<PAGE> 1
EXHIBIT 2.9
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
TELESERVICES INTERNET GROUP INC
AND
TSIG NEWCO INC.
AND
THE AFFINITY GROUP, INC.
AND
THE STOCKHOLDERS OF THE AFFINITY GROUP, INC.
LISTED ON THE SIGNATURE PAGE HEREOF
NOVEMBER 29, 2000
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 1 of 44
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1. Definitions 5
2. Basic Transaction 8
(a) The Acquisition 8
(b) The Closing 8
(c) Actions at the Closing 9
(d) Effect of Acquisition 9
(e) Additional Terms 10
3. Representations and Warranties of the Target 13
(a) Organization, Qualification, and Corporate Power 13
(b) Capitalization on the Closing Date 13
(c) Authorization of Transaction 13
(d) Noncontravention 14
(e) Broker's Fees 14
(f) Title to Tangible Assets 15
(g) Subsidiaries 15
(h) Financial Statements 15
(i) Events Subsequent to June 30, 2000 16
(j) Legal Compliance 16
(k) Tax Matters 16
(l) Real Property 17
(m) Intellectual Property 17
(n) Contracts 17
(o) Powers of Attorney 17
(p) No Undisclosed Liabilities 18
(q) Litigation 18
(r) Employee Benefits 18
(s) Environmental, Health and Safety Matters 20
(t) Annualized EBITDA 20
(u) Target Shares 20
(v) Certain Securities Matters 22
(w) Disclaimer of Other Representations and Warranties 22
4. Representations and Warranties of the Parent and the Sub 22
(a) Organization 23
(b) Capitalization 23
(c) Authorization of Transaction 24
(d) Noncontravention 24
(e) Brokers' Fees 25
(f) Filings with the SEC 25
(g) Financial Statements 25
</TABLE>
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 2 of 44
<PAGE> 3
<TABLE>
<S> <C> <C>
(h) Events Subsequent to most recent fiscal quarter end 25
(i) No Undisclosed Liabilities 26
(j) No Changes 26
(k) Litigation 27
(l) Compliance with Laws 27
(m) No Default 27
(n) Certain Securities Matters 28
(o) Interested Party Transactions 28
(p) Market Manipulation 29
(q) Compliance with Regulation S-X 29
5. Covenants 29
(a) General 29
(b) Notices and Consents 29
(c) Regulatory Matters and Approvals 29
(d) Public Market for Parent Shares 29
(e) Operation of Business 29
(f) Full Access 31
(g) Notice of Developments 31
(h) Interest from Others 31
(i) Insurance and Release 31
(j) Employment Agreements with Target's Key Employees, etc. 32
(k) Release of Target Stockholders' Personal Guarantees 32
(l) Loans 32
(m) EPX Reserves 33
(n) Warrants to Third Parties 33
(o) Robert P. Gordon 33
(p) Bonuses 33
(q) Post-Closing Covenants of Parent 33
6. Conditions to Obligation to Close 34
(a) Conditions to Obligation of the Parent 34
(b) Conditions to Obligation of the Target 35
7. Termination 36
(a) Termination of Agreement 36
(b) Effect of Termination 36
8. Rescission or Reacquisition 36
(a) Failure to File Registration Statement 37
(b) Failure of the Registration Statement to Become
Effective 37
(c) Reacquisition and "Buy-Back" Option 37
</TABLE>
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 3 of 44
<PAGE> 4
<TABLE>
<S> <C> <C>
9. Miscellaneous 39
(a) Survival 39
(b) Press Releases and Public Announcements 39
(c) No Third Party Beneficiaries 39
(d) Transaction Indemnity 40
(e) Entire Agreement 40
(f) Succession and Assignment 40
(g) Counterparts 40
(h) Headings 40
(i) Notices 40
(j) Governing Law 41
(k) Amendments and Waivers 41
(l) Severability 42
(m) Expenses 42
(n) Construction 42
(o) Prior Agreements 42
(p) Incorporation of Exhibits and Schedules 42
</TABLE>
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 4 of 44
<PAGE> 5
AGREEMENT AND PLAN OF REORGANIZATION
Agreement and Plan of Reorganization (the "Agreement") by and among
TELESERVICES INTERNET GROUP INC., a Florida corporation, (the "Parent"); TSIG
NEWCO INC., a Florida corporation and a wholly owned subsidiary of Parent, (the
"Sub"); THE AFFINITY GROUP, INC., a Florida corporation (the "Target") and the
TARGET STOCKHOLDERS, as defined hereinafter, is entered into by the Parent, the
Target and the Target Stockholders on this 29th day of November, 2000. The
Parent, the Sub, the Target, and the Target Stockholders are referred to
collectively herein as the "Parties."
This Agreement contemplates a reverse triangular tax-free acquisitive
reorganization of the Target by the Parent pursuant to Code Section 368(a)(1)(A)
and Section 368(a)(2)(E). Pursuant to the merger and plan of reorganization, Sub
will be merged into Target and all of Sub's outstanding shares of stock will be
converted into shares of common stock of Target and the Target Stockholders will
surrender all or at least an amount of outstanding shares of Target common stock
representing control as defined in Section 368(c) in exchange solely for Parent
common stock. After the Closing, Target shall hold substantially all of its
properties and substantially all of the properties of Sub. The Parties expect
that the acquisition will further certain of their business objectives
(including, without limitation, significantly expanded markets for both Parent
and Target).
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. Definitions.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Acquisition" means the tax-free acquisitive reorganization of the
Target by the Parent pursuant to Code Section 368(a)(1)(A) and Section
368(a)(2)(E) as described in Section 2(a) below.
"Parent" has the meaning set forth in the preface above.
"Parent Exchange Shares" have the meaning set forth in Section 2(a)
below.
"Parent Share" means any share of the Common Stock, $0.0001 par value
per share, of the Parent as constituted after June 23, 2000, which is the date
upon which the Parent effected a combination (reverse split) of its outstanding
common stock on a ten-for-one basis.
"Closing" has the meaning set forth in Section 2(b) below.
"Closing Date" has the meaning set forth in Section 2(b) below.
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 5 of 44
<PAGE> 6
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of
ERISA and Code Section 4980B.
"Code" means the Internal Revenue Code of 1986, as amended as of the
Closing.
"Confidential Information" means any information concerning the
businesses and affairs of the Target and its Subsidiaries that is not already
generally available to the public.
"Conversion Ratio" has the meaning set forth in Section 2(d)(v) below.
"Florida General Corporation Law" means the Florida Business
Corporation Act, as amended as of the date of the full execution of this
Agreement by the Parties.
"Disclosure Schedule" has the meaning set forth in Section 3 below.
"Effective Time" has the meaning set forth in Section 2(d)(i) below.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement, (b) qualified defined
contribution retirement plan or arrangement which is an Employee Pension Benefit
Plan, (c) qualified defined benefit retirement plan or arrangement which is an
Employee Pension Benefit Plan (including any Multi-employer Plan), or (d)
Employee Welfare Benefit Plan or material fringe benefit or other retirement,
bonus, or incentive plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
"Environmental, Health, and Safety Requirements" shall mean all
federal, state, local and foreign statutes, regulations, and ordinances
concerning public health and safety, worker health and safety, and pollution or
protection of the environment, including without limitation all those relating
to the presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control, or cleanup of any hazardous
materials, substances or wastes, as such requirements are enacted and in effect
on or prior to the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means each entity that is treated as a single
employer with Target for purposes of Code Section 414.
"Financial Statement" has the meaning set forth in Section 3(g) below.
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 6 of 44
<PAGE> 7
"GAAP" means, with respect to the financial statements referenced in
this Agreement, United States generally accepted accounting principles as in
effect on the date of issuance of the respective financial statements referenced
in this Agreement.
"Income Tax" means any federal, state, local, or foreign income tax,
including any interest, penalty, or addition thereto, whether disputed or not.
"Income Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Income Taxes, including
any schedule or attachment thereto.
"IRS" means the Internal Revenue Service.
"Knowledge" means actual knowledge without independent investigation.
"Most Recent Financial Statements" has the meaning set forth in Section
3(g) below.
"Most Recent Fiscal Month End" has the meaning set forth in Section
3(g) below.
"Most Recent Fiscal Quarter End" has the meaning set forth in Section
3(f) below.
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" has the meaning set forth in the preface on page 1 above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Public Report" has the meaning set forth in Section 3(e) below.
"Registration Statement" has the meaning set forth in Section 5(l)
below.
"Reportable Event" has the meaning set forth in ERISA Section 4043.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 7 of 44
<PAGE> 8
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for taxes not yet due and payable or for taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Target" has the meaning set forth in the preface on page 1 above.
"Target's Key Employees" means Scott G. Roix, Vance Vogel, Stephen
Albert, Vincent Del Corso, Robert Poitras, Thomas J. Burkett, Louis Bruno, and
Deborah E. McCafferty.
"Target Share" means any share of the Common Stock, $0.50 par value per
share, of the Target.
"Target Shares" means the total number of issued and outstanding
shares, all of which are to be acquired by the Parent pursuant to this
Agreement.
"Target Stockholders" means Scott G. Roix, Fernur Ece Nihat, The Vance
Vogel Qualified Subchapter S Trust No. 1, Vance L. Vogel, Stephen Albert,
Vincent Del Corso, Robert Poitras, Louis Bruno, and Deborah E. McCafferty, who
collectively own all of the issued and outstanding Target Shares.
2. Basic Transaction.
(a) The Acquisition. Subject to the terms and conditions of this
Agreement, at the Effective Time, Sub will be merged into Target, upon which all
of Sub's outstanding shares of stock will be converted into shares of common
stock of Target, and the Target Stockholders will surrender all outstanding
shares of Target common stock, or at least an amount of outstanding shares of
Target common stock representing control as defined in Section 368(c), in
exchange solely for 35 million shares of Parent common stock (the "Parent
Exchange Shares"), to be issued to the Target Stockholders in proportion to the
number of Target Shares being tendered. After the Closing, Target will hold
substantially all of its properties and substantially all of the properties of
Sub.
(b) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Shumaker, Loop &
Kendrick, LLP, Bank of America Plaza, 101 E. Kennedy Boulevard, Suite 2800,
Tampa, Florida 33602, commencing at 9:00 a.m. local time on the second business
day following the satisfaction or waiver of all conditions to the obligations of
the Parties to consummate the transactions contemplated hereby (other than
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 8 of 44
<PAGE> 9
conditions with respect to actions the respective Parties will take at the
Closing itself) or such other date and/or time as the Parties may mutually
determine (the "Closing Date").
(c) Actions at the Closing. At the Closing, (i) the Target will deliver
to the Parent and the Sub the various certificates, instruments, and documents
referred to in Section 6(a) below, (ii) the Parent and the Sub will deliver to
the Target the various certificates, instruments, and documents referred to in
Section 6(b) below, (iii) the Target and the Sub will file with the Secretary of
State of the State of Florida the Articles of Merger in the form attached hereto
as Exhibit A (the "Certificate of Merger"), (iv) the Parent will deliver to the
Target Stockholders the certificates evidencing the issuance of the Parent
Exchange Shares to the Target Stockholders in the appropriate amounts to each of
the Target Stockholders, (v) the shares of Target stock surrendered by the
Target Stockholders in exchange for the Parent Exchange Shares shall be
cancelled, and (vi) the outstanding shares of Sub common stock held by Parent
shall be cancelled and replaced by shares of Target common stock constituting
not less than control of Target as defined in Section 368(c) issued to Parent.
