Document:

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
<PAGE>
                                   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
<PAGE>
     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
<PAGE>
               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
<PAGE>
     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
<PAGE>
     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
<PAGE>
                                LIST OF EXHIBITS

Schedule 1.1        Assumed Contracts
Schedule 1.7        Equipment
Schedule 1.18       Employees' Accrued Liabilities
<PAGE>
                                  SCHEDULE 1.1

                               (ASSUMED CONTRACTS)

                        (TO BE COMPLETED BY THE PARTIES)
<PAGE>
                                   EXHIBIT 1.7

                                   (EQUIPMENT)
<PAGE>
                                  SCHEDULE 1.18

                        (EMPLOYEES' ACCRUED LIABILITIES)

         (To Be Completed By The Parties On Or Before The Closing Date)Exhibit 10.2

                           PURCHASE AND SALE AGREEMENT
                               (AHWATUKEE SCHOOL)

     This PURCHASE AND SALE  AGREEMENT (the  "Agreement")  is entered into as of
the ___ day of  December,  2000,  by and between THE  TESSERACT  GROUP,  INC., a
Minnesota  corporation,  in its corporate capacity and in its capacity as debtor
and  debtor-in-possession  in its Chapter 11 case  pending in the United  States
Bankruptcy Court for the District of Arizona ("Seller"), and TAI, LLC an Arizona
limited liability company ("Buyer").

                                    RECITALS

     A. Seller operates that certain private school ("School") commonly known as
the  "Ahwatukee  TesseracT  School"  located  at 4515  East  Muirwood,  Phoenix,
Arizona.

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

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

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

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

     F.  The  parties  hereto   acknowledge  that:  (i)  they  intend  that  the
transaction  contemplated  under this  Agreement be an asset  purchase and not a
sale of the stock of Seller; and (ii) Buyer is not buying the Business of Seller
as defined in this Agreement.

     NOW,  THEREFORE,  in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto agree as follows:

                                        1
<PAGE>
                                    ARTICLE I

                                   DEFINITIONS

     For purposes of this Agreement,  the following capitalized terms, when used
in this Agreement, shall have the meanings assigned to them as follows:

     1.1  ASSUMED  CONTRACTS.  The term  "Assumed  Contracts"  shall  mean those
unexpired  leases  and  other  executory   contracts  which  Buyer  will  assume
hereunder, which are specifically set forth on SCHEDULE 1.1 attached hereto.

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

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

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

     1.5 CLOSING DATE.  The term "Closing Date" shall mean the date on which the
Closing occurs which shall not be later than January 15, 2001,  unless such date
is extended as mutually agreed in writing by the parties hereto.

     1.6 CORPORATE  LEASE.  The term  "Corporate  Lease" shall mean that certain
Lease between Buyer and Seller pursuant to which Seller shall lease that portion
of the Real Property  necessary to operate its corporate office through no later
than June 15, 2000. The Corporate Lease shall be in a form that is substantially
similar to the form enclosed behind SCHEDULE 1.6.

     1.7 COURT.  The term "Court" shall mean the United States  Bankruptcy Court
for the District of Arizona.

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

                                        2
<PAGE>
     1.9 EQUIPMENT.  The term  "Equipment"  shall mean all furniture,  fixtures,
office  equipment,  computers,  printers,  and other tangible  personal property
owned by Seller as specifically set forth on SCHEDULE 1.9 attached hereto.

     1.10 LEASE.  The term  "Lease"  shall mean that  certain  Lease dated as of
December 27, 1999 by and between Seller, as lessee, and EPI, as lessor, pursuant
to which Seller leases the Real Property and the North Scottsdale  Property from
EPI.

     1.11 NORTH SCOTTSDALE PROPERTY.  The term "North Scottsdale Property" shall
mean that certain real property located in Scottsdale,  Arizona, at which Seller
operates  the  private  school  commonly  referred  to as the "North  Scottsdale
TesseracT School."

     1.12 PREPAID TUITION AND DEPOSIT LIABILITIES. The term "Prepaid Tuition and
Deposit  Liabilities"  shall  mean the  liabilities  of  Seller  for any and all
unearned,  prepaid  tuition and deposits of students at the School  collected by
Seller as of the Closing Date, which total  approximately  $51,931.  By no later
than the Closing  Date,  the parties will agree to the form of a SCHEDULE  1.12,
which  will set forth  the  exact  amount of the  Prepaid  Tuition  and  Deposit
Liabilities as of the actual Closing Date.

     1.13 PRESCHOOL.  The term  "Preschool"  shall mean the preschool  presently
operated by Seller at the Real Property.

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

     1.15 REAL PROPERTY.  The term "Real  Property" shall mean the real property
that is the subject of the Real Property Purchase  Agreement,  which also is the
real property on which the Seller operates the School.

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

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

                                        3
<PAGE>
     1.18  TEACHERS'   ACCRUED   LIABILITIES.   The  term   "Teachers'   Accrued
Liabilities"  shall  mean the  liabilities  of Seller for  accrued  compensation
arising under Seller's employment contracts with the School's teachers as of the
Closing Date,  which are specifically set forth on SCHEDULE 1.19 attached hereto
and totals  $18,395.  The  Teachers'  Accrued  Liabilities  amounts set forth on
SCHEDULE 1.19 assume that this  transaction  closes on January 15, 2000,  and at
the Closing the parties will agree to an amended  SCHEDULE 1.19 which sets forth
the amount of the Teachers'  Accrued  Liabilities  based upon the actual Closing
Date. The Teachers' Accrued  Liabilities is based upon that portion of teachers'
compensation that has accrued, but has not yet been paid, as of the Closing Date
because  teachers at the School work ten (10)  months,  but are paid over twelve
(12) months, under their employment contracts with Seller.

