Purchase And Sale Agreement

Purchase and Sale Agreement

                                                                    Exhibit 10.1

                           PURCHASE AND SALE AGREEMENT
                            (PARADISE VALLEY SCHOOL)

     This PURCHASE AND SALE  AGREEMENT (the  "Agreement")  is entered into as of
the 26th day of December,  2000,  by and between THE  TESSERACT  GROUP,  INC., a
Minnesota  corporation,  in its corporate capacity and in its capacity as debtor
and  debtor-in-possession  in its Chapter 11 case  pending in the United  States
Bankruptcy Court for the District of Arizona ("Seller"), and THE PARADISE VALLEY
PRIVATE SCHOOL FOUNDATION, an Arizona non-profit corporation ("Buyer").

                                    RECITALS

     A. Seller operates that certain private school and preschool commonly known
as the "Paradise Valley  TesseracT  School" located at 4800/4834 East Doubletree
Ranch Road, Paradise Valley,  Arizona and a preschool  ("Preschool")  located at
4530 E. Gold Dust  Avenue,  Phoenix,  Arizona  (collectively  referred to as the
"School").

     B. Seller has filed a voluntary  petition for Chapter 11 relief under Title
11 of the United States Code  ("Bankruptcy  Code"),  which is pending before the
United States Bankruptcy Court for the District of Arizona (the "Court").

     C. Seller desires,  subject to the approval of the Court, to sell and Buyer
desires to purchase  certain assets and assume certain  liabilities of Seller in
connection  with Seller's  operations of the School on the terms and  conditions
set forth in this Agreement and in accordance with Bankruptcy Code ss.ss.363 and
365.

     D. Buyer and Seller further  desire,  subject to the approval of the Court,
to enter into such other agreements and arrangements that effectuate the orderly
transition of the School from Seller to Buyer.

     E.  Buyer has  completed  its due  diligence  of the  School  and all other
matters addressed in this Agreement.

     F. Prior to or  contemporaneously  with the  closing  of this  transaction,
Private School Real Estate LLC ("Private School") intends on purchasing the real
property  on which the School is  situated,  and the  related  improvements  and
fixtures from EPI (defined below).

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     G.  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  ASSUMED  CONTRACTS.  The term  "Assumed  Contracts"  shall  mean those
unexpired  leases  and  other  executory  contracts,  which  Buyer  will  assume
hereunder,  which are specifically set forth on SCHEDULE 1.1 attached hereto and
the Preschool  Lease.  [SCHEDULE WILL INCLUDE ALL TEACHERS'  CONTRACTS AND OTHER
CONTRACTS THAT BUYER SPECIFICALLY AGREES TO ASSUME.]

     1.2 BUSINESS.  The term "Business" shall mean Seller's operations conducted
under the name  "TesseracT,"  "The TesseracT  Group,  Inc.," or "Paradise Valley
TesseracT School," at the School and at any other location within or outside the
State of Arizona.

     1.3 CLAIM.  The term "Claim" shall be given the same meaning as provided to
such term under Bankruptcy Codess.101(5).

     1.4 CLOSING.  The term "Closing" shall mean the completed  exchange of: (i)
Closing  documents  set forth in Articles  XIV and XV below,  together  with the
simultaneous  conveyance  by Seller to Buyer of the Purchased  Assets;  (ii) the
payment  by Buyer to  Seller of the  Purchase  Price due under the terms of this
Agreement;  and (iii) the  assumption by Buyer of the  obligations  which it has
expressly agreed to assume hereunder.

     1.5 CLOSING DATE.  The term "Closing Date" shall mean the date on which the
Closing occurs which shall not be later than January 15, 2001,  unless such date
is extended in accordance with Article X.2.

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     1.6 EPI. The term "EPI" shall mean Education  Property  Investors,  Inc., a
Nevada corporation.

     1.7 EQUIPMENT.  The term  "Equipment"  shall mean all furniture,  fixtures,
office  equipment,  computers,  printers,  and other tangible  personal property
owned by Seller and located at the School on December  10, 2000 as  evidenced by
SCHEDULE 1.7 attached hereto, the inventory list prepared by Seller.

     1.8 LEASE.  The term "Lease" shall mean that certain Lease dated as of June
9, 1998 by and between Seller, as lessee, and EPI, as lessor,  pursuant to which
Seller leases the Real Property and the Paradise Lane Property from EPI.