(d) Effect of Acquisition.
(i) General. The Acquisition shall become effective at the
date and time (the "Effective Time") when the following have occurred:
the Secretary of State of the State of Florida has certified the date
and time that the Merger of Sub into Target is effective, the Target
Shares of the Target Stockholders have been canceled and the Target
Stockholders have received the Parent Exchange Shares, properly
executed to effectively issue said shares to the Target Stockholders.
(ii) Conversion of Target Shares. At and as of the Effective
Time the total number of issued and outstanding Target Shares shall be
10,000, and each of the 10,000 Target Shares shall be exchanged for
3,500 of the Parent Exchange Shares (the ratio of 3,500 of the Parent
Exchange Shares to one Target Share is referred to herein as the
"Conversion Ratio"). The Conversion Ratio shall also be subject to
equitable adjustment in the event of any stock split, stock dividend,
reverse stock split, or other change in the number of Target Shares
outstanding. Immediately after the Closing and the Effective Time, no
Target Share shall be deemed to be outstanding, or to have any rights,
other than those Target Shares into which the outstanding shares of the
Sub were converted in the Merger of Sub into Target as set forth above.
(iii) Parent Shares. The Parent Exchange Shares will be
original issue Parent Shares, and no Parent Share issued and
outstanding immediately prior to the Effective Time shall be affected
by this transaction and the issuance of the Parent Exchange Shares,
except that the Parent Shares issued and outstanding immediately prior
to the Effective Time shall be diluted by the issuance of the Parent
Exchange Shares.
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 9 of 44
<PAGE> 10
(e) Additional Terms.
(i) Insurance and Release. Parent will provide liability
insurance to each individual who served as a member, director and/or
officer of the Target and/or any one or more of its subsidiaries,
indemnify and release the Key Employees of the Target as provided in
section 5 (i) of this Agreement.
(ii) Employment Agreements. At Closing, Parent will enter into
and execute the Employment Agreements with the Target's Key Employees
attached hereto as Exhibits 2(e)(ii)(1) through 2(e)(ii)(8),
respectively, and the Consulting Agreement with Noyan Nihat attached
hereto as Exhibit 2(e)(ii)(9).
(iii) Release of Personal Guaranties. Prior to or at Closing,
but in no event later than the Closing, Parent shall secure the release
of Scott G. Roix and Vance L. Vogel from their personal guaranties of,
and their personal liability on, all loans, leases, and credit card
transactions entered into by or on behalf of the Target and/or any one
or more of its Subsidiaries from and after the Closing Date, or in the
alternative, Parent shall make other arrangements with respect to such
personal guaranties and personal liability that are satisfactory to
Scott G. Roix and Vance L. Vogel. (See also Section 5(k) of this
Agreement).
(iv) Registration and Other Covenants. After completion of
financial statements of Target meeting the requirements of Regulation
S-X of the Securities Act and the Securities Exchange Act, Parent will
register the Parent Exchange Shares as provided in Section 5(q) of this
Agreement. Effective upon Closing, Parent shall have (A) elected Scott
G. Roix to Parent's Board of Directors (simultaneously with the
effective time of Robert P. Gordon's resignation), and (B) honored and
complied with all the other covenants of the Parent contained in
Section 5 of this Agreement, except those contained in Section 5(q)
that by their nature or terms require more time for accomplishment or
compliance.
(v) Loans. Parent has borrowed the approximate sum of
$416,026.13 from Target and/or the Florida Subsidiary, and prior to the
Closing, Parent has executed and delivered a Promissory Note, a copy of
which is attached to this Agreement as Exhibit 2(e)(v), the principal
amount of which and accrued but unpaid interest on which shall be
adjusted as of the Closing Date.
(vi) EPX Reserve. At or prior to the Closing, Parent will
execute and deliver all documents requested by EPX to secure the
release of Scott G. Roix and Vance L. Vogel from their personal
guaranties of and their personal liability for the EPX merchant account
with respect to the Target and its Subsidiaries as of the Closing Date.
Parent acknowledges and agrees that Target has authorized a
distribution payable to Scott G. Roix and Vance L. Vogel (either by
check made payable the order of both of them or by two checks, each in
an amount equal to one-half of the total amount distributed) in an
amount equal to the reserve held by EPX with respect to the merchant
accounts and loans of Target and its Subsidiaries with EPX (the "EPX
Reserve") existing as of the Closing Date and that
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 10 of 44
<PAGE> 11
the EPX Reserve existing as of the Closing Date shall be the property
of Scott G. Roix and Vance L. Vogel, and Parent renounces all right,
title and interest in the EPX Reserve existing on the Closing Date.
Beginning on the date that EPX initiates a merchant account in the name
of, or guaranteed by Parent, anticipated to be on or about December 27,
2000, daily credits against prior credit card transactions will be
refunded from the EPX-Affinity Reserve presently maintained in a bank
in Aruba, and a like amount will be paid daily by check to the order of
Scott G. Roix and Vance L. Vogel by Parent from that day's credit card
transactions until such time as Parent has paid to Scott G. Roix and
Vance L. Vogel the sum of the EPX-Affinity Reserve presently maintained
in the bank in Aruba as of December 4, 2000, the amount of which is
estimated to approximately $820,000.00. At or prior to Closing, the
Target and all of its Subsidiaries shall execute and deliver to Scott
G. Roix and Vance L. Vogel an absolute assignment of all right, title
and interest in the EPX Reserve.
(vii) Warrants to Third Parties. In addition to the stock
options provided in the Employment Agreements with the Target's Key
Employees and the Consulting Agreement of Noyan Nihat attached hereto
as Exhibits 2(e)(ii)(1) through 2(e)(ii)(9), respectively, effective
upon Closing, Parent shall issue common stock purchase warrants to the
following named individuals for the number of common shares of Parent
as set forth below next to each such individual's name:
<TABLE>
<S> <C>
Cheryl Mercuris 220,000
Craig Gruber 220,000
Soydan Nihat 60,000
Joe Costa 25,000
Ed McGinty 10,000
</TABLE>
All of the foregoing warrants shall bear the following terms:
(1) Each warrant shall be at an exercise price of
$1.00 per share, exercisable on a cashless basis, in whole or
in part, in all events, at any time and as many times as the
warrant holder, in his or her sole discretion, may choose
(until the warrant has been exercised with respect to all of
the underlying shares), beginning 3 months after the Closing
Date during an exercise period of 5 consecutive years from the
Closing Date.
(2) The Company shall include the shares of common
stock underlying the warrants in a registration statement to
be filed with the SEC within 90 days from the completion of
financial statements of Target meeting the requirements of
Regulation S-X of the Securities Act and the Securities
Exchange Act. The Parent shall use its best efforts for the
registration statement to become effective within 120 days
from the date of completion of the financial statements and
such registration statement shall remain effective for 5 years
from said date.
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 11 of 44
<PAGE> 12
(3) Beginning on the date that each warrant granted
hereunder may first be exercised by the designated holder, the
underlying shares shall vest for purposes of legal public
resale at the rate of 1/12th of the total underlying shares
per month on consecutive calendar months until all of the
shares granted under these warrants are fully vested for
purposes of legal public resale.
(4) Vesting of shares for purposes of legal public
resale shall not be delayed by the fact that the registration
statement with respect to such shares has not become effective
or by the fact that the warrant has not been exercised or has
only been exercised in part.
(5) Accordingly, vesting of shares for resale shall
accumulate each month prior to the effective date of the
registration statement and regardless of whether or not any of
the warrants has been exercised, in whole or in part.
(6) The stock warrants, and the terms and conditions
of same, granted hereunder shall survive the Closing of the
transactions contemplated under this Agreement, and shall be
enforceable by the designated holders in accordance with the
terms and conditions of the common stock purchase warrants
issued to them.
(viii) Robert P. Gordon. Prior to the Closing, Robert P.
Gordon shall have executed and delivered (A) the Separation Agreement
terminating his employment with Parent and his seat on Parent's board
of directors, assigning his Employment Agreement to a company unrelated
to Parent and including mutual general releases and (B) the Consulting
Agreement, attached hereto as Exhibits 2(e)(viii)(1) and 2(e)(viii)(2),
respectively.
(ix) Bonuses. Parent acknowledges that Target has delayed
paying substantial bonuses to Scott G. Roix and Vance L. Vogel and, to
a lesser extent, other employees of Target on account of the allocation
of cash for same to loans to Parent and that as a result of such loans,
such bonuses will remain accrued but unpaid as of Closing. Accordingly,
Parent agrees that Target shall have the right to pay delayed bonuses
to Scott G. Roix, Vance L. Vogel and other employees from the first
available cash receipts of Target after the closing, but in any event,
no later than April 15, 2001, at such time and in an aggregate amount
of $500,000, allocated among the said recipients as may be finally
determined by the Target's board of directors.
(x) Stock Option Plan. Upon Closing, Parent shall adopt a
stock option plan for Target's employees by reserving 3,465,000 Parent
Shares that the Target's board of directors may award to employees upon
terms and conditions to be determined by the Target's board of
directors on a case by case basis, and consistent with prior practice
of Parent.
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 12 of 44
<PAGE> 13
3. Representations and Warranties of the Target and the Target
Stockholders. The Target and the Target Stockholders represent and warrant to
the Parent that the statements contained in this Section 3 are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 3), except as
set forth in the disclosure schedule accompanying this Agreement and initialed
by the Parties (the "Disclosure Schedule"). The Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 3. For purposes of this Section 3, the representations
and warranties regarding the Target shall be deemed to apply equally to the
predecessors in interest to the Target, The Affinity Group LLC and SGR
Marketing, Inc.
(a) Organization, Qualification, and Corporate Power. The Target is a
privately-held, corporation duly organized, validly existing, and in good
standing under the laws of the State of Florida. The Target has two Subsidiaries
at the time of execution of this Agreement, Crown Plaza Resorts, Inc. (the
"Florida Subsidiary"), a Florida corporation, of which the Target owns 100% of
the issued and outstanding shares of stock of the Florida Subsidiary, and Crown
Membership and Holidays A.V.V. (the "Aruba Subsidiary"), an Aruba corporation,
of which the Target owns 100% of the Beneficial Interest in the issued and
outstanding shares of stock of the Aruba Subsidiary, which are bearer shares.
The Target and its two Subsidiaries are duly authorized to conduct business and
are in good standing under the laws of each jurisdiction where such
qualification is required, except where the lack of such qualification would not
have a material adverse effect on the financial condition of the Target and its
Subsidiaries taken as a whole. The Target and its two Subsidiaries have
corporate power and authority to carry on the businesses in which each is
engaged and to own and use the properties owned and used by them, respectively.
Section 3(a) of the Disclosure Schedule lists the stockholders, directors and
officers of the Target and its two Subsidiaries. By signing this Agreement,
Parent acknowledges receipt of a copy of the articles of incorporation, bylaws,
and minutes of the Target and its Subsidiaries, certified by Target's secretary
to be a true copy of said articles of incorporation, bylaws, and minutes.
(b) Capitalization on the Closing Date. As of the Closing, the entire
authorized capital stock of the Target shall consist of 15,000 Target Shares, of
which 10,000 Target Shares shall be issued and outstanding and no Target Shares
shall be held in treasury. All of the issued and outstanding Target Shares shall
have been duly authorized, validly issued, fully paid, and nonassessable, and
shall be held of record in the names of the respective Target Stockholders as
set forth in Section 3(b) of the Disclosure Schedule. There shall be no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require the Target to issue, sell, or otherwise cause to become
outstanding any of its capital stock. There shall be no outstanding or
authorized stock appreciation, phantom stock, profit participation, or similar
rights with respect to the Target. All of the Target Shares to be issued
pursuant to the Closing of this Agreement and the merger of Sub and Target will
be duly authorized and, upon Closing, will be validly issued, fully paid, and
nonassessable.