     1.19  ADMINISTRATIVE  LEASE CLAIM.  The term  "Administrative  Lease Claim"
shall mean the Claim entitled to administrative  priority pursuant to Bankruptcy
Code ss.503(b) arising under the Lease with respect to the Real Property and the
North Scottsdale  Property for the period of October 6, 2000 through October 31,
2000. The parties hereto agree the amount of the  Administrative  Lease Claim is
$137,903.00.

                                   ARTICLE II

                                PURCHASE AND SALE

     2.1  ASSETS  TO BE  SOLD.  Subject  to the  terms  and  conditions  of this
Agreement,  on the Closing  Date,  Seller agrees to sell,  assign,  transfer and
convey the following assets to Buyer (collectively, the "Purchased Assets"):

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

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

          2.1.3  RECORDS,  FILES AND RELATED  MATERIALS.  Copies of all records,
files,  invoices,  student lists,  customer data (including  telephone numbers),
accounting  records,  business records,  operating data and other data of Seller
relating to the School.

                                        4
<PAGE>
          2.1.4 CERTAIN RIGHTS.  All rights under or pursuant to all warranties,
representations  and  guarantees  made  by  suppliers  in  connection  with  the
Purchased  Assets or services  furnished to Seller  pertaining  to the School or
affecting the Purchased Assets,  to the extent such warranties,  representations
and guarantees:  (i) are not required by Seller to fulfill its obligations under
this Agreement; and (ii) are assignable.

          2.1.5 GOODWILL. All of Seller's goodwill that relates to the School.

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

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

          2.2.2  INTELLECTUAL  PROPERTY.  All  intellectual  property of Seller,
including, but not limited to, Sellers' trademarks, trade names, curriculum, and
trade secrets.

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

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

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

     2.3 SELLER'S  BUSINESS.  The parties  expressly  acknowledge and agree that
this  Agreement  is not entered  into for the sale of the stock of Seller or the
sale of Seller's Business.  The Agreement addresses only those assets located on
the School's  premises,  or used by Seller solely in connection with the School,
and which are defined herein as the Purchased Assets.

                                   ARTICLE III

                            ASSUMPTION OF LIABILITIES

     3.1 ASSUMED LIABILITIES . At Closing,  Seller shall assign, and Buyer shall
assume  (collectively,  the "Assumed  Liabilities"):  (i) the Assumed Contracts;
provided,  however,  that:  (a) Seller shall be solely  responsible  to cure the
Assumed Contracts  effective as of the Closing Date; and (b) Buyer shall only be
obligated to pay,  perform,  or discharge  in  accordance  with their terms such

                                        5
<PAGE>
obligations  thereunder  that first become  performable  on or after the Closing
Date; (ii) the Teachers' Accrued Liabilities;  and (iii) the Prepaid Tuition and
Deposit  Liabilities  only to the extent  such  funds are  turned  over to Buyer
pursuant to Section 7.6 below.  Buyer  shall  fully and  faithfully  perform all
duties and  obligations,  due or owing after Closing,  of Seller with respect to
the Assumed Liabilities.

     3.2 NO  ASSUMPTION OF OTHER  LIABILITIES.  Except as expressly set forth in
this Agreement,  Buyer does not by this Agreement, and will not be obligated to,
assume  any  obligation,  liability  or  duty  of  Seller  whether  incurred  in
connection with the Purchased Assets, whether known or unknown as of the Closing
Date,  discovered or undiscovered  as of the Closing Date, or otherwise.  Unless
otherwise  provided herein,  Buyer shall not deemed by anything contained herein
to have assumed any of Seller's liabilities,  including, but not limited to: (i)
any  obligation  or liability  of Seller  arising from any tort claims made by a
third party  arising  from actions or failures to act by the Seller or otherwise
relating to the School prior to the Closing; or (ii) any obligation or liability
of Seller relating to employees or independent  contractors accruing on or prior
to the Closing Date,  including,  but not limited to,  accrued  salaries,  other
compensation  or benefits,  severance  payments,  accrued  vacations,  pensions,
retirement plans,  distributions or bonuses accruing on or prior to 3:00 p.m. on
the Closing Date;  it being  understood  that,  at or prior to the Closing,  any
employment agreements between Seller and any employees relating to the operation
of the School will be  terminated  on or before the Closing Date and none of the
same will prevent any of such employees  from becoming  employees of Buyer after
the Closing.

     3.3 ALLOCATIONS.  At the Closing Date and/or within a reasonable  period of
time after the Closing  Date,  as the case may be, and effective as of 3:00 p.m.
local time on the Closing Date, to the extent not otherwise  provided for by any
other  provision  of  this  Agreement,  Buyer  and  Seller  shall  allocate  any
obligations or  liabilities  relating to the School (such as equipment and other
operating lease payments,  real estate and personal  property tax payments,  and
the like) consistent with the terms of this Agreement.

