SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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): February 5, 1998
AMBASSADORS INTERNATIONAL, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
33-93586 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)
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ITEM 2. Acquisition or Disposition of Assets
On February 5, 1998, Ambassador Performance Group, Inc. ("APG"), a
wholly-owned subsidiary of Ambassadors International, Inc. (the
"Company"), acquired certain of the assets (the "Assets") of Rogal
America, Co., pursuant to a certain Asset Purchase Agreement dated as
of February 5, 1998 by and among APG, the Company, Rogal America, Co.,
a Massachusetts Business Trust (the "Seller") and Andrew Rogal
("Rogal")(the "Asset Purchase Agreement").
The purchase price for the Assets was approximately $9,500,000,
subject to adjustment, with approximately $6,500,000 of such purchase
price paid in cash at the closing and approximately $3,000,000 of such
purchase price to be delivered in the form of 140,187 shares of the
Company's common stock. The Seller was also granted certain piggyback
registration rights with respect to the shares received.
The Seller was in the business of providing comprehensive, integrated,
housing, registration and travel services for major meetings,
conventions, expositions and trade shows for business clients (the
"Business"). The Assets acquired by the Company include two office
leases for premises in Virginia and Massachusetts, computer equipment
and Seller's client contracts. The Company intends to continue to use
the Assets in connection with the Business.
If pre-tax net income for the Business exceeds $1,700,000 for the
period from January 31, 1998 through December 31, 1998 and the 1999
bookings of the Business (as determined at December 31, 1998) exceed
the 1998 bookings, then APG will pay an additional $500,000 to Seller,
which amount will be payable, at the option of APG, in cash, shares of
stock of the Company or a combination thereof, and, in addition, APG
will pay to Seller an amount equal to 10% of that portion of the net
income before income taxes which exceeds $1,700,000.
The purchase price for the Assets was arrived at through arms' length
negotiations with the Seller, an unrelated third party. The
approximately $6,500,000 of the cash portion of the purchase price
came from funds raised in the Company's August 1995 initial public
offering of securities.
Andrew Rogal, the President and holder of more than 99% of the equity
securities of Seller, entered into a five year employment agreement to
serve as an executive of APG. In addition, the Company agreed that
upon the request of Rogal, at any time prior to April 16, 1999, that
it would make a loan to Rogal of up to $500,000 at an interest rate of
8% per annum, which loan, plus accrued but unpaid interest thereon,
would be secured by the Company's common stock and would be due and
payable within one year from the date of the making of such loan.
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ITEM 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(a) Financial statements of business acquired.
The financial statements required to be included in this Form 8-K
will be filed by amendment to this Form 8-K not later than
April 21, 1998.
(b) Pro forma financial information
The pro forma financial information to be included in this report
on Form 8-K will be filed by amendment to this Form 8-K not later
than 60 days after the filing of this report.
(c) Exhibits
2.6 Asset Purchase Agreement dated as of February 5, 1998 by and
among Ambassadors International, Inc., Ambassador
Performance Group, Inc., Rogal America, Co. and Andrew
Rogal.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunder duly authorized.
Dated: February 12, 1998 AMBASSADORS INTERNATIONAL, INC.
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By /s/ John A. Ueberroth
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John A. Ueberroth, President
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Exhibit 2.6
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made and entered into
this 5th day of February, 1998, by and between AMBASSADOR PERFORMANCE
GROUP, INC. ("Buyer"), a Delaware corporation, AMBASSADORS
INTERNATIONAL, INC. ("Ambassadors"), a Delaware corporation, ROGAL
AMERICA, CO. ("Seller"), a Massachusetts Business Trust, and ANDREW
ROGAL ("Rogal").
WHEREAS, Seller owns and operates a business under the name "Rogal
America" 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, Rogal owns 99.6% 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:
SALE AND PURCHASE OF ASSETS.