(c) Authorization of Transaction. The Target has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of the Target,
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 13 of 44
<PAGE> 14
enforceable in accordance with its terms and conditions, except as may be
limited by bankruptcy, reorganization, insolvency and similar laws of general
application relating to or affecting the enforcement of rights of creditors. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Target. The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated hereby
will not, conflict with, or result in any violation of, or default under (with
or without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
material benefit under (i) any provision of the Articles of Incorporation or
Bylaws of the Target or (ii) any mortgage, indenture, lease, contract or other
agreement or instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to the
Target or the properties or assets of Target. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity, is required by or with respect to the Target in connection with the
execution and delivery of this Agreement by the Target or the consummation by
the Target of the transactions contemplated hereby, except for such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable state and federal securities laws and the laws
of any foreign country.
(d) Noncontravention. To the Knowledge of any of the Target
Stockholders, neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will violate (i) any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which any of the Target and its Subsidiaries is subject or (ii) any
provision of the charter or bylaws of the Target or either or both of its
Subsidiaries. To the Knowledge of any of the Target Stockholders, neither the
Target nor either of its Subsidiaries needs to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any government
or governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement, except where the failure to give notice, to
file, or to obtain any authorization, consent, or approval would not have a
material adverse effect on the financial condition of the Target and its
Subsidiaries taken as a whole or on the ability of the Parties to consummate the
transactions contemplated by this Agreement. To the Knowledge of any of the
Target Stockholders, except as set forth in Section 3(e) of the Disclosure
Schedule, neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will conflict with, result
in a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, cancel, or
require any notice under any agreement, contract, lease, license, instrument or
other arrangement to which the Target or either of its Subsidiaries is a party
or by which the Target or either of its Subsidiaries is bound or to which any of
their assets is subject.
(e) Brokers' Fees. None of the Target or its Subsidiaries or the Target
Stockholders has any liability or obligation to pay any fees or commissions to
any broker, finder, or agent with respect to the transactions contemplated by
this Agreement.
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 14 of 44
<PAGE> 15
(f) Title to Tangible Assets. Each of the Target and its Subsidiaries
has good title to, or a valid leasehold interest in, the material tangible
assets it uses regularly in the conduct of its businesses.
(g) Subsidiaries. Section 3(g) of the Disclosure Schedule sets forth
for each Subsidiary of the Target (i) its name and jurisdiction of
incorporation, (ii) the number of shares of authorized capital stock of each
class of its capital stock, (iii) the number of issued and outstanding shares of
each class of its capital stock, the names of the holders thereof, and the
number of shares held by each such holder, and (iv) the number of shares of its
capital stock held in treasury. All of the issued and outstanding shares of
capital stock of each Subsidiary of the Target have been duly authorized and are
validly issued, fully paid, and nonassessable. The Target holds of record and
beneficially all of the outstanding shares the Florida Subsidiary and owns
beneficially all of the outstanding shares of the Aruba Subsidiary.
(h) Financial Statements. Attached hereto as Exhibit B are the
following financial statements (collectively the "Financial Statements"): (i)
unaudited balance sheets and statement of income for the Target's predecessor
entity, SGR Marketing, Inc., for the two fiscal years ended December 31, 1998
and December 31, 1999, and (ii) unaudited balance sheet and statement of income
for the Target's predecessor entity, The Affinity Group LLC, (which was merged
into the Target on June 9, 2000) for the period ended June 30, 2000 for the
Target. The Financial Statements, have been prepared with the assistance of
Parent's certified public accountants, and to the Knowledge of the Target
Stockholders, have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby and present fairly the financial
condition of the Target as of such dates and the results of operations of the
Target for such periods; provided, however, that all Financial Statements for
periods ending in calendar year 2000 are subject to (i) normal year-end
adjustments and lack footnotes and other presentation items and (ii) to
footnotes and further adjustments upon issuance of audited statements of the
Target and its Subsidiaries that are being prepared by Parent's auditors, BDO
Seidman, LLP. It should be noted that the foregoing Financial Statements do not
include the assets, liabilities and operations of either the Florida Subsidiary
or the Aruba Subsidiary.
Attached hereto as Exhibit C are the following financial
statements (collectively the "Florida Subsidiary Financial
Statements"): unaudited balance sheet and statement of income for the
Florida Subsidiary's predecessor entity, Crown Plaza Resorts, L.C.
(which was merged into the Florida Subsidiary on June 13, 2000) for the
two fiscal years ended December 31, 1998 and December 31, 1999, and for
the period ended June 30, 2000. The Financial Statements of the Florida
Subsidiary's predecessor, have been prepared with the assistance of
Parent's certified public accountants and, to the Knowledge of the
Target Stockholders, have been prepared in accordance with GAAP applied
on a consistent basis throughout the periods covered thereby and
present fairly the financial condition of the Florida Subsidiary's
predecessor as of such dates and the results of operations of the
Florida Subsidiary's predecessor for such periods; provided, however,
that Financial Statements for periods ending in calendar year 2000 are
subject to (i) normal year-end adjustments and lack
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 15 of 44
<PAGE> 16
footnotes and other presentation items and (ii) to footnotes and
further adjustments upon issuance of audited statements of the Target
and its Subsidiaries that are being prepared by Parent's auditors, BDO
Seidman, LLP.
Attached hereto as Exhibit D are the following financial
statements (collectively the "Aruba Subsidiary Financial Statements"):
(i) unaudited balance sheet and statement of income for the period
ended June 30, 2000, for the Aruba Subsidiary, which was organized
under the laws of Aruba on April 7, 2000, and was acquired by the
Target on or about July 19, 2000. The Financial Statements of the Aruba
Subsidiary, to the Knowledge of the Target Stockholders, present fairly
the financial condition of the Aruba Subsidiary as of such date;
provided, however, that such statements are subject to (i) normal
year-end adjustments and lack footnotes and other presentation items
and (ii) to footnotes and further adjustments upon issuance of audited
statements of the Target and its Subsidiaries that are being prepared
by Parent's auditors, BDO Seidman, LLP.
(i) Events Subsequent to June 30, 2000. Since June 30, 2000, except for
the loans to Parent as described in Section 2(f)(v), there has not been any
material adverse change in the financial condition of the Target and its
Subsidiaries taken as a whole. Without limiting the generality of the foregoing,
since that date none of the Target and its Subsidiaries has engaged in any
practice, taken any action, or entered into any transaction outside the Ordinary
Course of Business the primary purpose or effect of which has been to generate
or preserve Cash.
(j) Legal Compliance. To the Knowledge of the Target Stockholders,
except as otherwise indicated in Section 3(q)(1) of the Disclosure Schedule,
each of the Target and its Subsidiaries has complied with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), except where the failure to comply would
not have a material adverse effect upon the financial condition of the Target
and its Subsidiaries taken as a whole.
(k) Tax Matters.
(i) Each of the Target and its Subsidiaries has filed all
Income Tax Returns that it was required to file, and has paid all
Income Taxes shown thereon as owing, except where the failure to file
Income Tax Returns or to pay Income Taxes would not have a material
adverse effect on the financial condition of the Target and its
Subsidiaries taken as a whole.
(ii) Section 3(k) of the Disclosure Schedule lists all Income
Tax Returns filed with respect to the Target and its Subsidiaries for
taxable periods ended on or before December 31, 1999, indicates whether
those Income Tax Returns have been audited, and indicates those Income
Tax Returns that currently are the subject of audit (i.e., Income Tax
Returns for which the applicable statute of limitations is still open).
The Target has delivered to the Parent correct and complete copies of
all Federal Income Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by any of the Target and its
Subsidiaries since December 31, 1998.
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 16 of 44
<PAGE> 17
(iii) Neither the Target nor either of its Subsidiaries has
waived any statute of limitations in respect of Income Taxes or agreed
to any extension of time with respect to an Income Tax assessment or
deficiency.
(iv) Neither the Target nor either of its Subsidiaries is a
party to any Income Tax allocation or sharing agreement.
(v) To the Knowledge of the Target Stockholders, neither the
Target nor either of its Subsidiaries has been a member of an
Affiliated Group filing a consolidated federal Income Tax Return (other
than a group the common parent of which was the Target).
(l) Real Property.
(i) Section 3(l)(i) of the Disclosure Schedule lists all real
property that any of the Target and its Subsidiaries owns, which is
none.
(ii) Section 3(l)(ii) of the Disclosure Schedule lists all
real property leased or subleased to any of the Target and its
Subsidiaries. The Target has delivered to the Parent correct and
complete copies of the leases and subleases listed in Section 3(l)(ii)
of the Disclosure Schedule (as amended to date). To the Knowledge of
any of the Target or the Target Stockholders, each lease and sublease
listed in Section 3(l)(ii) of the Disclosure Schedule is legal, valid,
binding, enforceable, and in full force and effect, except where the
illegality, invalidity, nonbinding nature, unenforceability, or
ineffectiveness would not have a material adverse effect on the
financial condition of the Target and its Subsidiaries taken as a
whole.
(m) Intellectual Property. Section 3(m) of the Disclosure Schedule
identifies each patent or trademark registration which has been issued to any of
the Target and its Subsidiaries with respect to any of its intellectual
property, identifies each pending patent application or application for
registration which any of the Target and its Subsidiaries has made with respect
to any of its intellectual property, and identifies each license, agreement, or
other permission which any of the Target and its Subsidiaries has granted to any
third party with respect to any of its intellectual property.
(n) Contracts. Section 3(n) of the Disclosure Schedule lists all
written contracts and other written agreements to which any of the Target and
its Subsidiaries is a party, the performance of which will involve consideration
in excess of $10,000. The Target has delivered to the Parent a correct and
complete copy of each contract or other agreement listed in Section 3(n) of the
Disclosure Schedule (as amended to date).
(o) Powers of Attorney. Except for the general power of attorney
granted by the managing director of the Aruba Target to Vance L. Vogel to act
for the Aruba Target, to the Knowledge of the Target Stockholders, there are no
outstanding powers of attorney executed on behalf of any of the Target and its
Subsidiaries.
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 17 of 44
<PAGE> 18
(p) No Undisclosed Liabilities. Except (i) to the extent disclosed in
the Disclosure Schedule, (ii) to the extent disclosed in the Financial
Statements attached hereto as Exhibit B, and (iii) for liabilities and
obligations incurred in the ordinary course of business consistent with past
practice, the Target has not incurred any liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, that have, or would be
reasonably likely to have, individually or in the aggregate, a material adverse
effect on the Target.
Except (i) to the extent disclosed in the Disclosure
Schedule, (ii) to the extent disclosed in the Financial Statements attached
hereto as Exhibit C and Exhibit D, respectively, and (iii) for liabilities and
obligations incurred in the ordinary course of business consistent with past
practice, neither the Florida Subsidiary nor the Aruba Subsidiary has incurred
any liabilities or obligations of any nature, whether or not accrued, contingent
or otherwise, that have, or would be reasonably likely to have, individually or
in the aggregate, a material adverse effect on either of the Target's
Subsidiaries.
(q) Litigation. Section 3(q)(1) of the Disclosure Schedule sets forth
each instance in which the Target (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party to any action,
suit, proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction, except where the injunction, judgment, order, decree, ruling,
action, suit, proceeding, hearing, or investigation would not have a material
adverse effect on the financial condition of the Target and its Subsidiaries
taken as a whole.
