8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): September 18, 2006

EXCELLIGENCE LEARNING CORPORATION

(Exact Name of registrant as specified in its charter)

Delaware	0-32613	77-0559897
(State of other jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

2 Lower Ragsdale Drive, Monterey, California 93940

(Address of principal executive offices) (Zip Code)

(831) 333-2000

(Registrant’s telephone number, including area code)

N/A

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry Into a Material Definitive Agreement.

On September 18, 2006, Educational Products, Inc., a wholly-owned subsidiary of the Registrant (“EPI”), entered into a Second Amendment to Lease Agreement (the “Amendment”) with TIAA Realty, Inc., an unrelated third party (the “Landlord”), pursuant to which EPI agreed to expand its existing lease for an aggregate of 53,650 square feet of warehouse and office space located at 2155 Silber Road, Houston, Texas by 16,200 square feet, bringing the aggregate square footage leased to 69,850 (the leased area as so expanded, the “Property”), effective September 1, 2006.

In addition to its proportionate share of the Landlord’s operating expenses, under the lease as amended by the Amendment, EPI must pay the Landlord a monthly base rent of $24,441 from September 1, 2006 to December 31, 2008; and $25,146 from January 1, 2009 to December 31, 2010. EPI has an option to extend the lease term for an additional period of five years commencing on January 1, 2010. A copy of the Amendment is attached to this current report as Exhibit 10.1 and is incorporated by reference to this report.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits:

10.1 Second Amendment to Lease Agreement, dated as of September 18, 2006, by and between TIAA Realty, Inc. and Educational Products, Inc.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	EXCELLIGENCE LEARNING CORPORATION
Date: September 22, 2006	By:	/s/ Ronald Elliott
		Name:	Ronald Elliott
		Title:	Chief Executive Officer

EX-10.1

Exhibit 10.1

SECOND AMENDMENT TO LEASE AGREEMENT

This SECOND AMENDMENT TO LEASE AGREEMENT (this Amendment) is made and entered into as of September 18, 2006 by and between TIAA Realty, Inc., a Delaware corporation (Landlord), and Educational Products, Inc., a Texas corporation (Tenant).

BACKGROUND:

A. On or about April 15, 1999, Landlord and Tenant entered into a Lease Agreement for approximately 95,600 square feet of space (the Original Premises) located at 2155 Silber Road, Houston, Texas (the Building).

B. Landlord and Tenant amended the above referenced Lease to reduce the Original Premises by approximately 41,950 square feet as of August 31, 2006 (the Reduction Premises) for a total area in the Original Premises of approximately 53,650 square feet of space (the Premises) pursuant to the First Amendment to Lease Agreement dated as of December 13, 2005, (the above-referenced lease as so amended is the Lease).

C. Landlord and Tenant desire to further amend the Lease to, among other things, expand the Premises.

AGREEMENT:

NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties agree as follows:

1. Capitalized Terms. All capitalized terms which are not otherwise defined herein shall have the meaning set forth in the Lease, as amended hereby.

2. Expansion. Effective as of September 1, 2006 (the Expansion Effective Date), the Premises shall be expanded by approximately 16,200 square feet of space more fully described in Attachment A hereto (the Expansion Space), thereby enlarging the Premises from approximately 53,650 square feet of space to approximately 69,850 square feet of space (the Expansion Premises). Landlord and Tenant agree that on the Expansion Effective Date, the Expansion Premises will contain approximately 69,850 square feet of space. On the Expansion Effective Date, all references to the Premises in the Lease shall thereafter refer to the Expansion Premises as expanded in this Paragraph and Exhibit A to the Lease is deleted and replaced with Attachment A hereto.

3. Base Rent. From the Expansion Effective Date through December 31, 2010, the Base Rent payable under the terms and conditions of the Lease is as follows:

9/1/06 – 12/31/08	$24,440.99
1/1/09 – 12/31/10	$25,146.00

Tenant shall continue to pay all other amounts payable under the Lease.