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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 used
in connection with the Business ("Seller Assets"):
INVENTORY AND SUPPLIES. All of the inventory, supplies and marketing
materials of Seller produced or used in the operation of the Business;
FIXED ASSETS. All of the furniture, fixtures, equipment, computers
and improvements (which are not subject to a lease) located at the
offices of the Business at 51 Water Street, Watertown, Massachusetts
02172, as well as any other furniture, fixtures, equipment and
improvements owned by Seller and used in connection with the Business.
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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,
photocopies of such books and records relating to the Business which
Buyer reasonably determines it will use after the Closing, client
lists and files, and any and all tradenames, including but not limited
to the name "Rogal America".
LEASES. Seller's right, title and interest in and to the leases set
forth in Exhibit 1(d) attached hereto.
PREPAID EXPENSES AND DEPOSITS. Any and all prepaid expenses relating
to the Business (other than program costs) as well as any security or
other deposits relating to any leases which are to be assumed by Buyer
under this Agreement.
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 Effective Date, as defined in Paragraph 8
below) 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 net deposits received by Seller relating to the
contracts set forth therein (this amount reflects the deduction of all
actual and direct program costs and expenses paid by Seller out of
such deposits).
PURCHASE PRICE AND ASSUMPTION OF CERTAIN LIABILITIES.
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The total purchase price to be paid by Buyer to Seller in respect to
the Seller Assets is the following:
The sum of Six Million Five Hundred Thousand Dollars ($6,500,000.00),
subject to adjustment under Paragraph 2(c) below, payable to Seller at
the Closing by a wire transfer of good funds into a commercial bank
account of Seller in Massachusetts.
The sum of Three Million Dollars ($3,000,000.00) ("Stock Amount") by
way of Ambassadors delivering to Seller, within ten (10) business days
after the Closing, shares of Ambassadors' common stock in an amount
equal to the Stock Amount divided by the average of the closing prices
of Ambassadors' common stock on NASDAQ for the fifteen (15) trading
days immediately preceding the date of the Closing ("Per Share
Valuation Price").
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The portion of the purchase price set forth in Paragraph 2(a) above
shall be (a) reduced by an amount equal to the sum of (i) all 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, and (ii) any and all compensation due to
Seller's employees through the date of the Closing as well as any and
all unpaid vacation pay, sick pay and the value of unused vacation
time and (b) increased by an amount equal to the sum of the prepaid
expenses and deposits described in subparagraph 1(e) above.
In addition to the payments provided for above, Buyer shall assume at
the Closing all obligations of Seller 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. The parties shall execute
at the Closing the Assignment and Assumption Agreement attached hereto
as Exhibit 2(d).
In addition to the payments and obligations provided for above, Buyer
shall pay to Seller, ONLY upon the following terms and conditions, the
following:
If for the period commencing on the Effective Date (as that term is
defined below) and terminating on December 31, 1998 ("Measurement
Period"), the net income before income taxes earned by Buyer from the
operations of the Business is in excess of One Million Seven Hundred
Thousand Dollars ("Net Income Requirement") AND the bookings for the
Business for the 1999 calendar year (as determined as of December 31,
1998) exceeds the bookings for the 1998 calendar year (which Seller
represents to be 6,467,932)("Bookings Requirement"), Buyer shall (i)
pay to Seller the amount of Five Hundred Thousand Dollars
($500,000.00) in cash, shares of common stock of Ambassadors using the
Per Share Valuation Price or any combination thereof and (ii) pay to
Seller an amount equal to ten percent (10%) of that portion of the net
income before income taxes which exceeds $1,700,000.00. "Bookings"
for this purpose means the estimated value of programs as of December
31 to be performed in the following calendar year, the estimations to
be reasonably made by Rogal consistent with past practices. If either
the Net Income Requirement or the Bookings Requirement, or both, is
not fulfilled, then Buyer shall not receive any of the shares referred
to in (i) above or any payment referred to in (ii) above.