Section 3(q)(2) of the Disclosure Schedule sets forth
each instance in which the Florida Subsidiary (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is a party to any
action, suit, proceeding, hearing, or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction, except where the injunction, judgment, order, decree,
ruling, action, suit, proceeding, hearing, or investigation would not have a
material adverse effect on the financial condition of the Florida Subsidiary
taken as a whole.
Section 3(q)(3) of the Disclosure Schedule sets forth
each instance in which the Aruba Subsidiary (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is a party to any
action, suit, proceeding, hearing, or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction, except where the injunction, judgment, order, decree,
ruling, action, suit, proceeding, hearing, or investigation would not have a
material adverse effect on the financial condition of the Aruba Subsidiary taken
as a whole.
(r) Employee Benefits.
(i) Section 3(r) of the Disclosure Schedule lists each
Employee Benefit Plan that the Target
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 18 of 44
<PAGE> 19
and/or either or both of its Subsidiaries maintains or to which the
Target and/or either or both of its Subsidiaries contributes.
(A) To the Knowledge of the Target Stockholders, each
such Employee Benefit Plan (and each related trust, insurance
contract, or fund), if any, complies in form and in operation
in all respects with the applicable requirements of ERISA and
the Code, except where the failure to comply would not have a
material adverse effect on the financial condition of the
Target and its Subsidiaries taken as a whole.
(B) All contributions (including all employer
contributions and employee salary reduction contributions), if
any, which are due have been paid to each such Employee
Benefit Plan, if any, that is an Employee Pension Benefit
Plan.
(C) Each such Employee Benefit Plan that is an
Employee Pension Benefit Plan, if any, has received a
determination letter from the Internal Revenue Service to the
effect that it meets the requirements of Code Section 401(a).
(D) As of the last day of the most recent prior plan
year, the market value of assets under each such Employee
Benefit Plan which is an Employee Pension Benefit Plan (other
than any Multiemployer Plan), if any, equaled or exceeded the
present value of liabilities thereunder (determined in
accordance with then current funding assumptions).
(E) With respect to each Employee Benefit Plan that
is an Employee Pension Benefit Plan, if any, the Target has
delivered to the Parent correct and complete copies of the
plan documents and summary plan descriptions, the most recent
determination letter received from the Internal Revenue
Service, the most recent Form 5500 Annual Report, and all
related trust agreements, insurance contracts, and other
funding agreements which implement each such Employee Benefit
Plan.
(ii) With respect to each Employee Benefit Plan that the
Target and/or either of its Subsidiaries or any ERISA Affiliate, if
any, maintains or has maintained during the prior six years or to which
any of them contributes, or has been required to contribute during the
prior six years:
(A) No action, suit, proceeding, hearing, or
investigation with respect to the administration or the
investment of the assets of any such Employee Benefit Plan
(other than routine claims for benefits) is pending, except
where the action, suit, proceeding, hearing, or investigation
would not have a material adverse effect on the financial
condition of the Target and its Subsidiaries taken as a whole.
(B) None of the Target and its Subsidiaries has
incurred any liability to the PBGC (other than PBGC premium
payments) or otherwise under Title IV of ERISA (including any
withdrawal liability) with respect to any such Employee
Benefit Plan which is an Employee Pension Benefit Plan.
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 19 of 44
<PAGE> 20
(s) Environmental, Health, and Safety Matters.
(i) To the Knowledge of any of the Target Stockholders, the
Target and its Subsidiaries are in compliance with Environmental,
Health, and Safety Requirements, except for such noncompliance as would
not have a material adverse effect on the financial condition of the
Target and its Subsidiaries taken as a whole.
(ii) To the Knowledge of any of the Target Stockholders, the
Target and its Subsidiaries have not received any written notice,
report or other information regarding any actual or alleged material
violation of Environmental, Health, and Safety Requirements, or any
material liabilities or potential material liabilities (whether
accrued, absolute, contingent, unliquidated or otherwise), including
any investigatory, remedial or corrective obligations, relating to the
Target or its Subsidiaries or their facilities arising under
Environmental, Health, and Safety Requirements, the subject of which
would have a material adverse effect on the financial condition of the
Target and its Subsidiaries taken as a whole.
(iii) This Section 3(s) contains the sole and exclusive
representations and warranties of the Target Stockholders with respect
to any environmental, health, or safety matters, including without
limitation any arising under any Environmental, Health, and Safety
Requirements.
(t) Annualized EBITDA. The Target's annualized EBITDA, on a pro forma
basis, based upon the nine-month period ended September 30, 2000, was
approximately $2.2 million (with $200 thousand in bonuses paid added back) on
annualized gross revenues, on a pro forma basis, of approximately $19.4 million.
(u) Target Shares. Each of the Target Stockholders hereby represents
and warrants to the Parent as follows:
(i) Authorization. Each Target Stockholder has all requisite
right, power and authority and full legal capacity to execute and
deliver this Agreement and to perform his or her obligations hereunder
and to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by such Target
Stockholder, and this Agreement constitutes a legal, valid and binding
obligation enforceable against such Target Stockholder in accordance
with its terms, except as may be limited by bankruptcy, reorganization,
insolvency and similar laws of general application relating to or
affecting the enforcement of rights of creditors. The failure of the
spouse of any Target Stockholder to be a party or signatory to this
Agreement shall not (A) prevent any such Target Stockholder from
performing his or her obligations and from consummating the
transactions contemplated hereunder and thereunder or (B) prevent this
Agreement from constituting the legal, valid and binding obligation of
any
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 20 of 44
<PAGE> 21
such Target Stockholder enforceable against any such Target Stockholder
in accordance with its terms.
(ii) No Conflict. The execution, delivery and performance of
this Agreement by each of the Target Stockholders does not and will not
conflict with or violate any law or governmental order, applicable to
such Target Stockholder, or conflict with, result in any breach of,
constitute a default (or event which with the giving of notice or lapse
of time, or both, would become a default) under, require any consent
under, or give to others any rights of termination, amendment,
acceleration, suspension, revocation or cancellation of, or result in
the creation of any encumbrance on any of the Target Shares or on any
of the assets or properties of such Target Stockholder pursuant to, any
note, bond, mortgage or indenture, contract, agreement, lease,
sublease, license, permit, franchise or other instrument, obligation or
arrangement to which such Target Stockholder is a party or by which any
of the Target Shares or any of such assets or properties is bound or
affected.
(iii) Governmental Consents and Approvals. Except as may
required by laws applicable because the Parent is a public company, the
execution, delivery and performance of this Agreement by each of the
Target Stockholders does not and will not require any consent,
approval, authorization or other order of, action by, filing with or
notification to any governmental authority.
(iv) Accuracy of Representations and Warranties of the Target
and its Subsidiaries. Each of the Target Stockholders has reviewed the
representations and warranties of the Target and its Subsidiaries
contained in this Agreement, and, to the best knowledge of each such
Target Stockholder, subject to the qualifications contained in such
individual representations and warranties, such representations and
warranties of the Target and its Subsidiaries are true and correct.
(v) Ownership. Each of the Target Stockholders owns the number
of Target Shares set forth next to such Target Stockholder's name on
the signature page hereof and such Target Stockholder has good and
marketable title to such Target Shares, free and clear of any
encumbrance of any kind. All of the Target Shares set forth next to
each Target Stockholder's name on the signature page hereof have been
duly authorized, validly issued, and are fully paid and nonassessable
and have been accorded full voting rights. There are no voting trusts,
stockholder agreements, proxies or other agreements or understandings
in effect with respect to the voting or transfer of any of the Target
Shares, or if there are, all votes and consents necessary to authorize
all of the Target Stockholders to enter into and to perform this
Agreement have been given, and all restrictions encumbering the power
and authority of the Target Stockholders to enter into and to perform
this Agreement have been waived, and upon delivery of such Target
Shares at Closing as contemplated herein, the Parent will own the
Target Shares free and clear of all encumbrances.
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 21 of 44
<PAGE> 22
(v) Certain Securities Matters. Each of the Target Stockholders hereby
represents and warrants to the Parent as follows:
(i) Except for the Target Stockholders registration rights and
resale rights as set forth in Section 5(q) and the right of the Target
Stockholder to exercise such rights to their fullest extent, the Target
Stockholder (A) is acquiring the Parent Shares for the Target
Stockholder's own account and not with a view to, or for offer or sale
in connection with, any distribution thereof, and the Target
Stockholder is not participating and does not have a participation in
any such distribution or the underwriting of any such distribution; (B)
the Target Stockholder has sufficient knowledge and experience in
financial and business matters and is fully capable of evaluating the
merits and risks of purchasing the Parent Shares; and (C) the Target
Stockholder has not been solicited to acquire the Parent Shares by
means of general advertising or general solicitation.
(ii) The Target Stockholder has been furnished with
information about and allowed access to Parent's business and has had
the opportunity to investigate Parent's business and to ask questions
of and receive answers from Parent sufficient to satisfy the Target
Stockholder that Parent's business is reasonably as described by
Parent.
(iii) Notwithstanding the obligations of Parent after Closing
to include in a registration statement the Parent Shares for resale by
the Target Stockholder, as set forth in Section 5(n)(i), the Target
Stockholder understands that at Closing and until such registration
statement is effective (A) the Parent Exchange Shares are not
registered under any applicable federal or state securities law in
reliance upon certain exemptions thereunder, (B) the Parent Exchange
Shares may not be sold, transferred or otherwise disposed of without
registration under the Securities Act and compliance with applicable
state securities laws or the availability of an exemption therefrom;
and (C) in the absence of registration under the Securities Act and
compliance with applicable state securities laws or an exemption
therefrom, the Parent Exchange Shares must be held indefinitely. The
Target Stockholder acknowledges that the reliance of the Parent upon
such exemption from registration is predicated upon the foregoing
representations.
(w) Disclaimer of other Representations and Warranties. Except as
expressly set forth in Section 2 and this Section 3, the Target Stockholders
make no representation or warranty, express or implied, at law or in equity, in
respect of the Target, its Subsidiaries, or any of their respective assets,
liabilities or operations, including, without limitation, with respect to
merchantability or fitness for any particular purpose, and any such other
representations or warranties are hereby expressly disclaimed.
4. Representations and Warranties of the Parent and the Sub. The Parent
and the Sub each represents and warrants to the Target and to the Target
Stockholders that the statements contained in this Section 4 are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 4), except as
set forth in the Disclosure Schedule. The Disclosure
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 22 of 44
<PAGE> 23
Schedule will be arranged in paragraphs corresponding to the numbered and
lettered paragraphs contained in this Section 4.
(a) Organization. The Parent is a public corporation that trades on the
over-the-counter market and is duly organized, validly existing, and in good
standing under the laws of the State of Florida. The Sub is a wholly owned
subsidiary of the Parent and is duly organized, validly existing and in good
standing under the laws of the State of Florida. Each of the Parent and its
Subsidiaries (including, without limitation, the Sub) is duly authorized to
conduct its business and is in good standing under the laws of each jurisdiction
where such qualification is required, except where the lack of such
qualification would not have a material adverse effect on the financial
condition of the Parent and its Subsidiaries taken as a whole. Each of the
Parent and its Subsidiaries (including, without limitation, the Sub) has full
corporate power and authority to carry on the businesses in which it is engaged
and to own and use the properties owned and used by it. Section 4(a) of the
Disclosure Schedule lists the directors and officers of each of the Parent and
its Subsidiaries (including, without limitation, the Sub).