                                   ARTICLE IV

                                TERMS OF PAYMENT

     4.1 PAYMENT DUE AT CLOSING.  At Closing,  Buyer shall  provide,  and Seller
shall receive  consideration  equal to $100,000 (the "Purchase  Price") LESS the
amount of the Deposit  delivered by Buyer to Seller in  accordance  with Section
4.2 below.  The Purchase Price is composed of: (i) Buyer's release and waiver of
the   Administrative   Lease  Claim  (see   Section  6.3  below)  (the   "Waived
Administrative  Claim");  (ii)  Buyer's  assumption  of  the  Teachers'  Accrued
Liabilities;  (iii)  $12,653.50 in cash paid by certified funds or wire transfer
on the Closing Date (the "Cash Payment"); and (iv) the Corporate Lease.

                                        6
<PAGE>
     4.2 DEPOSIT.  Contemporaneously with the execution of this Agreement, Buyer
shall  deliver  and the  Seller  shall  accept a cash  deposit  in the amount of
$10,000.00 (the "Deposit"),  which shall not be refundable to Buyer unless:  (i)
the  transactions  contemplated  in this  Agreement do not close due to Seller's
failure to meet all of the conditions precedent set forth in Article XIV of this
Agreement;   or  (ii)  Seller  otherwise   refuses  to  close  the  transactions
contemplated  in this  Agreement.  If the  Closing  does not  occur on or before
January 15, 2001, due to any event  described in the  immediately  preceding (i)
and (ii), then Seller shall immediately transfer the Deposit to Buyer.

     4.3 DETERMINATION. At or prior to thirty (30) days after the Closing, Buyer
and Seller shall mutually agree to an allocation of the Purchase Price among the
Purchased  Assets  in a  reasonable  manner  that  is  in  accordance  with  the
requirements  of Section 1060 of the Internal  Revenue Code of 1986, as amended,
and any  applicable  Treasury  Regulations  promulgated  thereunder.  Each party
agrees to file, at its own expense, all federal,  state and local tax returns in
conformity with such allocation.

                                    ARTICLE V

              REPRESENTATIONS, WARRANTIES, AND COVENANTS OF SELLER

     Seller hereby represents,  warrants, and covenants to Buyer as follows, and
the  warranties,  representations,  and  covenants  contained in this Article or
elsewhere in this Agreement shall be deemed to be made as of the Closing:

     5.1 CORPORATE  STATUS.  Seller is a  corporation  duly  organized,  validly
existing and in good  standing  under the laws of the State of Minnesota  and is
qualified to do business in the State of Arizona.

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

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

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

                                        7
<PAGE>
     5.5 CONDITION OF THE PURCHASED ASSETS. The equipment,  fixtures, furniture,
furnishings,  office  equipment  and all  other  tangible  personal  assets  and
properties of Seller  (including  the Purchased  Assets)  presently  used in, or
necessary to the operation of, the School,  are in good operating  condition and
have been maintained in accordance with normal industry  practice.  There are no
material defects in the physical  condition of the Purchased Assets,  including,
but not limited to, structural  elements,  mechanical systems,  roofs or parking
and loading areas. All water,  sewer,  gas,  electric,  telephone,  drainage and
other utilities  required by law or necessary for the operation of the Purchased
Assets have been  connected  pursuant to valid  permits  and are  sufficient  to
service the School.

     5.6  COMPLIANCE  WITH LAW AND OTHER  REGULATIONS.  Seller has  operated the
School  in  compliance  with all  requirements  (including,  those  relating  to
environmental  matters) of federal, state and local law, and all requirements of
all governmental bodies and agencies having jurisdiction over it with respect to
the School,  the operation of the School,  the use of the Purchased Assets,  and
all premises occupied by Seller with respect to the School.  Seller is not aware
of any charge,  complaint,  action, suit,  proceeding,  hearing,  investigation,
claim,  demand,  or notice has been  filed or  commenced  against  Seller or the
School alleging any failure to comply with any such law or regulation.

     5.7 STATEMENTS AND OTHER DOCUMENTS NOT MISLEADING.  Neither this Agreement,
nor any schedule or exhibit  hereto,  contains any untrue  statement of material
fact with respect to Seller or the School or omits to state a material fact with
respect  to Seller  or the  School  required  to be stated in order to make such
statement, document or other instrument not misleading.

     5.8  LABOR  RELATIONS.  No  employee  of  Seller  at any of the  School  is
represented  by a labor  union,  and no petition  has been filed or  proceedings
instituted by any employee or group of employees with any labor  relations board
seeking recognition of a bargaining representative. There are no matters pending
before the National  Labor  Relations  Board or any similar state or local labor
agency with respect to the employees at the School, and Seller is not engaged in
or subject to any penalties or enforcement action in respect of any unfair labor
practices with respect to the employees at the School.  Seller is not delinquent
in  payments  to any of its  employees  for any  wages,  salaries,  commissions,
bonuses or other direct  compensation  for any services  performed for it to the
date hereof or amounts required to be reimbursed to such employees. Seller is in
compliance  with  all  applicable  laws  and   regulations   respecting   labor,
employment,  fair employment practices,  work place safety and health, terms and
conditions  of  employment,  and  wages  and  hours.  There  are no  charges  of
employment  discrimination or unfair labor practices, nor are there any strikes,
slowdowns,  stoppages of work, or any other concerted  interference  with normal
operations existing, pending or threatened against or involving Seller.

