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) July 17, 1998
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AMBASSADORS INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
0-26420 91-1688605
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(Commission File Number) (I.R.S. Employer
Identification No.)
Dwight D. Eisenhower Building, 110 So. Ferrall St.,
Spokane, Washington 99202
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(Address of Principal Executive Offices) (Zip Code)
(509) 534-6200
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed
Since Last Report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
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Pursuant to an Asset Purchase Agreement dated July 17, 1998 (the
"Asset Purchase Agreement"), Ambassadors Performance Group, Inc.
("APG"), a wholly-owned subsidiary of Ambassadors International, Inc.
(the "Company"), purchased certain assets from Destination, Inc., a
Georgia corporation ("Destination").
The purchased assets (the "Assets") include (i) all of the inventory,
supplies and marketing material used by Destination in its business of
organizing and operating comprehensive integrated housing,
registration and travel services for meetings, conventions,
expositions and trade shows for business clients (the "Business");
(ii) all of the furniture, fixtures, equipment and improvements
located at the offices of the Business at 240 Peachtree Street, Suite
22-S-22, Atlanta, Georgia (the "Business Premises"); (iii)
Destination's right, title and interest in and to the lease for the
Business Premises; (iv) all of the goodwill and other intangible
assets relating to the Business; (v) any and all prepaid expenses
relating to the Business; and (vi) all of the contracts, work in
progress and prospective contracts relating to the Business. APG
intends to continue the Business as previously conducted, at the
Business Premises.
The total purchase price for the Assets was $2,150,000, paid in cash.
In addition, the Asset Purchase Agreement provides that, for the
period July 1, 1998 through December 31, 1998, Destination will be
paid between $50,000 and $350,000, depending upon the Business'
earnings during that period. The amount earned may be paid, at APG's
option, in cash or in shares of common stock of the Company based upon
the then-current market value.
For each of the calendar years ending December 31, 1999, 2000 and 2001
(the "Earn Out Years") Destination may be paid an earn-out payment (an
"Earn-Out Payment") of up to $900,000, based on earnings of the
Business in those years. Each of the Earn-Out Payments, if any, with
respect to 1999, 2000 and 2001, shall be paid one-third (1/3) in cash
and the remaining two-thirds (2/3) in cash or, at APG's option, in
shares of the Company's Common Stock based upon the then-current
market value. In addition, depending upon earnings of the Business in
each of the Earn-Out Years, the Company shall issue to Destination
options to purchase shares of the Company's Common Stock pursuant to
the Company's Amended and Restated 1995 Equity Participation Plan,
subject to a maximum of 10,000 shares of the Company's Common Stock in
any Earn-Out Year.
The purchase price for the Assets was arrived at through arms' length
negotiations between APG and Gregory S. Cunningham ("Cunningham"), the
sole shareholder of Destination, who is not an affiliate of the
Company. The source of the funds used to purchase the Assets came
from the Company's working capital, including the proceeds of its
recently-completed public offering in April 1998.
<PAGE>
In connection with the foregoing transactions, APG also entered into a
non-competition agreement and a five-year employment agreement with
Cunningham for him to serve as an executive of APG and pursuant to
which, among other things, Cunningham will be granted an option to
purchase 10,000 shares of the Company's Common Stock.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
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(c) Exhibits
2.6 Asset Purchase Agreement, dated July 17, 1998 by and among
Ambassadors International, Inc., Ambassador Performance
Group, Inc., Destination, Inc. and Gregory S. Cunningham.
<PAGE>
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 hereunder duly authorized.
Dated: August 3, 1998
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AMBASSADORS INTERNATIONAL, INC.
By /s/ John A. Ueberroth
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John A. Ueberroth, President
<PAGE>
EXHIBIT 2.6
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ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT ("Agreement") is made and entered into
this 17th day of July, 1998, by and between AMBASSADOR PERFORMANCE
GROUP, INC. ("Buyer"), a Delaware corporation, AMBASSADORS
INTERNATIONAL, INC. ("Ambassadors"), a Delaware corporation,
DESTINATION, INC. ("Seller"), a Georgia corporation, and GREGORY S.
CUNNINGHAM ("Shareholder").