(b) Capitalization. The authorized capital stock of Parent consists of
300,000,000 shares of Common Stock, par value $.0001 per share, of which
78,868,556 shares are issued and outstanding, and 10,000,000 shares of Preferred
Stock, par value $.001 per share, of which 1,250,000 shares were designated as
Series A Convertible Preferred Stock and all 1,250,000 of which have been
converted and retired. In addition, approximately 1,400 shares of Common Stock
of Parent are held in treasury by Parent. All such shares have been duly
authorized, and all such issued and outstanding shares have been validly issued,
are fully paid and nonassessable and are free of any liens or encumbrances other
than any liens or encumbrances created by or imposed upon the holders thereof.
Parent has also reserved: (i) an aggregate of approximately 13,942,043 shares of
Common Stock for issuance pursuant to outstanding options granted to employees
and consultants of Parent and its Subsidiaries; and (ii) an aggregate of
approximately 7,610,038 shares of Common Stock for issuance pursuant to other
outstanding options and warrants. Except as set forth in Section 4(b) of the
Disclosure Schedule, there are no other options, warrants, calls, rights,
commitments or agreements of any character to which Parent is a party or by
which it is bound obligating Parent to issue, deliver, sell, repurchase or
redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any
shares of the capital stock of Parent or obligating Parent to grant, extend or
enter into any such option, warrant, call, right, commitment or agreement. The
issuance of the Parent Exchange Shares and the Parent Shares pursuant to options
granted or committed in this Agreement or in exhibits to this Agreement are not
subject to preemptive rights created by statute, the Articles of Incorporation
or Bylaws of Parent or any agreement to which Parent is a party or by which it
is bound. All of the Parent Shares to be issued pursuant to the Closing of this
Agreement will be duly authorized and, upon Closing, will be validly issued,
fully paid, and nonassessable.
The authorized capital stock of Sub consists of 7,000 shares of common
stock, par value $1.00 per share, of which 100 shares are issued and outstanding
and all of which are owned exclusively by Parent. No shares are held in treasury
by Sub. All such shares have been duly authorized, and all such issued and
outstanding shares have been validly issued, are fully paid and
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 23 of 44
<PAGE> 24
nonassessable and are free of any liens or encumbrances. There are no options,
warrants, calls, rights, commitments or agreements of any character to which Sub
is bound obligating Sub to issue, deliver, sell, repurchase, or redeem, or cause
to issued, sold, repurchased, or redeemed, any shares of capital stock of Sub or
obligating Sub to grant, extend, or enter into any such option, warrant, call,
right, commitment, or agreement.
(c) Authorization of Transaction. Each of the Parent and the Sub has
full power and authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its obligations hereunder.
This Agreement constitutes the valid and legally binding obligation of the
Parent and the Sub, enforceable in accordance with its terms and conditions,
except as may be limited by bankruptcy, reorganization, insolvency and similar
laws of general application relating to or affecting the enforcement of rights
of creditors. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Parent and the Sub. The execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated hereby will not, conflict with, or result in any violation of, or
default under (with or without notice or lapse of time, or both), or give rise
to a right of termination, cancellation or acceleration of any obligation or to
loss of a material benefit under (i) any provision of the Articles of
Incorporation or Bylaws of the Parent or the Sub or (ii) any mortgage,
indenture, lease, contract or other agreement or instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Parent or Sub or the properties or assets of either
Parent or Sub. Except as required by the Securities Exchange Act and Section
2(c) of this Agreement, no consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity, is required
by or with respect to Parent or Sub in connection with the execution and
delivery of this Agreement by Parent or Sub or the consummation by Parent or Sub
of the transactions contemplated hereby, except for such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under applicable state and federal securities laws and the laws of any
foreign country.
(d) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Parent or the Sub is subject or any
provision of the charter or bylaws of the Parent or the Sub or (ii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument or other arrangement to which the Parent or the Sub is a party or by
which either the Parent or the Sub is bound or to which any of the assets or the
Parent or the Sub is subject. Other than in connection with the provisions of
the Hart-Scott-Rodino Act, the Florida General Corporation Law, the Securities
Exchange Act, the Securities Act, and the state securities laws, neither the
Parent nor the Sub is required to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or governmental
agency in order for the Parties to consummate the transactions contemplated by
this Agreement.
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 24 of 44
<PAGE> 25
(e) Brokers' Fees. Neither the Parent nor the Sub has any liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement.
(f) Filings with the SEC. The Parent has made all filings with the SEC
that it has been required to make under the Securities Act and the Securities
Exchange Act (collectively the "Public Reports"). Each of the Public Reports has
complied with the Securities Act and the Securities Exchange Act in all material
respects. None of the Public Reports, as of their respective dates, contained
any untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The Parent has
delivered or made available to the Target and to the Target Stockholders a
correct and complete copy of each Public Report (together with all exhibits and
schedules thereto and as amended to date). The Sub is not required to make any
filings with the SEC.
(g) Financial Statements. Parent has filed and furnished or made
available to Target and to the Target Stockholders a true and complete copy of
each of the following: its Form 10-KSB for the fiscal year ended December 31,
1999, its registration on Form SB-2 filed August 31, 2000, and its Form 10Q-SB
for the quarter ended September 30, 2000 (collectively, the "SEC Documents"),
which Parent filed under the Exchange Act. As of their respective filing dates,
the SEC Documents complied in all material respects with the requirements of the
Exchange Act, and none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
in which they were made, not misleading, except to the extent corrected by a
subsequently filed document with the SEC. The financial statements of Parent,
including the notes thereto, included in the SEC Documents (the "Parent
Financial Statements") comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with GAAP
consistently applied (except as may be indicated in the notes thereto or, in the
case of unaudited statements, as permitted by Form 10-Q of the SEC) and fairly
present the consolidated financial position of Parent at the dates thereof and
its results of operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal, recurring audit adjustments, which
will not be material in the aggregate). There has been no change in Parent
accounting policies or estimates except as described in the notes to the Parent
Financial Statements. Parent has no material obligations other than (i) those
set forth in the Parent Financial Statements and (ii) those not required to be
set forth in the Parent Financial Statements under generally accepted accounting
principles. Parent is unaware of any facts or circumstances (other than the
acquisition of Target) which would be reasonably likely to cause Parent to
restate any of the Parent Financial Statements.
(h) Events Subsequent to the SEC Documents. Except as disclosed in
Parent's SEC Documents, there has not occurred any events, changes or effects
(including the incurrence of any liabilities of any nature) having or, which
would be reasonably likely to have a material adverse
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 25 of 44
<PAGE> 26
effect on the business, financial condition, operations, results of operations,
or future prospects of the Parent and its Subsidiaries (including, without
limitation, the Sub) taken as a whole.
(i) No Undisclosed Liabilities. Except (i) to the extent disclosed in
the Public Reports, (ii) as specifically described herein, or (iii) incurred
subsequent to the latest Public Reports and disclosed herein or in the
Disclosure Statement attached hereto, the Parent has not incurred any
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, and whether or not required to be reflected in financial statements
in accordance with GAAP that have, or would be reasonably likely to have,
individually or in the aggregate, a material adverse effect on the Parent.
(j) No Changes. Since the date of Parent's most recent Public Reports,
there has not occurred or arisen any: (A) transaction by Parent except in the
ordinary course of business as conducted on that date; (B) capital expenditure
by Parent, either individually or in the aggregate, exceeding $25,000; (C)
destruction, damage to, or loss of any assets (including without limitation
intangible assets) of Parent (whether or not covered by insurance), either
individually or in the aggregate, exceeding $10,000; (D) labor trouble or claim
of wrongful discharge or other unlawful labor practice or action; (E) change in
accounting methods or practices (including any change in depreciation or
amortization policies or rates, any change in policies in making or reversing
accruals, or any change in capitalization of software development costs) by
Parent; (F) declaration, setting aside, or payment of a dividend or other
distribution in respect to the shares of Parent, or any direct or indirect
redemption, purchase or other acquisition by Parent of any of its shares; (G)
increase in the salary or other compensation payable or to become payable by
Parent to any of its officers, directors or employees, or the declaration,
payment, or commitment or obligation of any kind for the payment, by Parent, of
a bonus or other additional salary or compensation to any such person;
acquisition, sale or transfer of any asset of Parent, except in the ordinary
course of business; (H) formation, amendment or termination of any distribution
agreement or any material contract, agreement or license to which Parent is a
party, other than termination by Parent pursuant to the terms thereof; (I) loan
by Parent to any person or entity, or guaranty by Parent of any loan except for
expense advances in the ordinary course of business consistent with past
practice; (J) waiver or release of any material right or claim of Parent,
including any write-off or other compromise of any account receivable of Parent;
(K) the commencement or notice or, to Parent's knowledge, threat of commencement
of any governmental proceeding against or investigation of Parent or its
affairs; (L) other event or condition of any character that has or would, in
Parent's reasonable judgment, be expected to have a material adverse effect on
Parent; (M) issuance, sale or redemption by Parent of any of its shares or of
any other of its securities other than issuances of Parent Shares pursuant to
outstanding options and warrants; (N) change in pricing or royalties set or
charged by Parent except for discounts extended in the ordinary course of
business consistent with past practice; or negotiation or agreement by Parent to
do any of the things described in the preceding clauses of this Section 4 of the
Agreement (other than negotiations with Target and its representatives regarding
the transactions contemplated by this Agreement).
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 26 of 44
<PAGE> 27
The Sub has not (AA) entered into any transactions, contracts or
agreements, except those contemplated for it in this Agreement; (BB) made any
expenditure, capital or otherwise, except those incurred in the ordinary course
of its own formation and organization and entering into the agreements and
transactions contemplated for it in this Agreement, which do not exceed in the
aggregate $3,000; (CC) acquired any assets having value collectively in excess
of $3,000 or incurred any indebtedness or obligations in excess of $3,000
collectively; (DD) hired any employees or incurred any obligations to employees;
(EE) made any loans or extended any credit; (FF) waived or released any material
right or claim, including any write-off or other compromise of any account
receivable; (GG) been the target of any governmental proceeding or investigation
of it or its affairs; (HH) experienced any event or condition of any kind or
character that has or may have a material adverse effect on Parent, Target or
itself.
(k) Litigation. Except as disclosed to the contrary in the Public
Reports, there is no suit, claim, action, proceeding, arbitration, mediation,
review or investigation pending or, to the knowledge of the Parent or Sub,
threatened against or affecting the Parent or Sub which, individually or in the
aggregate, is reasonably likely to have a material adverse effect on the Parent
or Target or itself, or which would, or would be reasonably likely to,
materially impair the ability of the Parent or the Sub to consummate the
transactions contemplated by this Agreement.
(l) Compliance with Laws. Except as disclosed to the contrary in the
Public Reports, the Parent and its Subsidiaries have complied with all laws,
statutes, regulations, rules, ordinances and judgments, decrees, orders, writs
and injunctions, of any court or governmental entity relating to any of the
property owned, leased or used by them, or applicable to their business,
including, but not limited to, equal employment opportunity, discrimination,
occupational safety and health, environmental, insurance, regulatory, antitrust
laws, ERISA and laws relating to taxes, except to the extent that any such
non-compliance would not have a material adverse effect on the Parent, the
Target or the Sub. The Sub has complied with all laws, statutes, regulations,
rules, ordinances and judgments, decrees, orders, writs and injunctions, of any
court or governmental entity relating to any of the property owned, leased or
used by it, or applicable to its business, including, but not limited to, equal
employment opportunity, discrimination, occupational safety and health,
environmental, insurance, regulatory, antitrust laws, ERISA and laws relating to
taxes.