     1.9 PARADISE LANE PROPERTY.  The term  "Paradise Lane Property"  shall mean
that certain real property located in Paradise Valley,  Arizona, at which Seller
operates the charter school commonly referred to as the "Paradise Lane TesseracT
Charter School."

     1.10 PREPAID  TUITION AND DEPOSIT  CLAIMS.  The term  "Prepaid  Tuition and
Deposit  Claims" shall mean all Claims against Seller and its estate for prepaid
tuition and  deposits  provided on behalf of students at the School  through the
Closing  Date;  provided,  however,  that it shall not include the  Billings (as
defined in Section 7.5 below).

     1.11 PRESCHOOL.  The term  "Preschool"  shall mean the preschool  presently
operated by Seller at the Preschool Facility.

     1.12  PRESCHOOL  FACILITY.  The term  "Preschool  Facility"  shall mean the
facility located at 4530 East Gold Dust Avenue, Phoenix Arizona.

     1.13 PRESCHOOL  LEASE.  The term "Preschool  Lease" shall mean that certain
Agreement to Lease between Seller and the St. George Antiochian  Orthodox Church
dated March 30, 1998, pursuant to which Seller leases the Preschool Facility.

     1.14 REAL PROPERTY  PURCHASE  AGREEMENT.  The term "Real Property  Purchase
Agreement" shall mean the written  agreement between Private School and EPI that
provides for EPI's sale, and Private School's purchase, of the Real Property.

     1.15 REAL PROPERTY.  The term "Real  Property" shall mean the real property
that is the subject of the Real Property Purchase  Agreement,  which is commonly
known as 4800/4834 East Doubletree Ranch Road, Paradise Valley, Arizona.

     1.16 SECTION 363 ORDER.  The term  "Section 363 Order" shall mean the order
entered by the Court pursuant to Bankruptcy Code ss.363 approving  Seller's sale
of the  Purchased  Assets (as  defined  in Section  2.1 below) to Buyer free and
clear  of any and all  liens,  encumbrances,  claims,  security  interests,  and
adverse  interests  of any  kind,  the form of which  shall be  agreed to by the
parties hereto.

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     1.17 SECTION 365 ORDER.  The term  "Section 365 Order" shall mean the Order
entered by the Court pursuant to Bankruptcy  Code ss.365(a)  approving  Seller's
decision to: (i) reject the Lease as it relates to the Real Property;  provided,
however,  that the  Section 365 Order  shall not  approve  Seller's  decision to
reject the Lease as it relates to the Paradise Lane Property  unless Seller,  in
its sole and absolute discretion which may be unreasonably  withheld,  hereafter
decides to reject the Lease as it relates to the  Paradise  Lane  Property;  and
(ii) assume the Assumed  Contracts,  the form of which shall be agreed to by the
parties hereto.

     1.18  EMPLOYEES'  ACCRUED   LIABILITIES.   The  term  "Employees'   Accrued
Liabilities"  shall  mean the  liabilities  of Seller for  accrued  compensation
arising under Seller's employment obligations with its employees,  including the
obligations  arising from its contracts  with the School's  teachers,  as of the
Closing Date,  which are specifically set forth on SCHEDULE 1.18 attached hereto
and totals APPROXIMATELY $50,000.00.  The Employees' Accrued Liabilities amounts
set forth on SCHEDULE  1.18 are  effective  as of  November  30,  2000,  and the
parties will agree to an amended  SCHEDULE  1.18 at the Closing  which shall set
forth the actual amount of the  Employees'  Accrued  Liabilities  on the Closing
Date.

                                   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,  free and clear of any and all  liens,  encumbrances,  claims,  security
interests,  and  adverse  interests  of  any  kind,  the  following  assets  and
intangibles to Buyer  (collectively,  the "Purchased Assets, which the Buyer may
use to operate a school:

          2.1.1  EQUIPMENT  AND THE ASSUMED  CONTRACTS.  The  Equipment  and the
Assumed Contracts.

          2.1.2 OTHER PERSONAL PROPERTY.  In addition to the Equipment,  any and
all other tangible  property  utilized by Seller in connection with the Business
conducted at the School and Preschool located those facilities,  including,  but
not limited to, supplies-on-hand.