     5.9 ENVIRONMENTAL  MATTERS.  Seller has not received notice of violation of
any  Environmental  Law (as  defined  in this  Section  5.9)  or land  use  laws
applicable   to  the  School.   For  purposes  of  this   Agreement,   the  term

                                        8
<PAGE>
"Environmental Law" shall mean any current statute or regulation  pertaining to:
(i)  the  protection  of  health,  safety  and  outdoor  environment;  (ii)  the
protection  or use of  surface  water and  groundwater;  (iii)  the  management,
manufacture, possession, presence, use, generation,  transportation,  treatment,
storage, disposal, release, threatened release, abatement,  removal, remediation
or handling  of, or exposure  to, any solid waste or  "Hazardous  Material"  (as
defined in this Section 5.9); or (iv)  pollution  (including any release to air,
land, surface water, and groundwater),  and includes,  without  limitation,  the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund  Amendments and Reauthorization Act ("CERCLA"),  42 USC
9601 et  seq.,  the  Solid  Waste  Disposal  Act,  as  amended  by the  Resource
Conservation  and Recovery Act of 1976 and Hazardous and Solid Waste  Amendments
of 1984 ("RCRA"),  42 USC 6901 et seq., the Federal Water Pollution Control Act,
as amended by the Clean  Water Act of 1977,  33 USC 1251 et seq.,  the Clean Air
Act of 1966, as amended,  42 USC 7401 et seq., the Toxic Substances  Control Act
of 1976, 15 USC 2601 et seq., the Hazardous Materials Transportation Act, 49 USC
App.  1801 et seq.,  the Oil  Pollution  Act of 1990,  33 USC 2701 et seq.,  the
Emergency  Planning  and  Community  Right to Know Act of 1986,  42 USC 11001 et
seq.,  the National  Environmental  Policy Act of 1969, 42 USC 4321 et seq., the
Safe Drinking Water Act of 1974, as amended,  42 USC 300(f) et seq., any similar
implementing law, and any current  amendment,  rule,  regulation or order issued
thereunder.  For purposes of this Agreement, the term "Hazardous Material" shall
mean any substance that is hazardous or toxic and includes,  without limitation:
(a) asbestos,  polychlorinated  biphenyls, and petroleum (including crude oil or
any fraction  thereof);  and (b) any such  material  classified  or regulated as
"hazardous" or "toxic" pursuant to any Environmental Law.

     5.10  LICENSES.  Seller  has  all  approvals,   authorizations,   consents,
licenses,  and  permits  (collectively,   "Licenses")  of  any  governmental  or
regulatory agency, whether federal, state, local or foreign,  required to permit
it to carry on the business as presently  conducted at the School,  all of which
are in full force and  effect,  except  where the  failure  to possess  any such
Licenses would not have a material adverse effect on the operation of the School
or ownership of the Purchased  Assets. A valid certificate of occupancy has been
issued  with  respect to the School,  and Seller  lawfully  occupies  the School
premises under said certificate of occupancy.

                                   ARTICLE VI

               REPRESENTATIONS, WARRANTIES, AND COVENANTS OF BUYER

     Buyer  hereby  represents  and  warrants  to  Seller  as  follows  and  the
warranties  and  representations  contained in this Article or elsewhere in this
Agreement shall be deemed to be made as of Closing:

     6.1  ORGANIZATION.  Buyer is a limited  liability  company duly organized,
validly existing and in good standing under the laws of the State of Arizona.

                                        9
<PAGE>
     6.2  AUTHORITY.  Buyer has full power and authority to execute and perform
this Agreement and all action  necessary to confirm such authority has been duly
and lawfully  taken.  Upon execution  hereof,  this shall be a valid and legally
binding  obligation of Buyer,  enforceable  against Buyer in accordance with its
terms subject only to approval by the Court.

     6.3  ADMINISTRATIVE  LEASE CLAIM. As of the Closing Date: (i) Buyer owns a
fifty percent (50%) undivided  interest in the  Administrative  Lease Claim (the
"Administrative  Lease  Claim");  (ii)  Buyer  shall not have  previously  sold,
assigned, or transferred the Administrative Lease Claim; and (iii) the amount of
the Administrative Lease Claim shall be not less than $68,951.50.

                                   ARTICLE VII

                                 OTHER COVENANTS

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

     7.2  PRESCHOOL.  If Buyer  has not  obtained  a license  from the  Arizona
Department  of Education  to operate the  Preschool  at the Real  Property  (the
"Preschool  License")  as of the Closing  Date,  then Seller  shall  continue to
manage and operate the  Preschool for Buyer until such time as Buyer obtains the
Preschool License;  provided,  however, that: (i) Seller shall be entitled to be
reimbursed from Buyer, and Buyer shall pay Seller,  for all reasonable costs and
expenses  associated  with  Seller's  management  and operation of the Preschool
under this Section 7.2 if Buyer has not received the  Preschool  License  within
sixty (60) days of the Closing Date; and (ii) Buyer will use its best efforts to
obtain  the  Preschool  License  from and after the date  hereof,  and will keep
Seller  regularly  apprised  of the status of its  licensure  efforts  until the
Preschool  License is issued to Buyer;  and (iii) Seller's  obligation to manage
and operate the Preschool pursuant to this Section 7.2 shall terminate the later
of: (i) the date the  Arizona  Department  of  Education  issues  the  Preschool
License to Buyer; and (ii) June 30, 2001,  unless otherwise agreed to in writing
by  Seller.  All debts  and  liabilities  to third  persons  incurred  by Seller
pursuant to this Section 7.2, in the course of its operation  and  management of
the Preschool shall be the debts and liabilities of Buyer only, and Seller shall
not be liable for (and is shall be  indemnified in respect of) any such debts or
liabilities. If ADE objects to the management and operation procedures set forth
in this Section 7.2,  then the parties will  mutually  cooperate to arrive at an
alternative  arrangement  that  provides  one another  with the benefit of their
bargain hereunder.