(m) No Default. The business of the Parent is not being conducted in
default or violation of any term, condition or provision of (i) its certificate
of incorporation or bylaws or similar organizational documents, or (ii)
agreements to which the Parent is a party, excluding from the foregoing clause
(iii) defaults or violations that would not have a material adverse effect on
the Parent and would not, or would not be reasonably likely to, materially
impair the ability of the Parent to consummate transactions contemplated by this
Agreement. The Sub has not conducted any business, except for those transactions
necessary or incidental to entering into and performing this Agreement and the
transactions contemplated herein.
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 27 of 44
<PAGE> 28
(n) Certain Securities Matters.
(i) The Parent represents and warrants that (A) the Target
Shares being acquired by virtue of the merger of the Sub into the
Target are being acquired by the Parent for its own account and not
with a view to, or for offer or sale in connection with, any
distribution thereof, and it is not participating and does not have a
participation in any such distribution or the underwriting of any such
distribution; (B) the Parent has sufficient knowledge and experience in
financial and business matters and is fully capable of evaluating the
merits and risks involved in acquiring the Target Shares; and (C) the
Parent has not been solicited to acquire the Target Shares by means of
general advertising or general solicitation.
(ii) The Parent and the Sub have been furnished with
information about and allowed access to Target's business, books,
records, files, and properties and properties and have had the
opportunity to investigate Target's business and assets and to ask
questions of and receive answers from Target sufficient to satisfy the
Parent and the Sub that Target's business is reasonably as described by
Target.
(iii) Parent and Sub understand that (A) the Target Shares are
not registered under any applicable federal or state securities law in
reliance upon certain exemptions thereunder, (B) the Target Shares may
not be sold, transferred or otherwise disposed of without registration
under the Securities Act and compliance with applicable state
securities laws or the availability of an exemption therefrom; and (C)
in the absence of registration under the Securities Act and compliance
with applicable state securities laws or an exemption therefrom, the
Target Shares must be held indefinitely. The Parent and the Sub
acknowledge that the reliance of the Target upon such exemption from
registration is predicated upon the foregoing representations.
(iv) Acquisition. The Parent has provided the Target
Stockholders with its current report on Form 8-K dated August 23, 2000,
and filed August 31, 2000, and subsequent amendments thereto filed on
November 6, 2000 and November 17, 2000, which details Parent's
acquisition of GeneralSearch.com, Inc. Parent has also provided the
Target Stockholders with a true and correct copy of the Agreement and
Plan of Reorganization by and among the following: Parent, Reliant
Interactive Media Corp, AsSeenOnTVpc.com, Inc. ("ASOT"), the
shareholders of ASOT and GeneralSearch.com, Inc., of which no assurance
can be given that the transaction contemplated by this agreement will
close, on the terms described therein or otherwise.
(o) Interested Party Transactions. Except as may be disclosed in the
Public Filings, to the best knowledge of Parent, no officer, director or 5% or
greater stockholder of Parent or Sub (nor any parent, sibling, descendant or
spouse of any of such persons, or any trust, partnership, corporation or other
entity in which any of such persons has or has had an interest), has or has had,
directly or indirectly, (i) an interest in any entity which furnished or sold,
or furnishes or sells, services or products which Parent or Sub furnishes or
sells, or proposes to furnish or sell, or (ii) any interest in any entity which
purchases from or sells or furnishes to, Parent or Sub, any goods or services,
or (iii) a beneficial interest in any contract or agreement with Parent or Sub
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 28 of 44
<PAGE> 29
(other than a written employment or consulting contract), or (iv) has purchased
Parent Shares on the public market in the past sixty (60) days; provided, that
ownership of no more than one percent (1%) of the outstanding voting stock of a
publicly traded corporation shall not be deemed an "interest in any entity" for
purposes of this warranty.
(p) Market Manipulation. Neither the Parent nor any of its Subsidiaries
(including, without limitation, the Sub) has, directly or indirectly, taken any
action designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of Parent's common stock to facilitate the sale or resale of its common
stock, in any case in violation of any federal or state securities laws.
(q) Compliance with Regulation S-X. Parent is unaware of any facts or
circumstances (other than the acquisition of Target) which would be reasonably
likely to cause Parent's independent accountants to be unable to complete
audited financial statements of Parent meeting the requirements of Regulation
S-X of the Securities Act through the date of Closing.
5. Covenants. The Parties agree as follows with respect to the period
from and after the execution of this Agreement:
(a) General. Each of the Parties will use its reasonable best efforts
to take all action and to do all things necessary, proper, or advisable in order
to consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
Section 6 below).
(b) Notices and Consents. Each of the Parties will give any notices
(and will cause each of its Subsidiaries to give any notices) to third parties,
and will use its reasonable best efforts to obtain (and will cause each of its
Subsidiaries to use its reasonable best efforts to obtain) any third party
consents, that any of the other Parties reasonably may request in connection
with the matters referred to in Section 3 and Section 4 above.
(c) Regulatory Matters and Approvals. Each of the Parties will (and
will cause each of its Subsidiaries to) give any notices to, make any filings
with, and use its reasonable best efforts to obtain any authorizations,
consents, and approvals of governments and governmental agencies in connection
with the matters referred to in Section 3(d) and Section 4(d) above.
(d) Public Market for Parent Shares. The Parent will use its best
efforts to remain current in its periodic reports required to be filed with the
SEC, so that the Parent Shares (including without limitation, the Parent
Exchange Shares and underlying shares with respect to warrants and options to be
issued pursuant to this Agreement) remain eligible for quotation on the National
Association of Securities Dealer's Over the Counter Electronic Bulletin Board
(the "OTC-BB").
(e) Operation of Business. From the date of execution of this Agreement
until Closing, without the written consent of the other, neither the Parent nor
the Target will (nor will either Parent or Target cause or permit any of its
Subsidiaries to) engage in any practice, take any action,
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 29 of 44
<PAGE> 30
or enter into any transaction outside the Ordinary Course of Business. Without
limiting the generality of the foregoing:
(i) Except as expressly provided in this Agreement or in
exhibits to this Agreement or by written agreement of the Parties made
subsequent to this Agreement, neither the Parent nor the Target will
(nor will either Parent or Target cause or permit any of its
Subsidiaries to) authorize or effect any change in its charter or
bylaws;
(ii) Except as expressly provided in this Agreement or in
exhibits to this Agreement or by written agreement of the Parties made
subsequent to this Agreement, neither the Parent nor the Target will
(nor will either Parent or Target cause or permit any of its
Subsidiaries to) grant any options, warrants, or other rights to
purchase or obtain any of its capital stock or issue, sell, or
otherwise dispose of any of its capital stock (except upon the
conversion or exercise of options, warrants, and other rights currently
outstanding);
(iii) Except as expressly provided in this Agreement or in
exhibits to this Agreement or by written agreement of the Parties made
subsequent to this Agreement, neither the Parent nor the Target will
(nor will either Parent or Target cause or permit any of its
Subsidiaries to) declare, set aside, or pay any dividend or
distribution with respect to its capital stock (whether in cash or in
kind), or redeem, repurchase, or otherwise acquire any of its capital
stock, in either case outside the Ordinary Course of Business;
(iv) Except as expressly provided in this Agreement or in
exhibits to this Agreement or by written agreement of the Parties made
subsequent to this Agreement, neither the Parent nor the Target will
(nor will either Parent or Target cause or permit any of its
Subsidiaries to) issue any note, bond, or other debt security or
create, incur, assume, or guarantee any indebtedness for borrowed money
or capitalized lease obligation outside the Ordinary Course of
Business;
(v) Except as expressly provided in this Agreement or in
exhibits to this Agreement or by written agreement of the Parties made
subsequent to this Agreement, neither the Parent nor the Target will
(nor will either Parent or Target cause or permit any of its
Subsidiaries to) impose any Security Interest upon any of its assets
outside the Ordinary Course of Business;
(vi) Except as expressly provided in this Agreement or in
exhibits to this Agreement or by written agreement of the Parties made
subsequent to this Agreement, neither the Parent nor the Target will
(nor will either Parent or Target cause or permit any of its
Subsidiaries to) make any capital investment in, make any loan to, or
acquire the securities or assets of any other Person outside the
Ordinary Course of Business; and/or
(vii) Except as expressly provided in this Agreement or in
exhibits to this Agreement or by written agreement of the Parties made
subsequent to this Agreement, neither the Parent nor the Target will
(nor will either Parent or Target cause or permit any of its
Subsidiaries to) commit to any of the foregoing.
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 30 of 44
<PAGE> 31
(f) Full Access. Each of the Parent and the Target will (and will cause
each of its Subsidiaries {including, without limitation, the Sub} to) permit
representatives of the other to have full access at all reasonable times, and in
a manner so as not to interfere with its normal business operations of the
Target and those of its Subsidiaries, to all premises, properties, personnel,
books, records (including tax records), contracts, and documents of or
pertaining to it and each of its Subsidiaries. The Parent and the Target will
(and will cause each of its Subsidiaries {including, without limitation, the
Sub} to) treat as and hold as confidential any Confidential Information it
receives from the other and/or either or both of its Subsidiaries in the course
of the reviews contemplated by this Section 5(f), will not use any of the
Confidential Information except in connection with this Agreement, and, if this
Agreement is terminated for any reason whatsoever, shall return to the other all
tangible embodiments (and all copies) of the other's Confidential Information
that are in its possession.
(g) Notice of Developments. Each of the Parties will (and will cause
each of its Subsidiaries {including, without limitation, the Sub} to) give
prompt written notice to the other Parties of any material adverse development
causing a breach of any of its own representations and warranties in Section 3
or Section 4 above, respectively. No disclosure by any Party pursuant to this
Section 5(g), however, shall be deemed to amend or supplement the Disclosure
Schedule or to prevent or cure any misrepresentation, breach of warranty, or
breach of covenant.
(h) Interest from Others. Prior to the satisfaction by the Parent of
the conditions to the Target's obligations to close this transaction, the
Target, its Subsidiaries, and their respective directors and officers will
remain free to participate in any discussions or negotiations regarding any
proposal or offer from any Person relating to the acquisition of all or
substantially all of the capital stock or assets of the Target and/or either or
both of its Subsidiaries (including any acquisition structured as a merger,
consolidation, or share exchange) and/or to furnish any information with respect
to, assist or participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek any of the foregoing; provided, however,
that the Target, its Subsidiaries and the Target Stockholders shall not enter
into any agreement with any Person other than the Parent for the acquisition of
the Target and/or either or both of its Subsidiaries or any part thereof unless
such agreement is clearly designated as a "back-up contract," subordinated to
this Agreement and to be activated only in the event that this Agreement is
canceled without Closing by one or both Parties for failure to fulfill the
conditions of Closing within the time allowed hereunder.
(i) Insurance and Release.
(i) The Parent will provide each individual who served as a
member, director or officer of the Target at any time prior to the
Effective Time with liability insurance for a period of 48 months after
the Effective Time no less favorable in coverage and amount than any
applicable insurance in effect immediately prior to the Effective Time,
unless the premium cost of such coverage is not available at all or is
available only at a premium cost (after any applicable dividends) in
excess of $25,000. If such coverage is only available at a
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 31 of 44
<PAGE> 32
premium cost in excess of $25,000 (after any applicable dividends),
then the period of months after the Effective Time that such coverage
is to be enforced shall be reduced, if possible, to a period of months
for which the premium cost of such coverage is $25,000 (after any
applicable dividends).