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          2.1.3  RECORDS,  FILES AND RELATED  MATERIALS.  Copies of all records,
files,  invoices,  student lists, employee files,  accounting records,  business
records,  operating  information,  any available  historical  financial data and
other data of Seller relating to the School and the Preschool.

          2.1.4  GOODWILL.  All of Seller's  goodwill that relates to the School
and the Preschool, including the telephone numbers of the School.

     2.2 EXCLUDED ASSETS.  Notwithstanding  Section 2.1 above,  Seller shall not
sell, transfer,  assign,  convey or deliver to Buyer, any asset not specifically
addressed  in Section  2.1 above,  including  but not  limited to the  following
assets (collectively the "Excluded Assets"):

          2.2.1  CONSIDERATION.  The consideration  delivered by Buyer to Seller
pursuant to this Agreement.

          2.2.2   INTELLECTUAL   PROPERTY.   Except  as  provided  herein,   all
intellectual  property  of  Seller,  including,  but not  limited  to,  Sellers'
trademarks, trade names, curriculum, and trade secrets.

          2.2.3  INSURANCE  POLICIES.  Seller's  insurance  policies  and rights
thereunder,  including,  but not  limited to,  general  liability  and  workers'
compensation insurance held by Seller.

          2.2.4 CORPORATE FRANCHISE. Seller's franchise to be a corporation, its
certificate of  incorporation,  corporate  seal,  stock books,  minute books and
other corporate records having exclusively to do with the corporate organization
and capitalization of Seller.

          2.2.5  PRESCHOOL  LICENSE.  Seller's  license  issued  by the  Arizona
Department of Education to operate the Preschool.

                                   ARTICLE III

                            ASSUMPTION OF LIABILITIES

     3.1 ASSUMED LIABILITIES.  At Closing, Seller shall assume, cure and assign,
and  Buyer   shall   accept  said   assignment   (collectively,   the   "Assumed
Liabilities"):  (i) the Assumed Contracts;  provided,  however, that Buyer shall
only be obligated to pay,  perform,  or discharge in accordance with their terms
such  obligations  thereunder  that arise on or after the Closing Date; (ii) the
Employees' Accrued Liabilities,  and (iii) the normal and customary  obligations
relating  to the  operation  of the School.  Buyer  shall  fully and  faithfully
perform all duties and obligations,  due or owing after Closing,  of Seller with
respect to the Assumed Liabilities.

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     3.2 NO  ASSUMPTION OF OTHER  LIABILITIES.  Except as expressly set forth in
this Agreement,  Buyer does not by this Agreement, and will not be obligated to,
assume  any  obligation,  liability  or  duty  of  Seller  whether  incurred  in
connection with the Purchased Assets, or otherwise.

                                   ARTICLE IV

                                TERMS OF PAYMENT

     4.1 PAYMENT DUE AT CLOSING. At Closing, Buyer shall pay to Seller an amount
equal to Fifty Thousand Dollars ($50,000) (the "Purchase Price") less the amount
of the  Deposit  delivered  by Buyer to Seller in  accordance  with  Section 4.2
below, in immediately available funds.

     4.2 DEPOSIT.  Contemporaneously with the execution of this Agreement, Buyer
shall  deliver  into  escrow a cash  deposit  in the amount of  $25,000.00  (the
"Deposit"), which shall be refundable to Buyer unless Buyer refuses to close the
transactions  contemplated in this  Agreement,  except that the Deposit shall be
refundable  to Buyer if Private  School's  transaction  with EPI to purchase the
Real  Property  does not close and such  failure to close is not the result of a
default  by  Private  School  under the Real  Property  Purchase  Agreement.  At
Closing,  the Deposit shall be  transferred to Seller as payment for part of the
Purchase Price.

     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 only to
approval by the Court.

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     5.3 TITLE TO PURCHASED ASSETS.  Seller has good and marketable title to the
Purchased  Assets,  and has full power and  authority to transfer  such title to
Buyer subject only to approval by the Court.

     5.4 ASSUMED CONTRACTS. The Assumed Contracts are valid, binding and in full
force and effect;  and there  exists no default or event that with the giving of
notice,  the passage of time or both, would constitute a default thereunder that
remains uncured as of the Closing Date.

                                   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.

     6.2  AUTHORITY.  Buyer has full power and  authority to execute and perform
this Agreement and all action  necessary to confirm such authority has been duly
and lawfully  taken.  Upon execution  hereof,  this shall be a valid and legally
binding  obligation of Buyer,  enforceable  against Buyer in accordance with its
terms subject only to approval by the Court.