WHEREAS, Seller owns and operates a business under the names
"Destination, Inc." and "Destinations", which organizes and operates
international management meetings and specializes in comprehensive,
integrated housing, registration and travel services for major
meetings, conventions, expositions and trade shows for business
clients ("Business");
WHEREAS, Shareholder is the sole shareholder of Seller, owning of
record and beneficially 100% of the issued and outstanding capital
stock of Seller;
WHEREAS, Buyer is a wholly owned subsidiary of Ambassadors; and
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to
sell to Buyer, certain of the assets relating to the Business on the
terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises contained in
this Agreement, the parties hereto agree as follows:
1. SALE AND PURCHASE OF ASSETS.
---------------------------
Subject to the terms and conditions of this Agreement and in
reliance on the representations, warranties and agreements of
Seller contained herein, Buyer will purchase from Seller at the
Closing, and Seller will sell, assign, transfer, convey and
deliver to Buyer at the Closing, the following assets and
properties owned by Seller and/or used in connection with the
Business:
(a) INVENTORY AND SUPPLIES. All of the inventory, supplies and
marketing materials of Seller produced or used in the
operation of the Business;
(b) FIXED ASSETS. All of the furniture, fixtures, equipment and
improvements (which are not subject to a lease) located at
the offices of the Business at 240 Peachtree Street, Suite
22-S-22, Atlanta, Georgia 30303, as well as any other
furniture, fixtures, equipment and improvements owned by
Seller and used in connection with the Business.
<PAGE>
(c) INTANGIBLE ASSETS. All of the goodwill and other intangible
assets relating to the Business, including but not limited
to its telephone and fax numbers, software and programs,
vendor lists and files, all books and records relating to
the Business, client lists and files, and any and all
tradenames, including but not limited to the names
"Destination, Inc." and "Destinations"; provided, however,
Buyer acknowledges and agrees that Seller may make copies of
such books and records to the extent that the same will be
needed by Seller for the preparation of Seller's income tax
returns.
(d) LEASES. Seller's right, title and interest in and to all of
the leases set forth in Exhibit 1(d) attached hereto.
(e) PREPAID EXPENSES AND DEPOSITS. Any and all prepaid expenses
relating to the Business as well as any security or other
deposits relating to any leases which are to be assumed by
Buyer under this Agreement.
(f) CONTRACTS. All of Seller's rights in and to contracts, work
in progress (which includes programs which are in progress
and which are not completed as of the Closing) and
prospective contracts relating to the Business, all of which
are set forth in Exhibit 1(f) attached hereto (which shall
be updated at the Closing), including but not limited to all
deposits received by Seller prior to the Closing in
connection therewith which have not been paid by Seller for
actual and direct program costs and expenses in connection
with such contracts. Also set forth in Exhibit 1(f) is a
list of all deposits received by Seller relating to the
contracts set forth therein as well as all actual and direct
program costs and expenses paid by Seller (all of which
shall be updated at the Closing).
2. PURCHASE PRICE AND ASSUMPTION OF CERTAIN LIABILITIES.
----------------------------------------------------
The total purchase price to be paid by Buyer to Seller in respect
to the assets and properties referred to in Paragraph 1 above is
the following:
(a) The sum of Two Million One Hundred Fifty Thousand Dollars
($2,150,000.00), payable at the Closing in the form of a
check or by a wire transfer of good funds into Seller's bank
account.
(b) If the "mark-up" (as that term is defined below) for
"Seller's Business" (as that term is defined below) for the
period July 1, 1998 through December 31, 1998 exceeds
$2,200,000 (the amount of any such excess being hereinafter
referred to as the "1998 Excess Amount"), then Buyer shall
pay to Seller, on or before March 31, 1999, the sum of
$350,000.00 ("Half Year Earn-Out Payment") in cash or, at
Buyer's option, by way of the issuance of shares of common
<PAGE>
stock of Ambassadors ("AMIE Shares") in an amount equal to
the Half Year Earn-Out Payment divided by the average of the
closing prices of AMIE Shares on NASDAQ for the fifteen (15)
trading days immediately preceding December 31, 1998;
provided, however, that $50,000 of the Half Year Earn-Out
Payment shall be payable by Buyer to Seller, as aforesaid,
without regard to whether the mark-up for Seller's Business
for the period July 1, 1998 through December 31, 1998
exceeds $2,200,000.
(c) For each of the calendar years ending December 31, 1999,
2000 and 2001 ("Earn-Out Years"), Buyer shall pay to Seller
earn-out payments ("Annual Earn-Out Payments") upon and
subject to the following terms and conditions:
(1) For the Earn-Out Year ending December 31, 1999, Buyer
shall pay to Seller an Annual Earn-Out Payment
determined as follows:
(A) An Annual Earn-Out Payment of $900,000 if the sum
of the mark-up for such Earn-Out Year and 50% of
the 1998 Excess Amount (such sum being hereinafter
referred to as the "Subject Sum") equals or
exceeds $3,100,000;
(B) An Annual Earn-Out Payment of $750,000 if the
Subject Sum equals or exceeds $3,000,000 but is
lower than $3,100,000;
(C) An Annual Earn-Out Payment of $600,000 if the
Subject Sum equals or exceeds $2,900,000 but is
lower than $3,000,000;
(D) An Annual Earn-Out Payment of $285,000 if the
Subject Sum equals or exceeds $2,800,000 but is
lower than $2,900,000; or
(E) No Annual Earn-Out Payment if the Subject Sum is
lower than $2,800,000.