(ii) During the term of the Employment Agreements with
Target's Key Employees, the Parent will observe any indemnification
provisions now existing in the certificate of incorporation or bylaws
of the Target and/or either or both of its Subsidiaries for the benefit
of each of Target's Key Employees who served as a member, director or
officer of the Target and/or either or both of its Subsidiaries at any
time prior to the Effective Time.
(iii) The Parent will release and forever discharge each of
the Target Stockholders who served as a director or officer of the
Target and its predecessors, The Affinity Group LLC and SGR Marketing,
Inc. and/or of the Florida Subsidiary and its predecessor, Crown Plaza
Resorts, L.C., and/or of the Aruba Subsidiary, at any time prior to the
Effective Time from any and all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines,
costs, amounts paid in settlement, liabilities, obligations, taxes,
liens, losses, expenses, and fees, including all court costs and
attorneys' fees and expenses, resulting from, arising out of, relating
to, in the nature of, or caused by this Agreement or any of the
transactions contemplated herein, except that the Parent will not
release any of the foregoing individuals from any of the foregoing to
the extent that same also constitutes a breach of such individual's
representations and warranties under Section 3.
(j) Employment Agreements with Target's Key Employees and Consulting
Agreement with Noyan Nihat. Parent hereby approves in form and substance, and
agrees to execute upon Closing, the employment agreements with each of the
Target's Key Employees, namely: Scott G. Roix, Vance L. Vogel, Robert Poitras,
Stephen Albert, Vincent Del Corso, Thomas J. Burkett, Louis Bruno and Deborah E.
McCafferty, attached hereto as Exhibits 2(e)(ii)(1) through 2(e)(ii)(8) and the
consulting agreement with Noyan Nihat attached hereto as Exhibit 2(e)(ii)(9).
The term of said employment agreements and said consulting agreement will
commence immediately upon Closing.
(k) Release of Target Stockholders' Personal Guarantees. At Closing,
Parent shall secure the release of the Target Stockholders' personal guarantees
of any and all liabilities of the Target and its Subsidiaries, such releases to
be effective at the Effective Time, or as mutually agreed upon as provided in
Section 2(e)(iii). Personal guaranties of the Target Stockholders existing on or
about the date of execution of this Agreement will be listed in Exhibit 5(k),
and the Target Stockholders will provide a written "bring-down" of such personal
guaranties on the Closing Date.
(l) Loans. Prior to Closing, Parent executed and delivered to Target a
promissory note in the principal amount of the final outstanding adjusted loans
and accrued interest as of the Closing Date, a copy o f which is attached hereto
as Exhibit 2(e)(v).
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 32 of 44
<PAGE> 33
(m) EPX Reserves. Parent shall perform its pre-Closing and Closing
obligations under the provisions of Section 2(e)(vi) of this Agreement.
(n) Warrants to Third Parties. At Closing, in addition to the stock
options contained in the employment agreements with the Target's Key Employees
and the consulting agreement with Noyan Nihat, Parent will issue to those
individuals named in Section 2(e)(vii) the common stock purchase warrants as
provided therein.
(o) Robert P. Gordon. Simultaneously with Closing, the Employment
Resignation Date, as defined in the Separation Agreement of Robert P. Gordon
(Exhibit 2(e)(viii)(1)) shall become effective.
(p) Bonuses. Parent hereby acknowledges the disclosure by Target in
Section 2(e)(ix) of the delay in its intentions to pay certain bonuses to
certain employees due to loans made by Target to Parent, and Parent hereby
accepts and approves said bonuses and agrees not to take any action at any time
after the Closing that would jeopardize the accumulation by Target of cash in
sufficient amounts to pay said bonuses. Parent further agrees that the said
bonuses shall be paid by Target and its Subsidiaries as soon as possible after
the Closing but in no event later than April 15, 2001, unless the intended
recipients of said bonuses agree in writing to such extension.
(q) Post-Closing Covenants of the Parent.
(i) Within 90 days after the completion of the financial
statements of Target that meet the requirements of Regulation S-X of
the Securities Act and the Securities Exchange Act, the Parent will
file, at its sole expense, a registration statement, which shall
include no less than 8 million of the Parent Exchange Shares (the
"Registration Statement"), with the SEC and all other applicable
authorities, for resale by the Target Stockholders on a pro rata basis.
The Registration Statement shall register the resale of the Parent
Exchange Shares in a delayed or continuous offering to the extent
permitted by Rule 415 under the Securities Act. The Parent shall use
its best efforts to cause the Registration Statement to be declared
effective by the SEC within 120 days after the filing and keep the
Registration Statement effective under the Securities Act until all of
the Parent Exchange Shares have been resold by the Target Stockholders
or for 5 years, whichever event occurs first. The Registration
Statement, when declared effective, will vest the Parent Exchange
Shares that have been registered for resale (the "Registered Parent
Exchange Shares") under federal and all other applicable securities
laws for legal resale, by the Target Stockholders on a pro rata basis,
without further filings, regulatory action or expense to the Target
Stockholders other than the customary costs of selling fully registered
publicly traded shares in the over-the-counter market or in a private
sale by the Target Stockholders in compliance with all applicable
securities laws at the rate of 1/12th of the total number of such
Registered Parent Exchange Shares per month for 12 consecutive months
commencing the month in which the Registration Statement is declared
effective. In the event registration of a delayed or continuous
offering is not permitted under the Securities Act, the Parent shall
provide comparable alternative registration rights within the same time
limits as for the filing and effectiveness of the Registration
Statement hereinabove provided.
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 33 of 44
<PAGE> 34
(ii) The Parent recognizes that the Target needs adequate
financial resources to achieve its objectives, and agrees to work with
Parent's investment bankers and Target to develop budgets on an ongoing
basis and to provide Target with adequate and timely financing.
(iii) Each of the Target's Key Employees and the Target's
consultant, Noyan Nihat, will be treated fairly relative to the
Parent's other executives at the comparable level of employment with
respect to salaries (fees in the case of consultant Noyan Nihat),
benefits and stock options.
(iv) Upon Closing, the Parent's board of directors shall
immediately elect Scott G. Roix to the Parent's board of directors.
(v) The Parent shall not merge or liquidate or dispose of the
Target during the first 36 months after the Closing.
(vi) The Parent shall not change the board of directors of the
Target as it existed immediately prior to the Closing Date during the
first 36 months after the Closing without the prior written consent of
the Target Stockholders.
6. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Parent. The obligation of the
Parent to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) The representations and warranties set forth in Section 3
above shall be true and correct in all material respects at and as of
the Closing Date;
(ii) The Target shall have performed and complied with all of
its covenants hereunder in all material respects through the Closing;
(iii) There shall not be any judgment, order, decree,
stipulation, injunction, or charge in effect preventing consummation of
any of the transactions contemplated by this Agreement;
(iv) The Target and the Target Stockholders shall have
delivered to the Parent a certificate to the effect that each of the
conditions specified above in Section 6(a)(i)-(iii) is satisfied in all
respects;
(v) All actions to be taken by the Target in connection with
consummation of the transactions contemplated in this Agreement and all
certificates, opinions, instruments,
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 34 of 44
<PAGE> 35
and other documents required to effect the transactions contemplated
hereby will be reasonably satisfactory in form and substance to the
Parent;
(vi) The Parent shall be reasonably satisfied with the opinion
expressed in the completed audit of Target by the Parent's auditors at
the Parent's expense, that the results are not materially adversely at
variance with the unaudited financial information provided to the
Parent by the Target and that the audit meets the requirements of
Regulation S-X of the Securities Act and the Securities Exchange Act;
and
The Parent may waive any condition specified in this Section 6(a) if it
executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Target. The obligation of the
Target and the Target Stockholders to consummate the transactions to be
performed by it in connection with the Closing is subject to satisfaction of the
following conditions:
(i) The representations and warranties set forth in Section 4
above shall be true and correct in all material respects at and as of
the Closing Date;
(ii) The Parent shall have performed and complied in all
material respects with all of its covenants and obligations hereunder
to be performed at or prior to the Closing, including, without
limitation, those contained in Section 2 and in Section 5 of this
Agreement;
(iii) There shall not be any judgment, order, decree,
stipulation, injunction, or charge in effect preventing consummation of
any of the transactions contemplated by this Agreement;
(iv) The Parent shall have delivered to the Target and the
Target Stockholders a certificate to the effect that each of the
conditions specified above in Section 6(b)(i)-(iii) is satisfied in all
respects;
(v) All actions to be taken by the Parent in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Target and the Target
Stockholders; and
(vi) The Target and the Target Stockholders shall be satisfied
in all material respects that the condition of the Parent and its
Subsidiaries (including, without limitation, the Sub) as learned
through the due diligence of the Target and the Target Stockholders and
their representatives is not materially adversely different from the
information disclosed by Parent and its Subsidiaries (including,
without limitation, the Sub) to the Target and the Target Stockholders.
The Target may waive any condition specified in this Section 6(b) if it
executes a writing so stating at or prior to the Closing.
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 35 of 44
<PAGE> 36
7. Termination.
(a) Termination of Agreement. Either of the Parties may terminate this
Agreement with the prior authorization of its board of directors (whether before
or after stockholder approval) as provided below:
(i) the Parties may terminate this Agreement by mutual written
consent at any time prior to the Effective Time.
(ii) the Parent may terminate this Agreement by giving written
notice to the Target at any time prior to the Effective Time (A) in the
event the Target or the Target Stockholders has breached any material
representation, warranty, or covenant contained in this Agreement in
any material respect, the Parent has notified the Target of the breach,
and the breach has continued without cure for a period of 30 days after
the notice of breach or (B) if the Closing shall not have occurred on
or before January 5, 2001, by reason of the failure of any condition
precedent under Section 6(a) hereof (unless the failure results
primarily from the Parent breaching any representation, warranty, or
covenant contained in this Agreement).
(iii) the Target may terminate this Agreement by giving
written notice to the Parent at any time prior to the Effective Time
(A) in the event the Parent has breached any material representation,
warranty, or covenant contained in this Agreement in any material
respect, the Target has notified the Parent of the breach, and the
breach has continued without cure for a period of 30 days after the
notice of breach or (B) if the Closing shall not have occurred on or
before January 5, 2001, by reason of the failure of any condition
precedent under Section 6(b) hereof (unless the failure results
primarily from the Target breaching any representation, warranty, or
covenant contained in this Agreement).
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 7(a) above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
(except for any liability of any Party then in breach); provided, however, that
the confidentiality provisions contained in Section 5(f) above shall survive any
such termination.
8. Rescission or Reacquisition. Parent and Target acknowledge and agree
that the obligations of Parent and Target are unique and are personal to Parent
and Target, respectively, and may be discharged only by Parent and Target,
respectively. Parent and Target further acknowledge and agree that if Parent
were to fail to observe or to perform any of certain provisions of this
Agreement, including in particular those set forth below, the award of damages
arising from such breach, would be difficult, and perhaps impossible, to
ascertain in money or money's worth and therefore, damages would not be an
adequate remedy. Therefore, Parent and Target acknowledge and agree that, Target
shall be entitled to the rescission, reacquisition and "buy back" rights set
forth below:
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 36 of 44
<PAGE> 37
(a) Failure to File Registration Statement. If a Registration Statement
including the Parent Exchange Shares in full and complete conformity with the
requirements of Section 5(q) is not filed and accepted by SEC so as to make the
Parent Exchange Shares legally saleable in all U.S. jurisdictions under all
applicable securities laws in accordance with the schedule set forth in Section
5(q), then at the option of a majority in interest of the Target Stockholders
and at the expense of the Parent, the Closing shall be nullified and rescinded
and the Target shall revert to the Target Stockholders and the Parent Exchange
Shares shall revert to the Parent.