     6.3 CONDITION OF ASSETS. Buyer has fully examined the physical condition of
the Purchased Assets,  and hereby agrees to accept such property AS IS AND WHERE
IS. NO REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, IS MADE
WITH RESPECT TO THE PURCHASED ASSETS.

                                   ARTICLE VII

                                 OTHER COVENANTS

     7.1  CURRICULUM.  Buyer  shall  have  the  fully  paid  up,  non-exclusive,
perpetual right to use Seller's curriculum in its post-Closing  operation of the
School  and  the  Preschool,  including,  without  limitation,   materials,  and
instruction techniques of Seller.

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     7.2 TESSERACT NAME. Buyer shall have the non-exclusive,  perpetual right to
use the  trademark  and trade name  "TesseracT"  as part of the full name of the
School and the Preschool and any two (2) other  facilities in the event that the
School  and/or the  Preschool  are closed or  relocated.  Buyer may  prepare for
Seller's execution a licensing agreement consistent with the terms herein.

     7.3  PRESCHOOL.  Buyer  shall be  responsible  for all costs  and  expenses
associated  with  obtaining a license from the Arizona  Department  of Education
("ADE") to operate the Preschool (the "Preschool License"),  including,  but not
limited to, any and all facility-related  expenses required by ADE. Seller shall
reasonably  cooperate with Buyer in its efforts to obtain the Preschool License.
The sale of the  Purchased  Assets and  assumption  of the  Assumed  Liabilities
contemplated  in this agreement is not  conditioned  upon Buyer's  obtaining the
Preschool  License.  Buyer agrees to hold harmless,  indemnify and defend Seller
from  and  against  any and all  loss,  claim,  damage,  liability  or  expense,
including but not limited to reasonable attorneys' fees and costs arising out of
or occurring as a result of Buyer's inability to obtain a Preschool License.

     7.4  FORBEARANCE OF CLAIMS FOR PREPAID  TUITION AND DEPOSITS.  Buyer agrees
that the Buyer,  all its  officers,  directors,  trustees,  agents and employees
shall (i)  forebear  from  taking  any action  against  Seller and its estate to
receive  payment on the Prepaid  Tuition  and Deposit  Claims and (ii) use their
best  efforts to seek the  forbearance  of any holder of a Prepaid  Tuition  and
Deposit  Claim to take any  action  against  Seller  and its  estate to  receive
payment on the Prepaid Tuition and Deposit Claims.  This forbearance  obligation
and  covenant  shall  expire at the earlier of (i)  distribution  of such claims
pursuant to a Chapter 11 plan in the Sellers  bankruptcy case; (ii) distribution
by a Chapter 7 trustee in the Sellers  bankruptcy  case or (iii) June 30,  2001.
This forbearance  obligation shall terminate  without order of the United States
Bankruptcy  Court for the District of Arizona if the Seller fails to file a plan
by March 15, 2001 or the Closing does not occur by the Closing  Date.  If Seller
enters into any other  agreement to sell its private or charter school assets to
another buyer and that agreement contains a forbearance period more favorable to
that other  buyer than is offered to Buyer  pursuant  to 7.4 of this  agreement,
then Buyer  automatically  shall be  entitled  to  exercise  the more  favorable
forbearance terms as that of the other buyer.

     7.5  BILLINGS.  As of the date  hereof,  Seller  estimates  that Seller has
approximately  $161,000  in unearned  revenues  due on behalf of students at the
School  which has been  billed,  but is as of yet  uncollected,  by  Seller  for
December 2000. These billings and all additional  billings hereafter through the
Closing  Date which are  collected  and  received  by Seller  (collectively  the
"Billings") shall be accounted for by the Seller and deposited  forthwith into a
separately  segregated  bank  account  jointly  in the  Seller's  and  Creditors
Restructuring  Officer of the  Unsecured  Creditors  Committee  (in the Seller's
bankruptcy  case) name. On the Closing Date,  Seller shall turn the funds in the
segregated bank account (the "Segregated  Funds") over to Buyer.  Buyer may only
withdraw  Segregated  Funds and commingle  such cash with its other funds,  when
Buyer has earned the  Segregated  Funds by  providing  the  related  educational
services  to the party who paid such funds to Seller  (the  "Payor");  provided,

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however,  that Buyer  shall be required  to return the  unearned  amount of such
Segregated  Funds to Payor,  pursuant to the terms of the agreement  wherein the
funds  were paid by  Payor,  upon  written  demand  if Payor  decides  not to do
business  with Buyer any time after the Closing  Date.  Buyer  acknowledges  and
agrees that Seller does not in any way  guarantee the  collectability  of any of
the Billings.  No student shall be  disenrolled  from School by either party for
failure to pay any Billing.