(2) For each of the Earn-Out Years ending December 31, 2000
and 2001, respectively, Buyer shall pay to Seller an
Annual Earn-Out Payment determined as follows:
(A) An Annual Earn-Out Payment of $900,000 if the
mark-up for such Earn-Out Year equals or exceeds
$3,300,000;
(B) An Annual Earn-Out Payment of $850,000 if the
mark-up for such Earn-Out Year equals or exceeds
$3,200,000 but is lower than $3,300,000;
<PAGE>
(C) An Annual Earn-Out Payment of $800,000 if the
mark-up for such Earn-Out Year equals or exceeds
$3,100,000 but is lower than $3,200,000;
(D) An Annual Earn-Out Payment of $750,000 if the
mark-up for such Earn-Out Year equals or exceeds
$3,000,000 but is lower than $3,100,000;
(E) An Annual Earn-Out Payment of $150,000 if the
mark-up for such Earn-Out Year equals or exceeds
$2,900,000 but is lower than $3,000,000; or
(F) No Annual Earn-Out Payment if the mark-up for such
Earn-Out Year is lower than $2,900,000.
(3) Each of the Annual Earn-Out Payments, if any, provided
for in (1) and (2) above shall be paid one-third (1/3)
in cash and two-thirds (2/3) in cash or, at Buyer's
option, in AMIE Shares based upon the average of the
closing prices of AMIE Shares on NASDAQ for the fifteen
(15) trading days immediately preceding the last
trading date of the Earn-Out Year for which such Annual
Earn-Out Payment is due.
(4) Annual Earn-Out Payments, if any, shall be paid within
three (3) months after the end of the Earn-Out Year.
(5) For each of the Earn-Out Years for which the mark-up
exceeds $3,300,000, Ambassadors shall issue to Seller
options to purchase AMIE Shares pursuant to Ambassadors
Amended and Restated 1995 Equity Participation Plan.
The number of AMIE Shares covered by such options shall
be 2,500 for each full $50,000 of mark-up in excess of
$3,300,000 during any Earn-Out Year, subject to a
maximum of 10,000 AMIE Shares in any Earn-Out Year.
The exercise price shall be the closing price on NASDAQ
of AMIE Shares on the last trading day of the Earn-Out
Year.
(d) Concurrently with the delivery of each of the AMIE Shares
issued to Seller under this Paragraph 2, Seller shall
execute and deliver to Ambassadors an investment
representation letter in the form of Exhibit 2(d) attached
hereto.
(e) For purposes of this Paragraph 2, the term "mark-up" for any
period shall mean all net revenues of Seller's Business,
less rebates, for such period, all to be determined by
Ambassadors' independent auditors in accordance with
generally accepted accounting principles. For purposes of
this Paragraph 2, the term Seller's Business shall mean the
sales generated on account of existing clients of Seller and
prospective clients of Seller identified on Exhibit 2(e)
attached hereto, and the sales generated by existing
<PAGE>
employees of Seller who are presently full-time members of
Seller's existing sales force (plus the additional
individuals identified for such purpose on Exhibit 2(e)
attached hereto) on account of new clients who become such
by virtue of such persons.
(f) In addition to the payments provided for above, Buyer shall
assume at the Closing all obligations of Seller relating to
periods from and after the Closing under the leases
described in Exhibit 1(d) attached hereto and the contracts
described in Exhibit 1(f) attached hereto.
(g) The purchase price shall be allocated in accordance with
Exhibit 2(g) attached hereto. The allocation set forth in
Exhibit 2(g) shall be adopted by the parties hereto for all
purposes, including federal and state income tax purposes.
Except as specifically provided for above, Buyer shall not
assume any liabilities or obligations of Seller, whether
with respect to the Business or otherwise. Seller shall
continue to pay, as they become due, any and all of its
liabilities, with respect to the Business or otherwise,
except for those liabilities which are expressly assumed by
Buyer under this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER.
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Seller and Shareholder, jointly and severally, represent and
warrant to Buyer that, as of the date hereof, and as of the date
of Closing:
(a) ORGANIZATION AND STANDING OF THE BUSINESS. Seller is duly
organized, validly existing and in good standing, and
qualified to operate the Business under the laws of the
State of Georgia, all local jurisdictions within said state
and in all other jurisdictions required by law. Seller has
full power and authority to carry on the Business as now
conducted and to own and operate the Business as well as its
assets and properties. Seller has no subsidiaries or
affiliated entities, direct or indirect, consolidated or
unconsolidated.
(b) COMPLIANCE. This Agreement has been duly executed and
delivered by Seller, has been approved by Shareholder in his
capacity as the sole shareholder of Seller and by all of
Seller's directors, and is binding upon and enforceable
against Seller. The consummation of the transactions
contemplated hereby will not result in the breach of any of
the terms, provisions or conditions of, or constitute a
default under or violate, as the case may be, (i) Seller's
Articles of Incorporation, Bylaws, or any agreement, lease,
license or other document or undertaking, oral or written,
to which Seller is bound, or by which any of the property or
<PAGE>
assets of Seller may be affected, or (ii) any applicable
laws.