For purposes of this Paragraph 2(e), the net income before income
taxes shall be determined by Buyer's regular independent accountants
on or before February 28, 1999 in accordance with generally accepted
accounting principles consistent with Seller's past practices;
provided, however, (i) there shall not be included any income
generated from any acquisition of business purchased from third party
entities after the Effective Date; (ii) there shall not be deducted
any compensation and associated employment expenses paid to or on
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behalf of Gayle Schwartz or any new employees of the Business hired
after the Effective Date whose employment is approved by Buyer, which
approval shall not unreasonably be withheld; and (iii) there shall not
be deducted any overhead or management fees of Buyer or Buyer's
affiliates, any expenses incurred in connection with any business
acquisition, any interest expense and any unusual or extraordinary
bonuses.
The purchase price shall be allocated in accordance with Exhibit 2(f)
attached hereto. The allocation set forth in Exhibit 2(f) shall be
adopted by the parties hereto for all purposes, including federal and
state income tax purposes.
If, during the two (2) year period immediately following the date of
the Closing, Ambassadors completes an underwritten public offering of
its common stock, which offering includes for sale shares of
Ambassadors common stock which are owned by other shareholders of
Ambassadors ("Selling Stockholders"), Seller shall have the right to
include in such offering that percentage of shares of common stock of
Ambassadors then owned by Seller which is the same percentage
determined by dividing the number of shares sold by the Selling
Shareholders by the total number of shares then owned by the Selling
Stockholders, but in no event shall the percentage be less than the
percentage of John Ueberroth's shares which are included in the
offering. In order for Seller to include its shares in such offering,
it shall enter into an agreement with the underwriter upon the same
terms and conditions contained in the agreements between the
underwriter and the Selling Stockholders. In addition, Ambassadors
and Seller shall agree upon the same indemnification provisions agreed
upon between Ambassadors and the Selling Stockholders.
Except as specifically provided for above, and except for the loan
with Citizens Bank of Rhode Island with an outstanding balance of
approximately $54,000.00 ("Bank Loan") which is being assumed by
Buyer, 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.
REPRESENTATIONS AND WARRANTIES OF SELLER AND ROGAL.
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Seller and Rogal, jointly and severally, represent and warrant to
Buyer that, as of the date hereof, and as of the date of Closing:
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 Massachusetts, all local
jurisdictions within said state and in all other jurisdictions
<PAGE>
required by law except where the failure to so qualify would not have
a material adverse effect on the Business. Seller is not qualified to
do business in Virginia as Virginia does not accept Massachusetts
business trusts for foreign qualification. 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 affiliates, direct or indirect, consolidated or
unconsolidated except for Bureau Reservations Systems, Inc., which is
presently inactive.
COMPLIANCE. This Agreement has been duly executed and delivered by
Seller, has been approved by all of Seller's shareholders and trustees
and is binding upon and enforceable against it. 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, Seller's Instrument of Trust,
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 assets of Seller may be affected.
FINANCIAL STATEMENTS. The financial statements of Seller as at and
for the fiscal years ended December 31, 1995, 1996 and 1997 (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.
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. Seller shall pay any and all sales and other
taxes which may become due and payable within the state of
Massachusetts regarding the sale of the Seller Assets to Buyer.
LITIGATION AND REGULATION. There are no litigations, suits or
governmental proceedings, administrative or judicial, pending, nor to
the knowledge of Seller threatened, against Seller and/or the Business
which might affect the financial condition, business or property of
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 all
<PAGE>
material respects, in 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.
TITLE TO PROPERTIES; LIENS AND ENCUMBRANCES. Except as set forth in
Exhibit 3(f) attached hereto, 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.
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 Seller is not aware of any condition or event which after notice
or lapse of time or both would constitute a default by any party
thereto.
BUSINESS CONDITIONS. Neither Seller nor Rogal has any knowledge of
any condition which would have a material adverse effect upon the
Business or prevent the Business from being carried on in the future,
including but not limited to any notice from any client of Seller that
such client does not intend to continue its contract with Seller.