     7.3  SCHOOL  OPERATIONS  UNTIL  THE  CLOSING.  Between  the  date  of this
Agreement  and the Closing  Date,  Seller  shall  operate the School only in the
regular,  ordinary,  and usual  course and manner of Seller's  general  business
practices,  maintain its existing  insurance (or similar coverage)  covering the

                                       10
<PAGE>
Purchased Assets and maintain its liability  insurance  coverage with respect to
the School and the operations conducted therein, maintain the level of supplies,
inventory  and  consumables  customarily  maintained  by Seller in its  ordinary
course of business at the School,  maintain,  replace when  required to continue
the regular  operations  of the School,  and keep in repair and regular  working
order,  except  for  ordinary  wear and  tear,  the  Purchased  Assets,  use its
commercially  reasonable  best  efforts to keep  available  the  services of its
current employees at the School, use its commercially reasonable best efforts to
maintain and preserve the good will of the suppliers,  customers, employees, and
other  having  business  relations  with the School,  and comply with all of its
agreements, licenses, permits and authorizations.

     7.4  ACCESS.  Seller  shall  provide to Buyer  access to or copies of such
additional books, contracts,  documents, and records related to the operation of
the School as Buyer may  reasonably  request to enable it to complete its review
of the School's operations. In addition, Buyer shall permit Seller to physically
inspect the School,  complete a physical  inventory of the items  located at the
School and interview  and consult with any  employees  who render  services with
respect to the School.

     7.5 TRANSITION.  Buyer and Seller will mutually cooperate with one another
to provide  for an orderly  transition  of the School to  minimize to the extent
reasonably possible disruption to the students at the School.  Buyer anticipates
closing its transaction  with EPI for the purchase of the Real Property prior to
the Closing Date. To the extent that Seller surrenders  possession of the School
to Buyer, as owner of the Real Property,  prior to the Closing Date, the parties
agree that Buyer's right to an administrative  claim under the Lease shall cease
to accrue effective as of the date of such surrender.

     7.6 PREPAID TUITION AND DEPOSIT  LIABILITIES.  On the Closing Date, Seller
shall turn over to Buyer cash equal to the  amount of the  Prepaid  Tuition  and
Deposit Liabilities set forth on SCHEDULE 1.12 and such post-Closing funds which
are Prepaid  Tuition and Deposit  Liabilities  received by Seller (the  "Prepaid
Cash").  The Prepaid  Cash shall be a  liability  of Buyer to the party who paid
such cash to Seller  ("Payor")  until such time as Buyer has earned the  Prepaid
Cash by providing the related educational services to Payor; provided,  however,
that Buyer shall be required to return the unearned  amount of such Prepaid Cash
to Payor upon written  demand if Payor decides not to do business with Buyer any
time after the Closing Date.

                                  ARTICLE VIII

                                    EMPLOYEES

     8.1  DEFINITION.  Seller has  provided  Buyer with a complete  list of all
persons regularly employed on either a part-time or full-time basis by Seller in
connection with the School ("Employees"),  a copy of which is attached hereto as
SCHEDULE 8.1.

                                       11
<PAGE>
     8.2 EMPLOYMENT OF SELLER'S  EMPLOYEES AT THE SCHOOL.  Simultaneously  with
the Closing,  Seller shall  terminate  all  employees  employed at the School by
Seller,  excluding any employees  whose  employment  responsibilities  extend to
schools owned or operated by Seller other than the School. Buyer agrees to offer
to hire all of Seller's  Employees  as of the Closing Date set forth on SCHEDULE
8.1 (the "Continuing Employees") and such offers of employment to the Continuing
Employees shall be on  substantially  equivalent terms as existed with Seller as
of the date  hereof;  provided,  however,  that  nothing  in this  Agreement  or
otherwise  shall (i)  constitute an agreement by Buyer to assume any of Seller's
liabilities with respect to such Continuing Employees for vacation, or such pay,
bonuses or the like, or (ii) prevent Buyer from  terminating  the  employment of
any  Continuing  Employee  after  the  Closing  Date.  Seller  hereby  agrees to
indemnify,  defend and hold Buyer  harmless  from and against  any  liabilities,
claims,  losses, fines or liabilities with respect to, and against the claims of
any persons  alleging  violations of any pension,  retirement,  profit  sharing,
compensation,  fringe benefit,  health or other insurance, or any other employee
benefit plans,  including any "employee benefit plan" as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended, arising with
respect to such persons'  employment at the School on or before 3:00 p.m.  local
time on the Closing Date, and no facts or  circumstances  exist that would cause
Buyer to be liable to any  person in  connection  with any such plans of Seller.
From and after the Closing Date,  Buyer shall be solely  responsible for payment
of: (i) the Teachers' Accrued  Liabilities when and if due; and (ii) when and if
due, all claims by or  obligations to  Transferred  Employees  arising after the
Closing  Date,  including,  but not limited to, any accrued  vacation  pay, sick
leave, or bonuses, arising after the Closing Date.