(c) FINANCIAL STATEMENTS. The financial statements of Seller as
at and for the fiscal years ended December 31, 1995, 1996
and 1997, and the interim financial statements as at and for
the period ended June 30, 1998 (copies of which statements
are collectively attached hereto as Exhibit 3(c)), are true
and correct, having been prepared in accordance with
generally accepted accounting principles, are consistent
with practices followed for prior periods, and present
fairly the financial condition of Seller and the Business at
such respective dates and the results of operations for
each of the respective periods.
(d) TAXES. Seller has paid all federal, state, county, local
and foreign taxes, including, without limitation,
withholding taxes and social security taxes on all
employees, sales taxes, license fees, and any charges
levied, assessed or imposed upon any of the property of
Seller, whether disputed or not, which are now known to be,
or are hereafter found to be or to have been due with
respect to the conduct of the Business and the ownership of
Seller's property. Seller has filed all federal, state,
county, local and foreign tax returns required to be filed
by it and has paid all taxes as shown on said returns and
all assessments received by it to the extent that such taxes
have become due.
(e) LITIGATION AND REGULATION. There is no litigation, suits or
proceedings, administrative, judicial, governmental or
otherwise, pending or threatened against Seller and/or the
Business. Neither Seller nor the Business is subject to, or
in violation or default in any material respect of, any
order, writ, injunction or decree of any court,
administrative agency or governmental body and both Seller
and the Business are in full compliance with all laws,
rules, regulations and orders applicable to the Business and
are in possession of all governmental licenses necessary to
the conduct of the Business, and such licenses are valid and
in full force and effect. There are no unresolved
complaints pending against Seller or the Business before any
governmental agency.
(f) TITLE TO PROPERTIES; LIENS AND ENCUMBRANCES. Seller has
good and marketable title to all of the properties and
assets being conveyed to Buyer under this Agreement, subject
to no mortgage, pledge, lien, conditional sales agreement,
encumbrance or charge, except to the extent set forth in
Exhibit 3(f) attached hereto (and Seller and Shareholder,
jointly and severally, shall cause all mortgages, pledges,
liens, claims, conditional sales agreements, encumbrances
and charges set forth in such Exhibit 3(f) to be discharged,
removed, eliminated and released in their entirety to the
<PAGE>
full and complete satisfaction of Buyer as soon as possible,
and, in any event, within ten (10) business days from the
date hereof).
(g) DUE PERFORMANCE. Seller has performed all obligations
required to be performed by it to date and is not in default
or alleged to be in default in any respect under, or in
violation in any respect of, any agreement, lease or
contract which is being assumed by Buyer pursuant to this
Agreement or by which Seller or any of its properties or
assets may be affected, and no other party is in default
thereunder, and there exists no condition or event which
after notice or lapse of time or both would constitute a
default by any party thereto.
(h) BUSINESS CONDITIONS. Neither Seller nor Shareholder has any
knowledge of any condition which might have a material
adverse affect upon the Business or prevent the Business
from being carried on in the future. No stockholder,
officer, director or employee of Seller owns, directly or
indirectly, any interest in, or is an employee of, any
corporation, firm or other business organization which is a
competitor of or conducts business with Seller.
(i) DOCUMENTS. Seller has delivered to Buyer true and correct
copies of each of the leases, agreements and other documents
referred to in this Agreement or in any Exhibit attached
hereto.
(j) DISCLOSURE. No representation or warranty by Seller in this
Agreement or any statement, document or certificate
furnished or to be furnished to Buyer pursuant hereto, or in
connection with the transactions contemplated hereby,
contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact
necessary to make the statements contained therein not
misleading.
(k) CONTINUATION OF THE BUSINESS. From and after December 31,
1997, the Business has been and will be carried on through
the Closing by Seller diligently and in the same manner as
the Business was conducted by Seller prior to June 30, 1998,
and in the ordinary course of business.
(l) EMPLOYEES. Seller has no written or oral agreement with any
employee which cannot be terminated at will. On or prior to
the Closing, all of Seller's employees shall be duly
compensated for all of their services through the date of
the Closing, including but not limited to unpaid vacation
pay and sick pay. There has been no increase in
compensation to any employee of Seller since June 30, 1998.
Attached hereto as Exhibit 3(l) is a list of all of the
employees of Seller as well as their date of hire,
<PAGE>
compensation, fringe benefits, vacation, duties and history
of wages.
(m) CONDITION OF ASSETS. All of the assets of the Business are
in good operating condition and repair and will continue to
be in good operating condition and repair as of the Closing.