     7.6  REJECTION  OF LEASE OF REAL  PROPERTY.  Subject to the  definition  of
Section  365 Order  stated  herein and  subject to the  acquisition  of the Real
Property and closing the Real Property Purchase Agreement by the Private School,
the Lease of the Real Property shall be rejected by Seller at the earlier of (i)
the Closing or (ii) February 5, 2001.  This  provision  shall be included in the
Section 363 Order.

                                  ARTICLE VIII

                                    EMPLOYEES

     8.1  DEFINITION.  Seller has  provided  Buyer  with a complete  list of all
persons regularly employed on either a part-time or full-time basis by Seller in
connection with the School.  For purposes of this Article,  the term "Employees"
shall mean all persons on such list.

     8.2 EMPLOYMENT OF SELLER'S  EMPLOYEES AT THE SCHOOL.  Buyer agrees to offer
to hire all of  Seller's  Employees  as of the  Closing  Date (the  "Transferred
Employees").  From and after the Closing Date, Buyer shall be solely responsible
for payment,  when and if due, of all claims by or  obligations  to  Transferred
Employees including, but not limited to, the Employees' Accrued Liabilities, and
any accrued vacation pay, sick leave, or bonuses earned after the Closing Date.

     8.3 EMPLOYEE SOLICITATIONS. Buyer shall be entitled to reasonable access to
all  employees  related  to  the  School  for  purposes  of  interviewing  these
individuals.

     8.4 WORKERS'  COMPENSATION.  Seller agrees to assume all responsibility for
liability  arising  from  workers'   compensation   claims,   both  medical  and
disability,  which  have been  filed at or prior to the time of Closing or which
arose  out  of  incidents  that  occurred  prior  to  Closing.  Buyer  shall  be
responsible  for all claims,  which arise out of, or are based upon,  incidents,
which occur subsequent to Closing.

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                                   ARTICLE IX

                                   INDEMNITIES

     9.1 SELLER. Seller agrees to hold harmless, indemnify and defend Buyer from
and against any and all loss, claim,  damage,  liability or expense  (including,
but not  limited to,  reasonable  attorneys'  fees and costs)  arising out of or
occurring  as the  result  of any  breach  by  Seller  of any of its  covenants,
representations or warranties hereunder.  Such indemnification shall include any
claims  pertaining to events or actions  occurring prior to the date of Closing.
In no event shall the  liability of Seller  under this Section 9.1  collectively
exceed $5,000.

     9.2 BUYER. Buyer agrees to hold harmless,  indemnify and defend Seller from
and against any and all loss, claim,  damage,  liability or expense  (including,
but not  limited to,  reasonable  attorneys'  fees and costs)  arising out of or
occurring  in  connection  with any  breach  by  Buyer of any of its  covenants,
representations  or  warranties  hereunder,  or any  liability  of  Buyer.  Such
indemnification  shall  include  any  claims  pertaining  to events  or  actions
occurring after the date of Closing..

                                    ARTICLE X

                                     CLOSING

     10.1  CLOSING.  Closing  shall  occur at the law offices of Quarles & Brady
Streich  Lang,  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 or
subsequent to the closing of the transaction pursuant to which Private School is
purchasing the Real Property from EPI and by no later than January 15, 2001.

     10.2 TIME IS OF THE ESSENCE. Time is of the essence for the Closing of this
transaction  and if such  Closing  does not occur as  provided  in Section  10.1
above, a new Closing Date shall be set for the next business day thereafter,  or
as soon as practicable.