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4. Acceptance of Expansion Premises. Tenant accepts the Expansion Premises in their “AS-IS” condition and Landlord shall have no obligation to improve, repair, restore or refurbish the Expansion Premises except as otherwise specifically provided in this Amendment. Tenant acknowledges that neither Landlord nor any agent of Landlord has made any representation or warranty, except as otherwise expressly provided in this Amendment, with respect to the Expansion Premises or any other portion of the Building, including, without limitation, any representation or warranty with respect to the suitability or fitness of the Expansion Premises or any other portion of the Building for the conduct of Tenant’s business. Landlord does not intend to immediately construct a demising wall separating the Expansion Space from the remainder of the Reduction Space but reserves the right to build such a wall on the perimeter of the Expansion Premises at any time during the Term. Until such time as the demising wall is complete, Tenant shall continue to pay the proportionate share of electricity for the Reduction Premises and the Expansion Premises. Once the demising wall is complete, Tenant will only pay the proportionate share of electricity for the Expansion Premises. Construction of the demising wall will be performed by Landlord while Tenant occupies the Expansion Premises therefore Tenant acknowledges that it will have to vacate only those portions of the Expansion Premises where improvements are being made upon 5 business days notice from Landlord. Tenant is responsible for relocation and protection of its furniture, equipment, and other personal property during the installation of the improvements. Tenant and Landlord shall use commercially reasonable efforts to cooperate and coordinate with each other to minimize disruption of Landlord’s construction activities and of Tenant’s business operations in portions of the Expansion Premises where improvements are not being installed.

5. Calculation of Charges. Tenant understands and accepts the methods of calculation for determining charges and amounts of assessed against Tenant under this Lease, and agrees that they comply with Section 93.012 (Assessment of Charges) of the Texas Property Code, as amended or succeeded from time to time. Tenant waives, to the fullest extent permitted by Applicable Law, all rights and benefits of Tenant under Section 93.012 of the Texas Property Code, as amended or succeeded from time to time.

6. Brokerage; Mutual Indemnities.

a. Tenant warrants that it has had no dealings with any broker or agent in connection with the negotiation or execution of this Amendment other than Transwestern Commercial Services and The Arledge Co. (collectively, Brokers). Tenant shall indemnify, defend, and hold Landlord harmless against all costs, expenses, attorneys’ fees, or other liability for commissions or other compensation or charges claimed by any broker or agent other than Brokers claiming by, through, or under Tenant with respect to this Amendment.

b. Landlord warrants that it has had no dealings with any broker or agent in connection with the negotiation or execution of this Amendment other than Brokers. Landlord shall indemnify, defend, and hold Tenant harmless against all costs, expenses, attorneys’ fees, or other liability for commissions or other compensation or charges claimed by any broker or agent, including Brokers, claiming by, through or under Landlord with respect to this Amendment.

c. Any brokerage commissions payable to Brokers are payable by Landlord pursuant to the terms of separate agreements between Landlord and Brokers.

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7. No Offsets. Tenant hereby represents to Landlord that to the best of Tenant’s knowledge, as of the date of this Amendment, Tenant has no defenses to or offsets against the full and timely payment and performance of each and every covenant and obligation required to be performed by Tenant under the terms of the Lease.

8. Conflicts. The terms of this Amendment prevail if there is a conflict with the terms of the Lease.

9. Headings. The headings or captions of the paragraphs in this Amendment are for convenience only and shall not act and shall not be implied to act to limit or expand the construction and intent of the contents of the respective paragraph.

10. Binding Effect. This Amendment is binding upon and shall inure to the benefit of the parties and their respective successors and assigns (but this reference to assigns shall not be deemed to act as a consent to an assignment by Tenant).

11. Ratification. The Lease, as amended and modified hereby, is ratified and confirmed by the parties as being in full force and effect.

EXECUTED as of the date first above written.

LANDLORD:
TIAA REALTY, INC.
a Delaware corporation
By:	TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, a New York corporation its Authorized Representatives
	By:	/s/ Leonard Balducci
	Print Name:	Leonard Balducci
	As Its:	Director

TENANT:
EDUCATIONAL PRODUCTS, INC.,
a Texas corporation
By:	/s/ Judith McGuinn
Print Name:	Judith McGuinn
As Its:	President

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