4. COVENANTS BY SELLER.
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Seller agrees that, from the date hereof to the Closing:
(a) It will conduct the Business and its affairs only in the
ordinary course.
(b) It shall afford to the officers, counsel, accountants and
other representatives of Buyer full and free access to
Seller's personnel, properties, records and books of account
at all reasonable times, and shall furnish such officers and
representatives with all such documents and information as
Buyer may reasonably request. The documents and information
so furnished Buyer are solely for the purposes of this
Agreement, are to be kept strictly confidential until the
Closing, and Buyer shall not disclose the same prior to the
Closing to anyone other than its authorized officers,
employees, agents, counsel and accountants, who shall be
advised of these provisions. No investigations by Buyer or
any of its representatives shall affect the representations
and warranties of Seller and Shareholder, and each such
representation and warranty shall survive any such
investigation.
(c) Without the prior written consent of Buyer, Seller shall
not:
(1) Increase the rate or form of compensation or fringe
benefits to or for the benefit of any agent or
employee;
(2) Make any commitments for capital expenditures nor sell,
transfer, invalidate or dispose of any of the assets of
the Business, except in the ordinary course of
business;
(3) Incur any indebtedness except in the ordinary course of
business, permit any adverse change to be made in the
Business, or allow any tax or other liability to be
extended by waiver of the statutes of limitation or
otherwise; or
(4) Enter into transactions except in the ordinary course
of its business.
<PAGE>
(d) Seller will:
(1) Keep its property and assets insured consistent with
its prior practices in respect thereof;
(2) Timely perform all its obligations under contracts,
leases and documents relating to or affecting its
assets, properties and business;
(3) Use its best efforts to preserve intact its business,
organization, employees, agencies, clients and
goodwill;
(4) Carry on the Business diligently and substantially in
the same manner as heretofore and make or institute no
unusual or novel methods of management or operation
thereof;
(5) Not amend any of its leases or other contracts or
borrow any money; and
(6) Promptly notify Buyer in writing of any threatened
lawsuit, claim or any adverse change or any projected
or threatened adverse change in the Business.
5. REPRESENTATIONS AND WARRANTIES OF BUYER.
---------------------------------------
Buyer represents and warrants to Seller that, as of the date
hereof, and as of the date of Closing:
(a) ORGANIZATION AND STANDING OF BUYER. Buyer is a corporation
duly organized, validly existing and in good standing under
the laws of the State of Delaware.
(b) AUTHORIZATION. The execution and delivery of this Agreement
by Buyer and the performance of the transactions
contemplated hereby have been duly and validly authorized by
the Board of Directors of Buyer, and this Agreement is
binding upon and enforceable against Buyer.
(c) COMPLIANCE. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby
will not result in the breach of any of the terms or
conditions of, or constitute a default under or violate, as
the case may be, the Certificate of Incorporation or ByLaws
of Buyer, or any agreement, lease, mortgage, note, bond,
indenture, license or other document or undertaking, oral or
written, to which it may be bound, or by which any of its
property or assets may be adversely affected.
<PAGE>
6. CONDITIONS TO BUYER'S OBLIGATIONS.
---------------------------------
The obligations of Buyer to consummate this Agreement shall be
subject to and shall be conditioned upon each of the following
conditions, any one or more of which may be waived by Buyer:
(a) BREACH. Buyer shall not have discovered any error,
misstatement or omission in any of the representations or
warranties made by Seller and/or Shareholder in this
Agreement, and all of the terms, covenants and conditions of
this Agreement to be complied with or performed by Seller on
or before the Closing shall have been complied with and
performed.
(b) NO MATERIAL CHANGES. The representations and warranties
made by Seller and/or Shareholder in Paragraph 3 above shall
be correct in all respects on and as of the Closing with the
same force and effect (except as affected by the
transactions contemplated herein or otherwise approved in
writing by Buyer) as though such representations had been
made again on and as of the Closing, and none of the
covenants contained in Paragraph 4 above shall have been
breached in any respect as of the Closing.
(c) APPROVALS. All actions, proceedings, instruments and
documents required to carry out this Agreement or incidental
thereto and all other related legal matters shall have been
approved by counsel for Buyer. Ambassadors' Board of
Directors shall have approved this Agreement.
(d) GOVERNMENTAL REGULATION. No consent, approval,
authorization or order of any court or governmental agency
or administrative body not obtained and in effect on the
Closing shall be required for the consummation of the
transactions contemplated by this Agreement, and no
regulation, claim, proceeding, investigation or litigation,
either administrative or judicial, shall be threatened or
pending against Seller or Buyer, or applicable to any of
them, which, in the opinion of counsel for Buyer, presents a
reasonable probability that the transactions contemplated by
this Agreement would be enjoined or prevented, or that the
Business would be adversely affected. At the Closing, there
shall exist no violations of any federal, state or local
law, ordinance or regulation affecting the assets,
properties or business of Seller.