Notwithstanding the foregoing, Buyer understands and acknowledges that
Seller's clients, from time to time when contracts with Seller expire,
solicit bids from competitors of Seller before awarding any future
business. Neither Rogal nor Seller make any representation or
warranty that any of Seller's clients will continue to do business
with Buyer 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 Seller.
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.
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.
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 December 31, 1997, and in the ordinary course of
business.
<PAGE>
EMPLOYEES. Except as set forth in Exhibit 3(l), Seller has no written
or oral agreement with any employee which cannot be terminated at
will. Included in Exhibit 3(l) attached hereto is a list of all of
the employees of Seller as well as their compensation, fringe
benefits, duties and history of wages.
CONDITION OF ASSETS. All of the computer software and hardware of the
Business are in good operating condition and repair, are and have been
during the last year in a condition to satisfactorily service the
needs of the Business, and will continue to be in good operating
condition and repair and to satisfactorily service the needs of the
Business as of the Closing. Buyer understands that Seller has
budgeted approximately $45,000.00 for application programming of the
computer software during 1998 and $40,000.00 for enhancements for both
the applications and network systems. All of the furniture, fixtures
and other equipment are being sold in an "as is" condition and are and
will be at the Massachusetts and/or Virginia locations on the Closing
Date except as set forth in Exhibit 3(m) attached hereto.
COVENANTS BY SELLER.
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Seller agrees that, from the date hereof to the Closing:
It will conduct the Business and affairs only in the ordinary course.
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
to furnish such officers and representatives all such documents and
copies of documents and information as Buyer may reasonably request.
The documents, copies 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 Rogal, and each such representation and warranty shall
survive any such investigation.
Without the prior written consent of Buyer, Seller shall not:
Increase the rate or form of compensation or fringe benefits to or for
the benefit of any agent or employee;
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;
<PAGE>
Incur any indebtedness except in the ordinary course of business,
cause any material adverse change to be made in his financial affairs,
or allow any tax or other liability to be extended by waiver of the
statutes of limitation or otherwise; or
Enter into transactions except in the ordinary course of its business.
Seller will:
Keep its property and assets insured consistent with its prior
practices in respect thereof;
Perform in the normal course of business all its obligations under
contracts, leases and documents relating to or affecting its
employees, assets, properties and business;
Use its best efforts to preserve intact its business, organization,
employees, agencies, clients and goodwill;
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;
Not amend any of its leases or other contracts or borrow any money;
and
Promptly notify Buyer in writing of any threatened lawsuit, claim or
any adverse change or any projected or threatened adverse change in
Seller's financial position or operations of the Business.
REPRESENTATIONS AND WARRANTIES OF BUYER.
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Buyer represents and warrants to Seller that, as of the date hereof,
and as of the date of Closing:
ORGANIZATION AND STANDING OF BUYER AND AMBASSADORS. Buyer and
Ambassadors are corporations duly organized, validly existing and in
good standing under the laws of the State of Delaware.
AUTHORIZATION. The execution and delivery of this Agreement by Buyer
and Ambassadors and the performance of the transactions contemplated
hereby have been duly and validly authorized by the Board of Directors
of Buyer and Ambassadors, and this Agreement is binding upon and
enforceable against Buyer and Ambassadors.
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 Articles of
Incorporation or ByLaws of Buyer or Ambassadors, or any agreement,
lease, mortgage, note, bond, indenture, license or other document or
undertaking, oral or written, to which they may be bound, or by which
any of their property or assets may be adversely affected.
<PAGE>
CONDITIONS TO BUYER'S OBLIGATIONS.
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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:
BREACH. Buyer shall not have discovered any material error,
misstatement or omission in any of the representations or warranties
made by Seller and/or Rogal 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 in all material respects.
NO MATERIAL CHANGES. The representations and warranties made by
Seller and/or Rogal in Paragraph 3 above 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 or
otherwise approved in writing by Buyer) as though such representations
had been made on and as of the Closing, and none of the covenants
contained in Paragraph 4 above shall have been breached in any
material respect as of the Closing.