     8.3 EMPLOYEE  SOLICITATIONS.  Buyer shall be entitled to reasonable access
to all  employees  related to the  School for  purposes  of  interviewing  these
individuals;  provided,  however,  that all  such  access  shall be  coordinated
through the Chief Executive Officer of Seller.

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

                                   ARTICLE IX

                                   INDEMNITIES

     9.1 SELLER.  Seller  agrees to hold  harmless,  indemnify and defend Buyer
from  and  against  any  and all  loss,  claim,  damage,  liability  or  expense
(including,  but not limited to,  reasonable  attroneys' fees and costs) arising
out of or  occurring  as  the  result  of any  breach  by  Seller  of any of its
covenants,  representations or warranties hereunder.  Such indemnification shall

                                       12
<PAGE>
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 by no later than
January 15, 2001.

     10.2 TIME IS OF THE ESSENCE. Time is of the essence for the Closing of this
transaction  and if such  Closing  does not occur as  provided  in Section  10.1
above, a new Closing Date may be set if, and only if,  mutually agreed upon in a
writing  signed  by both  parties.  If a new  Closing  Date is not so set,  then
neither Seller nor Buyer shall have any further obligation under this Agreement.

                                   ARTICLE XI

                  CONDITIONS PRECEDENT TO BUYER'S DUTY TO CLOSE

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

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

     11.2  PERFORMANCE  OF  OBLIGATIONS.  Seller  shall have fully  performed or
tendered performance of each and every one of its obligations hereunder which by
its terms is capable of performance before Closing.

     11.3 DELIVERY OF CLOSING DOCUMENTS.  Seller shall have tendered delivery to
Buyer of all the documents,  in form and substance  reasonably  satisfactory  to
Buyer, required to be delivered to Buyer by Seller on or before Closing pursuant
to this Agreement.

                                       13
<PAGE>
     11.4  LITIGATION.  No lawsuit,  administrative  proceedings  or other legal
action shall have been filed  against  Seller as of the Closing Date which seeks
to  restrain or enjoin  Buyer's  acquisition  of the  Purchased  Assets,  or the
assumption of the Assumed Contracts.

     11.5 NO MATERIAL  ADVERSE  CHANGE.  The School shall not have  suffered any
material adverse change since the date of this Agreement.

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

                                   ARTICLE XII

                 CONDITIONS PRECEDENT TO SELLER'S DUTY TO CLOSE

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

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

     12.2  PERFORMANCE  OF  OBLIGATIONS.  Buyer  shall have fully  performed  or
tendered  substantial  performance  of each  and  every  one of its  obligations
hereunder which by its terms is capable of performance before Closing.

     12.3 DELIVERY OF CLOSING  DOCUMENTS.  Buyer shall have tendered delivery to
Seller of all the documents,  in form and substance  reasonably  satisfactory to
Buyer, required to be delivered to Seller by Buyer on or before Closing pursuant
to this Agreement.

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

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

                                       14
<PAGE>
                                  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  BILL OF  SALE.  A duly  executed  bill of  sale  selling,  assigning,
transferring, and conveying the Purchased Assets.

     13.2  CERTIFIED  RESOLUTION.  A copy  of the  resolution  of the  Board  of
Directors of Seller,  certified  by the  Secretary  of Seller,  authorizing  the
execution and performance of this Agreement.

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

                                   ARTICLE XIV

                    ITEMS TO BE DELIVERED AT CLOSING BY BUYER

     At Closing,  Buyer shall,  unless waived in writing by Seller,  deliver the
following items, each in form and substance reasonably  acceptable to Seller and
Seller's counsel, to Seller:

     14.1  CERTIFIED   RESOLUTION.   A  copy  of  the  resolutions   appropriate
representative(s)  of Buyer  authorizing  the execution and  performance of this
Agreement.

     14.2 THE CORPORATE LEASE. The Corporate Lease.

     14.3 THE ADMINISTRATIVE  LEASE CLAIM. Buyer's written release and waiver of
the Administrative Claim.

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

     14.5 THE PURCHASE PRICE. The Purchase Price.

                                       15
<PAGE>
                                   ARTICLE XV

                                  MISCELLANEOUS

     15.1 RIGHT TO BID. Buyer  acknowledges  and understands  that the Court may
consider higher and better offers for the Purchased Assets.  Notwithstanding any
other language to the contrary herein,  Buyer acknowledges and agrees that, even
if Buyer is outbid for the Purchased Assets,  Seller will remain entitled to all
of the  benefits  and  consideration  provided  by Buyer to  Seller  under  this
Agreement other than the Deposit,  the Waived  Administrative Claim and the Cash
Payment.

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

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

     15.4 WAIVER.  Either party may waive the performance of any obligation owed
to it by the  other  party  hereunder  for  the  satisfaction  of any  condition
precedent to the waiving party's duty to perform any of its covenants, including
its obligations to Close.  Any such waiver shall be valid only if contained in a
writing signed by the waiving party.

