being transferred to EPI in consideration of EPI's agreements under this
Agreement.
6. NOTICES. All notices required or permitted to be given pursuant to
this Agreement shall be either (i) personally delivered; (ii) sent via
facsimile transmission; or (iii) sent via overnight courier (such as Federal
Express, DHL, etc.). If sent via facsimile on a business day, during normal
business hours, receipt shall be deemed effective upon confirmation of
transmittal thereof. If sent via overnight courier, receipt shall be deemed
effective one (1) business day after the sending thereof. All notices to be
given pursuant to this Agreement shall be given to the parties at the following
respective addresses.
If to Optionor:
The TesseracT Group, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Faegre & ▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Optionee:
Education Properties, Inc.
c/o LTC Properties, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Education Properties, Inc.
c/o LTC Properties, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
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and: Stern, Neubauer, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
7. NO ASSIGNMENT. Neither party may assign to any other party any of its
right or interest in this Agreement, nor delegate any of its duties under this
Agreement.
8. WAIVER. No waiver by any party at any time of any breach of any
provision of this Agreement shall be deemed a waiver or a breach of any other
provision herein or a consent to any subsequent breach of the same or another
provision. If any action by any party shall require the consent or approval of
another party, such consent or approval of such action on any one occasion
shall not be deemed a consent to or approval of such action on any subsequent
occasion or a consent to or approval of any other action.
9. CAPTIONS AND HEADINGS. The captions and paragraphs numbers appearing
in this Agreement are inserted only as a matter of convenience and do not
define, limit, construe, or describe the scope or intent of this Agreement.
10. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be considered an original and all of which taken together shall
constitute one and the same instrument.
11. GOVERNING LAW. This Agreement has been prepared, negotiated and
executed in, and shall be construed in accordance with, the laws of the State
of California.
12. ATTORNEYS FEES. If either party named herein brings an action or
proceeding to enforce the terms hereof or declare rights hereunder, the
prevailing party in any such action (or proceeding), on trial or appeal, shall
be entitled to its reasonable attorneys' fees to be paid by the losing party as
fixed by the Court.
13. TIME OF ESSENCE. Time is of the essence with respect to all matters
contained in this Agreement.
14. DRAFTING OF AGREEMENT. EPI and TesseracT acknowledge that this
Agreement has been negotiated at arm's length, that each party has been
represented by independent counsel and that this Agreement has been drafted by
both parties and no one party shall be construed as the draftsperson.
15. NO THIRD PARTY BENEFICIARY RIGHTS. This Agreement is entered into
for the sole benefit of EPI and TesseracT and no other parties are intended to
be direct or incidental beneficiaries of this Agreement and no third party
shall have any right in, under or to this Agreement.
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16. CLOSING COSTS AND LEGAL FEES. TesseracT shall pay all costs necessary
to consummate the transactions contemplated by this Agreement, including but
not limited to all costs required to be paid by TesseracT pursuant to the
Option Agreement and all other legal fees of EPI in connection with this
Agreement. All such costs shall be paid on the Closing Date and none of such
costs may be paid from net proceeds from the purchase price paid by EPI for the
Primary School Parcel (all of which net proceeds shall be deposited in the
Pledged Account pursuant to Paragraph 1.1, above).
IN WITNESS WHEREOF, the parties hereto have executed this Agreement this
day and year first above written.
"TENANT":
THE TESSERACT GROUP, INC.,
a Minnesota corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Its: CEO
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
"LANDLORD":
EDUCATION PROPERTIES INVESTORS, INC.,
a Nevada corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Its: V.P. & Chief Financial Officer
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