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 reasonably approved by
counsel for Buyer. Ambassadors' Board of Directors shall have
approved this Agreement.
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 of Seller would be adversely affected.
At the Closing, there shall exist no violations of any federal, state
or local law, ordinance or regulation materially affecting the assets,
properties or business of Seller.
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 Rogal.
<PAGE>
ITEMS TO BE DELIVERED BY SELLER. At the Closing, Seller shall deliver
to Buyer, in form and substance satisfactory to Buyer, the following:
A bill of sale conveying the assets and properties to be conveyed by
Seller under this Agreement.
Assignments of the leases and contracts described in Exhibits 1(d) and
1(f) attached hereto, including any consents and approvals required
hereunder, by execution of an Assignment and Assumption Agreement in
the form attached hereto as Exhibit 2(d).
Evidence satisfactory to Buyer's counsel that, except as set forth in
Exhibit in 3(f) attached hereto, no Uniform Commercial Code filings,
chattel mortgages, assignments, pledges or other encumbrances have
been filed with respect to any of the assets subject to this Agreement
in the offices of the Massachusetts Secretary of State or in any other
appropriate offices for the filing of such documents.
A current certificate from the Massachusetts Secretary of State
indicating that Seller is in good standing under the laws of that
state.
A certificate, executed and sworn to by Seller and Rogal, 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.
Certified copies of resolutions of all of the shareholders and
trustees of Seller.
Such other documents, instruments and certificates required of Seller
as are contemplated herein to effect and complete the Closing.
In connection with the Ambassadors' shares issued under Paragraph 2(b)
above, an executed copy of the investment representations in the form
attached hereto as Exhibit 6(f)(8).
Updated Exhibits as provided for in this Agreement.
CONSENTS. The landlords under Seller's two office leases, which are
being assumed by Buyer under this Agreement, shall have consented to
the assignments thereof. Buyer acknowledges that Seller's clients are
under no obligation to consent to the assignment to Buyer of their
contracts with Seller, and Seller makes no representation or warranty
that such consent, where required, can be obtained after the Closing.
Notwithstanding the foregoing, Seller and Rogal will cooperate with
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Buyer in obtaining the necessary consents to the assignment of such
contracts after the Closing. Buyer is not aware of any reason why any
of such clients will not consent to an assignment of their contracts
The leases listed in Exhibit 1(d) attached hereto require the consent
of the lessors thereunder. At Buyer's option, Seller and Rogal will
use their best efforts to assist Buyer in obtaining such consents
after the Closing.
BUYER'S DUE DILIGENCE. Through February 3, 1998, 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.
CONDITIONS TO SELLER'S OBLIGATIONS.
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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:
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 or Vice President.
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.
CLOSING; EFFECTIVE DATE; TERMINATION.
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The closing of the within purchase and sale ("Closing") shall take
place on February 5, 1998, at 10:30 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. Notwithstanding the actual Closing Date, the
consummation of the purchase and sale transactions provided for in
this Agreement shall be deemed to have occurred and be effective as of
the close of business on January 31, 1998 ("Effective Date"). Seller
and Buyer agree to use their best efforts to bring about the
satisfaction of the conditions for Closing specified in this
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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.
INDEMNIFICATION.
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BY SELLER AND ROGAL. Seller and Rogal, 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 (a "Claim"), as a result of the untruth of any representation
or the breach of any warranty, covenant or agreement made by Seller
and/or Rogal 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 Rogal at the Closing. Buyer shall be
entitled to recover any Claim made under this Paragraph 9(a) only to
the extent the aggregate amount of all such Claims exceeds $100,000
and then only to the extent of such excess. In Seller's and Rogal's
sole discretion, any payments due and owing hereunder may be satisfied
by payments of: (i) cash, (ii) shares of common stock of Ambassadors,
or (iii) any combination thereof. In the event Seller or Rogal elects
to make part or all of such payment in shares of common stock of
Ambassadors, the value of such stock shall be deemed the per share
price that was calculated at the Closing pursuant to Paragraph 2
hereunder.