(e) EMPLOYMENT AND NON-COMPETITION AGREEMENTS. An employment
agreement and a separate non-competition agreement in the
forms attached hereto as Exhibits 6(e)(1) and 6(e)2,
respectively, shall have been entered into by Shareholder.
(f) ITEMS TO BE DELIVERED BY SELLER. At the Closing, Seller
shall deliver to Buyer, in form and substance satisfactory
to Buyer, the following:
<PAGE>
(1) A bill of sale conveying the assets and properties to
be conveyed by Seller under this Agreement.
(2) Assignments of the leases and contracts described in
Exhibits 1(d) and 1(f) attached hereto, including
Seller's interest in any and all security and other
deposits.
(3) A certificate, executed and sworn to by Seller and
Shareholder, confirming that (i) as of the Closing, all
of the warranties and representations set forth in this
Agreement are true and correct, and all covenants and
agreements set forth in this Agreement have been
satisfied, (ii) Seller has delivered true, correct and
complete original leases, contracts and other
agreements assumed by Buyer pursuant to this Agreement
and all amendments thereto and (iii) that no adverse
changes have occurred with respect to the Business or
any assets subject to this Agreement.
(4) Certified copies of resolutions of all of the
shareholders and directors of seller.
(5) Such other documents, instruments and certificates
required of Seller as are contemplated herein to effect
and complete the Closing.
(6) An amount equal to the deposits received by Seller in
connection with the contracts set forth in Exhibit 1(f)
attached hereto (as updated at the Closing) less the
amount paid by Seller of all actual and direct program
costs in connection therewith.
(7) A current Certificate of Good Standing issued by the
Georgia Secretary of State confirming that Seller is in
good standing in said state.
(8) Updated Exhibits as provided for in this Agreement.
(9) Buyer and Ambassadors shall have received a favorable
opinion, reasonably satisfactory to Buyer, of Wagner,
Johnston & Rosenthal, PC, counsel to Seller and the
Shareholder, dated as of the date of the Closing,
addressed to Buyer and Ambassadors, and substantially
in the form of Exhibit 6(f)(9) attached hereto, to the
effect that:
(i) Seller is duly organized, validly existing and
in good standing under the laws of the State of
Georgia and has all requisite power to own,
lease and operate its respective assets,
properties and business as now conducted.
<PAGE>
(ii) Seller and the Shareholder have the full right,
power and authority required to enter into,
execute and deliver this Agreement and all other
agreements and instruments to be executed by
them in connection herewith and to perform fully
their obligations hereunder and thereunder.
(iii) This Agreement and all other agreements and
instruments to be executed by Seller and the
Shareholder in connection herewith have been
duly and validly authorized, executed and
delivered by them and constitute the legal,
valid and binding obligations of them,
enforceable in accordance with their respective
terms, except to the extent that such
enforceability is limited by bankruptcy,
insolvency, moratorium or similar laws now or
hereafter in effect relating to or limiting
creditors' rights generally.
(iv) Except to the extent set forth in Exhibit 3(f)
attached hereto, there are no Uniform Commercial
Code filings, chattel mortgages, assignments,
pledges or other encumbrances that have been
filed with respect to any of the assets subject
to this Agreement in Georgia or in any other
appropriate offices for the filing of such
documents.
(v) To the best knowledge of such counsel, there is
no pending claim, action, suit, investigation or
proceeding of any kind in which Seller or the
Shareholder has been served with process or
otherwise received notice, and there is no
threat of any such claim, action, suit,
investigation or proceeding against, involving,
affecting or relating to them or against,
involving, affecting or relating to any of them
or their officers or directors in connection
with the business and affairs of Seller.
(vi) To the best knowledge of such counsel, there is
no default (or event which, with notice or lapse
of time or both, would constitute a default) by
any party thereto under any contract or by
Seller under any governmental license,
franchise, permit or other governmental
authorization, which defaults and events would,
in the aggregate, have a material adverse effect
with respect to the condition (financial or
otherwise), assets, properties, business or
prospects of Seller, or a breach of any
provision of the Articles of Incorporation,
bylaws or other charter documents of Seller.
<PAGE>
(vii) This Agreement and the transactions contemplated
herein have been duly approved by the Board of
Directors and by all of the shareholders of
Seller at a meeting duly held (or by written
consent in lieu of a meeting) in compliance with
the laws of the State of Georgia and the
applicable regulations thereunder.
(viii) Nothing has come to the attention of such
counsel to indicate that any of the
representations and warranties of Seller or the
Shareholder contained in this Agreement are
untrue in any respect or misleading in any
respect.
(ix) Any other matters that may reasonably be
requested by Buyer.
(g) CONSENTS. All parties to any leases, contracts and
agreements which are being assumed by Buyer under this
Agreement shall have consented to the transactions
contemplated hereby or have waived the preferential or other
rights they would otherwise have by reason of such
transactions (to the extent that such consents and waivers
are required in the opinion of Buyer's counsel).