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                                   ARTICLE XI

                                   PRORATIONS

     The following costs and expenses shall be prorated as of the Closing Date:

     11.1 Personal property taxes, sales taxes and any other assessments related
to the Purchased Assets;

     11.2  Charges  for  utilities  servicing  the  School,  including,  without
limitation,  charges or gas,  electricity,  water, sewer, cable television,  and
telephone services; and

     11.3 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.  At Closing,  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 XII

                  CONDITIONS PRECEDENT TO BUYER'S DUTY TO CLOSE

     Buyer shall have no duty to close, and no obligation hereunder,  unless and
until each and every one of the following  conditions  precedent have been fully
and completely satisfied:

     12.1  CONTINUED  TRUTH  OF  WARRANTIES.  All  of  the  representations  and
warranties of Seller  contained  herein shall continue to be true and correct at
Closing.

     12.2  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.

     12.3 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.

     12.4  LITIGATION.  No lawsuit,  administrative  proceedings  or other legal
action shall have been filed  against  Seller as of the Closing Date which seeks
to  restrain or enjoin  Buyer's  acquisition  of the  Purchased  Assets,  or the
assumption of the Assumed Contracts.

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     12.5 REAL  PROPERTY.  Private  School has  purchased the Real Property from
EPI.

     12.6 EMPLOYEES' ACCRUED LIABILITIES.  Seller pays over to Buyer cash in the
amount of the Employees'  Accrued  Liabilities in the amount as agreed to at the
Closing, and as set forth on the amended SCHEDULE 1.18.

     12.7 COURT  ORDERS.  The Court shall have entered the Section 363 Order and
the Section 365 Order; provided, however, that Buyer shall not have the right to
not close  this  transaction  solely  because  the  Section  365 Order  approves
Seller's  decision  to  reject  the Lease as it  relates  to the  Paradise  Lane
Property in addition to the Real Property.

                                  ARTICLE XIII

                 CONDITIONS PRECEDENT TO SELLER'S DUTY TO CLOSE

     Seller shall have no duty to close this  transaction  unless and until each
and  every  one of the  following  conditions  precedent  have  been  fully  and
completely satisfied:

     13.1  CONTINUED  TRUTH  OF  WARRANTIES.  All  of  the  representations  and
warranties of Buyer  contained  herein shall  continue to be true and correct at
Closing.

     13.2  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.

     13.3 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.

     13.4  LITIGATION.  No lawsuit,  administrative  proceedings or legal action
other than the Chapter 11 Case shall have been filed by or against  Seller as of
the  Closing  Date,  which  seeks to  restrain  or enjoin  Seller's  sale of the
Purchased Assets or the assumption of the Assumed Contracts.

     13.5 COURT  ORDERS.  The Court shall have entered the Section 363 Order and
the Section 365 Order; provided, however, that Buyer shall not have the right to
not close  this  transaction  solely  because  the  Section  365 Order  approves
Seller's  decision  to  reject  the Lease as it  relates  to the  Paradise  Lane
Property in addition to the Real Property.

                                       12

                                   ARTICLE XIV

                   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:

     14.1  BILL OF  SALE.  A duly  executed  bill of  sale  selling,  assigning,
transferring, and conveying the Purchased Assets.

     14.2  CERTIFIED  RESOLUTION.  A copy  of the  resolution  of the  Board  of
Directors of Seller authorizing the execution and performance of this Agreement.

     14.3 REPRESENTATIONS AND WARRANTIES. A certificate signed by an appropriate
representative  of  Seller  to the  effect  that  all  the  representations  and
warranties of Seller contained herein are true and correct as of Closing.

                                   ARTICLE XV

                    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:

     15.1  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.

     15.2 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.

     15.3 THE PURCHASE PRICE. The Purchase Price.

                                   ARTICLE XVI

                                  MISCELLANEOUS

     16.1 RIGHT TO BID. Buyer  acknowledges  and understands  that the Court may
consider higher and better offers.  Notwithstanding,  the parties agree that the
Purchased Assets and Assumed Liabilities,  collectively, shall be the subject of
higher and better offers.

                                       13

     16.2  FURTHER  ASSURANCES.  Each party  shall,  at any time after  Closing,
execute  and  deliver  to the other  party all such  additional  instruments  of
conveyance and assignments,  certificates or similar documents and take all such
further actions as such other party may reasonably request.

     16.3 NO  ADMISSIONS.  Nothing  in this  Agreement  shall  be,  or  shall be
construed to be, an  admission  of liability by the parties  hereto to any other
person, party or entity.