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

     15.6 NOTICES.  Any notices  required or allowed in this Agreement  shall be
effectively given if placed in a sealed envelope, postage prepaid, and deposited
in the United States mail, registered or certified, addressed as follows:

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

                                       16
<PAGE>
               Copy To:       Robert J. Miller, Esq.
                              Quarles & Brady Streich Lang, LLP
                              Two North Central Avenue
                              Phoenix, Arizona  85004

               To Buyer:      TAI, LLC
                              c/o Squire, Sanders & Dempsey L.L.P.
                              40 North Central Avenue, Suite 2700
                              Phoenix, Arizona  85004
                              Attention: Craig Hansen, Esq.
                                         R.J. Carlson, Esq.

     15.7 BROKER AND FINDERS. Each of the parties hereto represents and warrants
to the  other  that it has not  employed  or  retained  any  broker or finder in
connection with the  transactions  contemplated by this Agreement nor has it had
any  dealings  with  any  person  which  may  entitle  such  person  to a fee or
commission  from any party hereto.  Each of the parties shall indemnify and hold
the other harmless for, from and against any claim,  demand or damage whatsoever
by virtue of any arrangement or commitment made by it with or to any person that
may entitle  such person to any fee or  commission  from the other party to this
Agreement.

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

     15.9 THIRD-PARTY BENEFICIARY. Nothing contained herein shall create or give
rise to any  third-party  beneficiary  rights for any  individual or entity as a
result of the terms and provisions of this Agreement.

     15.10  RELATIONSHIP OF PARTIES.  The relationship of Seller and Buyer shall
be that of  independent  entities and neither shall be deemed to be the agent of
the other.

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

                                       17
<PAGE>
     15.12  PARAGRAPH  HEADINGS.  The Section,  Article and  paragraph  headings
contained herein are for convenience only and shall have no substantive  bearing
on the interpretation of this Agreement.

     15.13 RULES OF INTERPRETATION . The following rules of interpretation shall
apply to this Agreement,  the Schedules hereto and any certificates,  reports or
other  documents or instruments  made or delivered  pursuant to or in connection
with this Agreement,  unless otherwise  expressly provided herein or therein and
unless the context hereof or thereof clearly requires otherwise:

          15.13.1 A reference to any document or  agreement  shall  include such
document or agreement as amended,  modified or supplemented from time to time in
accordance with its terms, and if a term is said to have the meaning assigned to
such term in another document or agreement and the meaning of such terms therein
is amended, modified or supplemented, then the meaning of such term herein shall
be deemed automatically amended, modified or supplemented in a like manner.

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

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

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

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

          15.13.6 The words "hereof,"  "herein,"  "hereunder," and similar terms
in this  Agreement  refer to this Agreement as a whole and not to any particular
provision of this Agreement.

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

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

     15.15  ATTORNEY  FEES.  Each party  shall bear its own legal fees and costs
incurred in the negotiation and closing of this  transaction.  In the event of a
dispute arising between the parties under this Agreement,  the prevailing  party
shall be  entitled  to  reasonable  attorneys'  fees and  costs of suit from the
non-prevailing party.

                                       18
<PAGE>
     15.16 COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be executed in
any number of counterparts,  each of which shall be an original, but all of such
counterparts shall together constitute but one and the same instrument. Delivery
of an executed  counterpart of this Agreement by telefacsimile  shall be equally
as effective as delivery of a manually  executed  counterpart of this Agreement.
Any party delivering an executed  counterpart of this Agreement by telefacsimile
also shall deliver a manually  executed  counterpart  of this  Agreement but the
failure  to  deliver  a  manually  executed  counterpart  shall not  affect  the
validity, enforceability, and binding effect of this Agreement.

     IN WITNESS  WHEREOF,  the parties hereto have set their hands effective the
date set forth above.

                                        THE TESSERACT GROUP, INC., a Minnesota
                                        corporation

                                        By
                                           -------------------------------------
                                        Its
                                            ------------------------------------

                                        SELLER

                                        TAI, LLC, an Arizona limited liability
                                        company

                                        By
                                           -------------------------------------
                                        Its
                                            ------------------------------------

                                        BUYER

                                       19
<PAGE>
================================================================================

                           PURCHASE AND SALE AGREEMENT

                                     BETWEEN

                           THE TESSERACT GROUP, INC.,
                             A MINNESOTA CORPORATION

                                       AND

                        FOOTHILLS EDUCATIONAL FOUNDATION,
                        AN ARIZONA NON-PROFIT CORPORATION

                               DECEMBER ___, 2000

================================================================================
<PAGE>
                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----
ARTICLE I      DEFINITIONS .................................................   1
     1.1       Business ....................................................   1
     1.2       Closing .....................................................   1
     1.3       Closing Date ................................................   2
     1.4       Assumed Contracts ...........................................   2
     1.5       Deposit .....................................................   2
     1.6       Equipment ...................................................   2
     1.7       Lease .......................................................   2
     1.8       Other Liabilities ...........................................   2
     1.9       Purchase Price ..............................................   2
     1.10      Purchased Assets ............................................   2
     1.11      Termination Date ............................................   2

ARTICLE II     PURCHASE AND SALE ...........................................   2
     2.1       Assets to be Sold ...........................................   2
     2.2       School Name .................................................   3
     2.3       TesseracT's Curriculum ......................................   3
     2.4       Seller's Business ...........................................   3