(h) BUYER'S DUE DILIGENCE. During the ten (10) business day
period immediately following the execution of this
Agreement, Buyer and its representatives, agents and
employees shall conduct such review as they deem appropriate
in their sole and absolute discretion of the books, records
and affairs of the Seller and the Business. As a condition
to Buyer's obligation to consummate this Agreement and the
purchase and sale hereunder, Buyer must be completely
satisfied with the results of such review. If, for any
reason whatsoever, Buyer is not satisfied with such review,
Buyer may terminate this Agreement and neither party shall
have any obligation hereunder to any of the other parties.
7. CONDITIONS TO SELLER'S OBLIGATIONS. The obligations of Seller to
consummate this Agreement shall be subject to and shall be
conditioned upon each of the following conditions, any one or
more of which may be waived by Seller:
(a) BREACH. The representations and warranties made by Buyer
shall be correct in all material respects on and as of the
Closing with the same force and effect (except as affected
by the transactions contemplated herein) as though such
representations had been made on and as of the Closing; the
covenants of Buyer contained herein shall not have been
breached in any material respect as of the Closing; and
Buyer shall have delivered to Seller a certificate to such
effect signed by its President.
<PAGE>
(b) PERFORMANCE. All the terms, covenants and conditions of
this Agreement to be complied with and performed by Buyer on
or before the Closing shall have been complied with and
performed.
8. CLOSING; TERMINATION. The closing of the within purchase and
sale ("Closing") shall take place on July 17, 1998, at 10:00
a.m., at the offices of Richman, Lawrence, Mann, Chizever &
Phillips, 9601 Wilshire Boulevard, Beverly Hills, California
90210, or at such other place or time as the parties may mutually
agree (it being understood and agreed that it is the present
intention of the parties to conduct the closing through facsimile
to the extent practicable). Seller and Buyer agree to use their
best efforts to bring about the satisfaction of the conditions
for Closing specified in this Agreement, but if any condition so
specified is not satisfied and such condition is not waived in
writing by the party for the benefit of whom or which such
condition is stated, such party may terminate this Agreement by
notice in writing to the other party. Any such conditions not so
waived in writing shall nevertheless be deemed to have been
waived by the party for the benefit of whom or which such
condition is stated, if such party shall not so terminate this
Agreement.
9. INDEMNIFICATION.
(a) BY SELLER AND SHAREHOLDER. Seller and Shareholder, jointly
and severally, agree to indemnify, reimburse and hold Buyer
harmless against and from all losses, damages, costs,
expenses and deficiencies suffered, incurred or sustained by
Buyer, including reasonable attorneys' fees and expenses, as
a result of the untruth of any representation or the breach
of any warranty, covenant or agreement made by Seller and/or
Shareholder in this Agreement or in any document, exhibit,
agreement or certificate given in connection with this
Agreement, and the untruth of any certificate required under
this Agreement to be delivered by Seller and/or Shareholder
at the Closing.
(b) BY BUYER. Buyer hereby agrees to indemnify, reimburse and
hold harmless Seller against and from all losses, damages,
costs, expenses and deficiencies suffered, incurred or
sustained by Seller, including reasonable attorneys' fees
and expenses, as a result of the untruth of any
representation or the breach of any warranty, covenant or
agreement made by it in this Agreement or in any document,
exhibit, agreement or certificate given in connection with
this Agreement and the untruth of any certificate required
under this Agreement to be delivered by it at the Closing.
<PAGE>
10. MISCELLANEOUS PROVISIONS.
(a) NATURE AND SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. All statements contained in any certificate or
other instrument covered by this Agreement, or made on
behalf of any party pursuant hereto or in connection with
the transactions contemplated hereby, shall be deemed
representations, warranties and agreements provided
hereunder. Any representations, warranties and agreements
made by the parties hereto shall survive the Closing and
continue until the applicable statute of limitations shall
have barred any claim thereon and shall be effective
regardless of any investigation which may have been made at
any time by or on behalf of a party.
(b) EXHIBITS. Exhibits referred to in this Agreement are hereby
made a part hereof.
(c) PARTIES IN INTEREST AND BINDING EFFECT. This Agreement
shall be binding upon, and inure to the benefit of, the
respective heirs, personal representatives, successors and
assigns of Seller, Shareholder and Buyer.
(d) ASSIGNMENT AND AMENDMENT OF AGREEMENT. This Agreement shall
not be assignable by any of the parties hereto except with
written consent of all other parties hereto. This Agreement
may be amended only by written agreement of all the parties
hereto.
(e) NOTICES. Any notice or communication given by any of the
parties hereto to the other parties hereto pursuant to this
Agreement shall be in writing and personally delivered,
faxed (with the transmission of such fax confirmed by a fax
transmission report) or mailed by certified mail, postage
prepaid, as follows:
1. If to Seller and/or Shareholder, to:
Gregory S. Cunningham
c/o Destination, Inc.