     16.4 NO OTHER AGREEMENTS.  This Agreement,  and all agreements delivered as
part of the Closing contemplated herein, constitute the entire agreement between
the parties with respect to its subject  matter.  All prior and  contemporaneous
negotiations,  proposals and  agreements  between the parties are  superseded by
this  Agreement.  Any  changes  to this  Agreement  must be agreed to in writing
signed by both parties.

     16.5 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.

     16.6 PUBLIC  ANNOUNCEMENTS.  Through the Closing,  no  announcements to the
news media of this Agreement  shall have been made unless Buyer and Seller shall
have  mutually  agreed  on  the  timing,  distribution,  and  contents  of  such
announcements,  except as may be required by law. The parties hereto acknowledge
and  understand  that this  Agreement will be filed with the Court promptly upon
its execution by the parties hereto.

     16.7 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:     Lucian Spataro, Ph.D.
                              The TesseracT Group, Inc.
                              4515 East Muirwood Drive
                              Phoenix, Arizona  85048

               Copy To:       Robert J. Miller, Esq.
                              Quarles & Brady Streich Lang, LLP
                              Two North Central Avenue
                              Phoenix, Arizona  85004

                                       14

               To Buyer:      Steven Gaynor
                              The Paradise Valley Private School Foundation
                              8131 N Mohave Road
                              Paradise Valley, Arizona  85253

               Copy To:       Scott Cohen, Esq.
                              Sacks Tierney P.A.
                              4250 N Drinkwater Blvd, 4th Floor
                              Scottsdale, Arizona  85251-3900

     16.8 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.

     16.9  RISK OF  LOSS.  The  risk of  loss,  damage,  or  destruction  of the
Purchased  Assets shall be borne by Seller until Closing.  In the event any loss
or damage to or taking of any such  Purchased  Assets is material in the context
of this transaction and occurs before Closing,  Seller shall immediately  notify
Buyer of the nature and extent of such loss, damage or taking,  and Buyer shall,
at its option,  by written  notice to Seller,  either  terminate  this Agreement
without  further  liability or obligation  to Seller,  or Buyer may proceed with
this transaction on the terms and conditions  mutually agreeable to the parties,
including any adjustment in the Purchase Price.

     16.10  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.

     16.11 COURT JURISDICTION.  Upon the execution hereof, the parties will file
this  Agreement  with the  Court.  Upon  approval  thereof,  the Court will have
continuing  jurisdiction  to resolve any and all  disputes  that may arise under
this Agreement.

     16.12  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.

     16.13 CHOICE OF LAW. This Agreement shall be governed by and interpreted in
accordance  with the laws of the  State  of  Arizona  and,  as  applicable,  the
Bankruptcy Code.

                                       15

     16.14  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.

     16.15 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:

          16.15.1 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.

          16.15.2  References to the plural  include the singular,  the singular
the plural and the part the whole.

          16.15.3  The words  "include,"  "includes,"  and  "including"  are not
limiting.

          16.15.4 A reference to any law includes any amendment or  modification
to such law, which is in effect on the relevant date.

          16.15.5 A reference to any person or entity  includes its  successors,
heirs and permitted assigns.

          16.15.6 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.

          16.15.7 All Schedules to this Agreement  constitute  material terms of
this Agreement and are incorporated fully into the terms of this Agreement.

     16.16 TIME IS OF THE ESSENCE. Time is of the essence in the performance and
observance of all obligations and duties under this Agreement.

     16.17  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.

                                       16

     16.18 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 /s/
                                           -------------------------------------
                                        Its
                                            ------------------------------------

                                        SELLER


                                        THE PARADISE VALLEY PRIVATE SCHOOL
                                        FOUNDATION, an Arizona non-profit
                                        corporation


                                        By /s/
                                           -------------------------------------
                                        Its
                                            ------------------------------------

                                        BUYER

                                       17

                                LIST OF EXHIBITS


Schedule 1.1        Assumed Contracts
Schedule 1.7        Equipment
Schedule 1.18       Employees' Accrued Liabilities

                                  SCHEDULE 1.1

                               (ASSUMED CONTRACTS)





                        (TO BE COMPLETED BY THE PARTIES)

                                   EXHIBIT 1.7

                                   (EQUIPMENT)

                                  SCHEDULE 1.18

                        (EMPLOYEES' ACCRUED LIABILITIES)





         (To Be Completed By The Parties On Or Before The Closing Date)