ARTICLE III    ASSUMPTION OF LIABILITIES ...................................   3
     3.1       Contracts ...................................................   3
     3.2       No Assumption of Other Liabilities ..........................   3

ARTICLE IV     TERMS OF PAYMENT ............................................   3
     4.1       Payment of Purchase Price ...................................   3
     4.2       Determination ...............................................   4

ARTICLE V      REPRESENTATIONS, WARRANTIES, AND COVENANTS OF SELLER ........   4
     5.1       Corporate Status ............................................   4
     5.2       Corporate Authority .........................................   4
     5.3       Title to Purchased Assets ...................................   4
     5.4       Contracts ...................................................   4

ARTICLE VI     REPRESENTATIONS, WARRANTIES, AND COVENANTS OF BUYER .........   4
     6.1       Organization ................................................   4
     6.2       Authority ...................................................   4

                                        i
<PAGE>
                                                                            Page
                                                                            ----
ARTICLE VII    EMPLOYEES ...................................................   5
     7.1       Definition ..................................................   5
     7.2       Termination .................................................   5
     7.3       Employment ..................................................   5
     7.4       Workers' Compensation .......................................   5

ARTICLE VIII   PROPERTY ....................................................   5
     8.1       Fee Simple ..................................................   5

ARTICLE IX     INDEMNITIES .................................................   6
     9.1       Seller ......................................................   6
     9.2       Buyer .......................................................   6

ARTICLE X      CLOSING .....................................................   6
     10.1      Closing .....................................................   6
     10.2      Time is of the Essence ......................................   6

ARTICLE XI     PRORATIONS ..................................................   6
     11.1      Costs: Advance Payments .....................................   6
     11.2      Prorations ..................................................   7
     11.3      Transfer Taxes ..............................................   7

ARTICLE XII    CONDITIONS PRECEDENT TO BUYER'S DUTY TO CLOSE ...............   7
     12.1      Continued Truth of Warranties ...............................   7
     12.2      Performance of Obligations ..................................   7
     12.3      Delivery of Closing Documents ...............................   7
     12.4      Litigation ..................................................   8
     12.5      No Material Adverse Change ..................................   8
     12.6      The Lease ...................................................   8
     12.7      License .....................................................   8
     12.8      No Defaults .................................................   8

ARTICLE XIII   CONDITIONS PRECEDENT TO SELLER'S DUTY TO CLOSE ..............   8
     13.1      Continued Truth of Warranties ...............................   8
     13.2      Performance of Obligations ..................................   8
     13.3      Delivery of Closing Documents ...............................   8
     13.4      Litigation ..................................................   8
     13.5      License .....................................................   9

                                       ii
<PAGE>
                                                                            Page
                                                                            ----
ARTICLE XIV    ITEMS TO BE DELIVERED AT CLOSING BY SELLER ..................   9
     14.1      Bill of Sale ................................................   9
     14.2      Assignment Of Contracts .....................................   9
     14.3      Certified Resolution ........................................   9

ARTICLE XV     ITEMS TO BE DELIVERED AT CLOSING BY BUYER ...................   9
     15.1      Assumption Of Contracts .....................................   9
     15.2      Certified Resolution ........................................   9
     15.3      Representations and Warranties ..............................   9
     15.4      The Purchase Price ..........................................   9
     15.5      Corporate Documents. ........................................   9

ARTICLE XVI    MISCELLANEOUS ...............................................  10
     16.1      Further Assurances ..........................................  10
     16.2      No Other Agreements .........................................  10
     16.3      Waiver ......................................................  10
     16.4      Public Announcements ........................................  10
     16.5      Notices .....................................................  10
     16.6      Broker and Finders ..........................................  11
     16.7      Books and Records ...........................................  11
     16.8      Risk of Loss ................................................  11
     16.9      Third-Party Beneficiary .....................................  11
     16.10     Relationship of Parties .....................................  11
     16.11     Choice of Law ...............................................  11
     16.12     Paragraph Headings ..........................................  11
     16.13     Rules of Interpretation .....................................  12
     16.14     Time is of the Essence ......................................  12
     16.15     Attorney Fees ...............................................  12
     16.16     Arbitration .................................................  12
     16.17     Counterparts; Facsimile Signatures ..........................  13

                                       iii
<PAGE>
                                LIST OF EXHIBITS

Schedule 1.1   Assumed Contracts
Schedule 1.6   Corporate Lease
Schedule 1.9   Equipment
Schedule 1.12  Prepaid Tuition and Deposit Liabilities
Schedule 1.19  Teachers' Accrued Liabilities
Schedule 8.1   Employees
<PAGE>
                                  SCHEDULE 1.1

                               (ASSUMED CONTRACTS)
<PAGE>
                                  SCHEDULE 1.6

                                (CORPORATE LEASE)
<PAGE>
                                   EXHIBIT 1.9

                                   (EQUIPMENT)
<PAGE>
                                  SCHEDULE 1.12

                    (PREPAID TUITION AND DEPOSIT LIABILITIES)
<PAGE>
                                  SCHEDULE 1.19

                         (TEACHERS' ACCRUED LIABILITIES)
<PAGE>
                                  SCHEDULE 8.1

                                   (EMPLOYEES)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00019-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00019-of-00352.parquet"}]]