240 Peachtree Street, Suite 22-S-22
Atlanta, Georgia 30303
Fax No. (404) 584-0685
With a copy to:
Wagner, Johnston & Rosenthal, PC
Suite 1200, Tower Place
3340 Peachtree Road NE
Atlanta, Georgia 30326
Attention: C. David Johnston, Esq.
Fax No. (404) 261-6779
<PAGE>
2. If to Buyer and/or Ambassadors, to:
Ambassador Performance Group, Inc.
1071 Camelback Street
Newport Beach, California 92660-3228
Attention: John Ueberroth
Fax No. (949) 759-5901
With a copy to:
Richman, Lawrence, Mann,
Chizever & Phillips
9601 Wilshire Boulevard, Penthouse
Beverly Hills, California 90210
Attention: Gerald M. Chizever, Esq.
Fax No. (310) 274-2831
or to such other address as hereafter shall be
furnished in writing by any of the parties hereto to
the other parties hereto.
e. ENTIRE UNDERSTANDING. This Agreement sets forth the entire
understanding of the parties, and it shall not be changed or
terminated orally. All prior discussions between the
parties pertaining to this transaction, both written and
oral, are superseded by and merged into this Agreement.
f. HEADINGS. The headings herein are inserted only as a matter
of convenience and reference, and in no way define, limit or
describe the scope of this Agreement, or the intent of any
provisions thereof.
g. COUNTERPARTS. This Agreement may be executed simultaneously
in one or more counterparts, each of which shall be deemed
an original and all of which together shall constitute one
and the same instrument.
h. FURTHER ACTS. Each party to this Agreement agrees to
execute any and all documents and perform any and all acts
requested by any of the other parties in order to effectuate
or consummate the terms of this Agreement.
i. JOINT AND SEVERAL LIABILITY. Any and all obligations or
liabilities under this Agreement by Seller and/or
Shareholder shall be joint and several and each of them
guarantees the full and faithful performance of the other as
to all terms, conditions, provisions, representations and
warranties made by each of them under this Agreement. Any
and all obligations or liabilities under this Agreement by
Buyer and/or Ambassadors shall be joint and several and each
of them guarantees the full and faithful performance of the
other as to all terms, conditions, provisions,
representations and warranties made by each of them under
this Agreement.
<PAGE>
j. ATTORNEYS' FEES. In the event that any party to this
Agreement commences legal proceedings against any of the
other parties, the prevailing party shall be entitled to
recover its attorneys' fees and court costs.
k. NAME CHANGE. Seller and Shareholder, jointly and severally,
shall cause Seller's Articles of Incorporation to be amended
within ten (10) business days from the date hereof to change
its name to a name which does not include and is not similar
to the names heretofore used by Seller and reflected in
Paragraph 1(c) of this Agreement.
l. DESTINATION TRAVEL, INC. Seller and Shareholder, jointly
and severally, shall cause Destination Travel, Inc., a
Georgia corporation ("DTI"), (i) at the Closing, to
transfer, without additional consideration, to Buyer all of
its right, title and interest in and to any and all
agreements identified in Exhibit 1(f) attached hereto to
which DTI is a party (and to deliver to Buyer all consents
that may be required for such purpose) in the same manner in
which other contracts are being transferred to Buyer by
Seller hereunder; and (ii) within ten (10) business days
from the date hereof, without additional consideration, to
amend its Articles of Incorporation to change its name to a
name which does not include the name "Destination" and is
not similar to such name (and, thereafter, to cease using
such names unless and except to the extent otherwise
approved by Buyer in writing).
m. CONSENTS. In the event that Buyer waives any consent or
other delivery at the Closing, within ten (10) business days
from the date hereof, Seller and Shareholder, jointly and
severally, shall cause such consent or other delivery to be
delivered to Buyer to Buyer's full satisfaction.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement the day and year first above written.
AMBASSADOR PERFORMANCE GROUP, INC.
By: _____________________________
Its: _____________________________
AMBASSADORS INTERNATIONAL, INC.
By: _____________________________
Its: _____________________________
DESTINATION, INC.
By: _____________________________
Gregory S. Cunningham
__________________________________
GREGORY S. CUNNINGHAM
<PAGE>
EXHIBITS
1(d) Leases
1(f) Contracts, work in progress, prospective contracts, deposits
and paid program costs and expenses
2(d) Form of Investment Representation Letter
2(e) List of prospective clients
2(g) Allocation of purchase price
3(c) Financial Statements
3(f) Title to Property; Liens
3(1) Employees, compensation, fringe benefits, etc.
6(e)(1) Employment Agreement
6(e)(2) Non-Competition Agreement
6(f)(9) Form of Opinion
<PAGE>