In addition to the indemnification provisions in Paragraph 9(a) above,
in the event that the net income before income taxes earned by Buyer
from the operations of the Business for the Measurement Period, as
determined in accordance with Paragraph 2(e)(2) above, is less than
$1,500,000.00, then Seller and Rogal, jointly and severally, shall be
obligated to immediately pay to Buyer an amount equal to thirty
percent (30%) of the difference between $1,500,000.00 and the actual
amount of the net income before income taxes. The aforesaid payment
may be made in cash and/or shares of common stock of Ambassadors
valued at the greater of the then fair market value of such stock or
the Per Share Valuation Price at Seller's election.
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.
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MISCELLANEOUS PROVISIONS.
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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.
EXHIBITS. Exhibits referred to in this Agreement are hereby made a
part hereof.
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, Rogal and
Buyer.
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.
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 delivered, faxed or mailed by certified mail, postage
prepaid, as follows:
If to Seller and/or Rogal, to:
Andrew Rogal
c/o Rogal America, Co.
51 Water Street
Watertown, Massachusetts 02172
Fax No. (617) 926-9901
With a copy to:
Posternak, Blankstein & Lund
100 Charles River Plaza
Boston, Massachusetts 02114
Attention: Noel G. Posternak, P.C.
Fax No. (617) 367-2315
If to Buyer and/or Ambassadors, to:
Ambassador Performance Group, Inc.
One Corporate Plaza, Suite 100
Newport Beach, California 92660
Attention: John Ueberroth
Fax No. (714) 717-5051
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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.
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.
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.
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.
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.
JOINT AND SEVERAL LIABILITY. Any and all obligations or liabilities
under this Agreement by Seller and/or Rogal 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.
BANK LOAN. If the Closing occurs, Buyer shall assume the Bank Loan;
provided, however, if Citizens Bank of Rhode Island does not release
Seller and Rogal from the Bank Loan within thirty (30) days after the
Closing, Buyer shall forthwith pay off the entire Bank Loan.
PRICE PROTECTION OF AMBASSADORS COMMON STOCK. At the end of the two
(2) year period immediately following the Closing, a calculation shall
be made as to the average of the closing prices of Ambassadors common
stock on NASDAQ for the last thirty (30) trading days of said period
("Price Average"). If the Price Average is less than eighty-five
percent (85%) of the Per Share Valuation Price ("85% Value"), then
Buyer shall pay to Seller the amount of the difference between the
Price Average and the 85% Value multiplied by the number of
Ambassadors shares then owned by Seller. Notwithstanding the
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foregoing, if, (i) at any time after the first year after the Closing
but prior to two years after the Closing, Seller sells, through a
normal brokerage transaction, or (ii) at any time within two (2) years
after the Closing Seller sells through an underwritten public
offering, any of its Ambassadors common stock which it received under
this Agreement, and the average of the closing prices of Ambassadors
common stock on NASDAQ for the fifteen (15) trading days prior to the
date of the sale ("Sale Average") is less than eighty-five percent
(85%) of the Per Share Valuation Price ("85% of Sale Average"), then
Buyer shall pay to Seller for each share sold the difference between
the Sale Average and the 85% of Sale Average. For purposes of this
paragraph and Paragraph 2(g), "Seller" includes both Rogal America,
Co. and its two stockholders.
AMBASSADORS GUARANTEE. All obligations of Buyer hereunder are
guaranteed by Ambassadors and Ambassadors agrees to be jointly and
severally liable with Buyer to Seller and Rogal hereunder.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement the day and year first above written.
AMBASSADOR PERFORMANCE GROUP, INC.
By: /s/ Ronald Merriman
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Its: President
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AMBASSADORS INTERNATIONAL, INC.
By: /s/John A. Ueberroth
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Its: President
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ROGAL AMERICA, CO.
By: /s/ Andrew Rogal
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Its: President
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/s/ Andrew Rogal
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ANDREW ROGAL
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