(b) Failure of the Registration Statement to Become Effective. If a
Registration Statement including the Parent Exchange Shares in full and complete
conformity with the requirements of Section 5(q) is timely filed or is filed in
full and complete conformity with the requirements of Section 5(q) before the
Target Stockholders exercise their rescission option, but the Registration
Statement is not declared effective within 180 days following the completion of
financial statements of Target meeting the requirements of Regulation S-X of the
Securities Act and the Securities Exchange Act, then at the option of a majority
in interest of the Target Stockholders and at the expense of the Parent, the
Closing shall be nullified and rescinded and the Target shall revert to the
Target Stockholders and the Parent Exchange Shares shall revert to the Parent.
(c) Reacquisition and "Buy-Back" Option.
(i) If any one or more of the following Buy-Back Events shall
occur during the first 18 months after the Closing and shall not be
cured by Parent within 60 days, then at the option of a majority in
interest of the Target Stockholders and at the expense of the Parent,
the Target Stockholders shall have the right to reacquire the Target
(the "Buy-Back Option"):
(A) Parent shall cease to be a publicly traded
company or shall cease to trade on the OTC-BB (unless it
begins trading on the NASDAQ, AMEX or the New York Stock
Exchange within 10 trading days after it ceases to be listed
on the OTC-BB) or trading in shares of Parent Shares shall be
suspended for more than 10 consecutive trading days;
(B) A receiver shall be appointed to take possession
of all or substantially all of the assets of Parent, or Parent
executes and delivers a general assignment for the benefit of
creditors, or any action is taken or suffered by Parent,
voluntarily or involuntarily, under any insolvency or
bankruptcy or reorganization act or law, except a proceeding
filed by a creditor that is dismissed within sixty (60) days
of filing, or Parent is insolvent or otherwise unable to pay
its debts as they become due;
(C) Parent enters into any negotiations, letter of
intent or agreement to sell or divest itself of the assets or
stock of the Target;
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 37 of 44
<PAGE> 38
(D) Parent takes any steps to encumber, distribute or
liquidate the assets or stock of Target;
(E) Parent attempts in any manner to enter into any
transaction of any kind that will create a material obligation
or debt of Target unless the same is approved by Scott G. Roix
or his successor from the Target's Key Employees if Scott G.
Roix should die, resign or become totally disabled;
(F) Except for cause in accordance with the
employment agreement, Parent attempts to terminate one or more
of the Target's Key Employees without the consent of a
majority of Scott G. Roix, Vance L. Vogel and Noyan Nihat; or
(G) Parent fails to timely file any of the reports
required under the Securities Exchange Act; or
(H) Any representation or warranty of Parent or Sub
contained in this Agreement or any covenant of Parent or Sub
contained in this Agreement shall be materially breached or
materially untrue and shall not be completely remedied within
30 days of written notice of material breach or material
untruth of same given by Target or any Target Stockholder to
Parent.
(ii) In the event of the exercise of the Buy-Back Option, the
assets remaining in the Target when its shares of stock are transferred
from the Parent to the Target Stockholders shall include all assets of
the Target, including, without limitation, the name "The Affinity
Group," the Target's phone numbers, the Target's contracts with
resorts, companies providing the Target with fulfillment services,
access to databases and the like, licenses, organization memberships,
and the Target's furniture, fixtures and equipment used in its
marketing and sales business.
(iii) In the event of the exercise of the Buy-Back Option, the
repurchase price of all of the Target Shares shall be determined as
follows:
1. All unsold Parent Exchange Shares will be returned to Parent;
2. Net cash proceeds from Parent Exchange Shares sold, less taxes paid on
same, shall be paid to Parent in consecutive equal monthly
installments, amortized over 60 months with simple annual interest at
the New York prime rate in effect on the Closing of the Buy-Back
Option;
3. All assets held by Target at the Effective Time of the acquisition of
Target by Parent shall be held by Target when returned to Target
Stockholders upon the Closing of the Buy-Back Option;
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 38 of 44
<PAGE> 39
4. New assets acquired by the Target after the Effective Time of the
acquisition of Target by Parent and held by the Target on the Closing
of the Buy-Back Option, to the extent not offset by new liabilities of
the Target on the Closing of the Buy-Back Option, shall be equitably
divided between Parent and Target, and to the extent that the Parties
cannot agree upon an equitable division, such new assets shall be sold
and the net proceeds of sale shall be evenly divided between the Parent
and the Target.
(iv) The Target Stockholders shall receive at closing from the
Parent a fully executed stock pledge agreement pledging 100% of the
Target Shares received by the Parent as security, executed in blank to
secure the Parent's performance under this Section 8(c) in the event of
the occurrence of a Buy-Back Event and the exercise of the Buy-Back
Option. UCC-1 Financing Statements evidencing the security interest
shall be executed by Parent at the Closing.
(v) The foregoing notwithstanding, the Buy-Back Option shall
become null and void if and when the Target Stockholders shall receive
$25 million in cash from the sale of the Parent Exchange Shares.
9. Miscellaneous.
(a) Survival. The representations and warranties of the Parties will
survive the Effective Time for a period of two years. The covenants of the
Parties shall survive the Effective Time for two years, unless a longer period
is required by the terms of a particular covenant for it to be fully performed,
in which case such covenant shall survive for such period plus 6 months. In
addition to the right of the Rescission and Reacquisition rights of the Target
Stockholders as provided in Section 8 of this Agreement, each of the Parties
shall have the right to recover actual damages for any material breach or
untruth of another party's representations and warranties or material breach of
another party's covenants that is discovered within the survival period of same.
(b) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure it believes in good faith
is required by applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party will use its
reasonable best efforts to advise the other Party prior to making the
disclosure).
(c) No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns; provided, however, that (i) the provisions in
Section 2 above concerning issuance of the Parent Exchange Shares and certain
other provisions concerning certain requirements for a tax-free reorganization
are intended for the benefit of the Target Stockholders and (ii) the provisions
in Section 5(i) above concerning insurance and release are intended for the
benefit of the individuals specified therein and their respective legal
representatives.
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 39 of 44
<PAGE> 40
(d) Transaction Indemnity. The Parties agree that this transaction has
been carefully structured to qualify as a "tax-free" reorganization pursuant to
Code Section 368, and the Parties have had the opportunity to consult with their
own tax advisors in that regard. To avoid additional delay in addressing
compelling business issues, the parties have agreed to proceed to Closing
without the additional assurance of obtaining a private letter ruling from the
Internal Revenue Service confirming the tax treatment of the transaction.
Accordingly, Parent and Sub, jointly and severally, shall indemnify and hold
harmless Target Stockholders from any and all damages, taxes, and other amounts
payable by Target Stockholders, including, professional fees and costs of
attorneys, paralegals, accountants and expert witnesses, if, for any reason,
this transaction should not qualify under Code Section 368 or if such
qualification shall be challenged.
(e) Entire Agreement. This Agreement (and the agreements and documents
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, to the extent they related in any way to
the subject matter hereof.
(f) Succession and Assignment. This Agreement shall be binding upon and
shall inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Parties.
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(h) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(i) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing and will be effective when
hand-delivered or upon delivery if sent by commercial courier service such as
Federal Express or Airborne or on the day of delivery or first attempted
delivery if sent by first class, postage prepaid, certified United States mail,
return receipt requested (whether or not the return receipt is subsequently
received), and addressed by the sender:
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 40 of 44
<PAGE> 41
If to the Target: Copy to:
Scott Roix A. Edward McGinty, Esq.
President and CEO Shumaker, Loop & Kendrick, LLP
The Affinity Group, Inc. Bank of America Plaza
100 2nd Avenue South, Suite 302N 101 East Kennedy Boulevard
St. Petersburg, FL 33701 Suite 2800
Tampa, FL 33602
If to the Parent: Copy to:
Joe Keegan Peter Futro, Esq.
President Futro & Trauenernicht, LLC
TeleServices Internet Group Inc. 1401 - 17th Street, 11th Floor
100 2nd Avenue South, Suite 1000 Denver, CO 80202
St. Petersburg, FL 33701
If to the Target Stockholders:
At the address for each as set forth next to the name of each on the
signature pages hereof.
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient.
Regardless of the method of delivery, any written notice, request, demand,
claim, or other communication actually received by a party hereto shall be
effective on the date of receipt. Any party hereto, from time to time, may
change his or her or its address to which notice is to be sent pursuant hereto
by sending a notice of such change in conformity with the foregoing requirements
to the other parties to the other parties to this Agreement.
(j) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Florida without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Florida or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Florida.
(k) Amendments and Waivers. The Parties may mutually amend any
provision of this Agreement at any time prior to the Effective Time with the
prior authorization of their respective boards of directors; provided, however,
that any amendment effected subsequent to stockholder approval will be subject
to the restrictions contained in the Florida General Corporation Law. No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by both of the Parties. No waiver by any Party of
any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 41 of 44
<PAGE> 42
any prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
(l) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(m) Expenses. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
(n) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation.
(o) Prior Agreements. All prior agreements, if any, by and between any
of the Parties to this Agreement relating to acquisition of the Target by the
Parent are, by this Agreement, hereby terminated and revoked and are hereby made
null and void and of no further force or effect.
(p) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.
TeleServices Internet Group Inc.
By: /s/ Paul W. Henry
--------------------------------
Paul W. Henry
--------------------------------
printed name
Secretary
--------------------------------
title
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 42 of 44
<PAGE> 43
The Affinity Group, Inc.
By: /s/ Scott G. Roix
----------------------------------------------
Scott G. Roix, President and CEO
Target Stockholders:
/s/ Scott G. Roix
-------------------------------------------------
Scott G. Roix
No. of Target Shares Owned: 3,661
-----
Address: 7676 Araila Way
-------------------------
Largo, FL 33777
---------------
/s/ The Vance Vogel Qualified Subchapter S. Trust No. 1
-------------------------------------------------------
The Vance Vogel Qualified Subchapter S Trust No. 1
No. of Target Shares Owned: 2,009
-----
Address: 2687 Willowood Dr.
------------------
Erie, Pa. 16506
---------------
/s/ Vance L. Vogel
-------------------------------------------------
Vance L. Vogel
No. of Target Shares Owned: 522
---
Address: 9901 Sago Point Dr
-------------------------
Largo, FL 33777
---------------
/s/ Fernur Ece Nihat
-------------------------------------------------
Fernur Ece Nihat
No. of Target Shares Owned: 2,009
-----
Address: 44 Laurel Way, Totteridge,
---------------------------
London N208IIX
--------------
United Kingdom
--------------
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 43 of 44
<PAGE> 44
/s/ Stephen Albert
---------------------------------------
Stephen Albert
No. of Target Shares Owned: 493
---
Address: 12233 Clubhouse Dr.
-------------------
Bradenton, FL 34202
-------------------
/s/ Vincent Del Corso
---------------------------------------
Vincent Del Corso
No. of Target Shares Owned: 493
---
Address: 815 115th Avenue,
-----------------
Treasure Island, FL 33706
-------------------------
/s/ Robert Poitras
---------------------------------------
Robert Poitras
No. of Target Shares Owned: 493
---
Address: 12242 Sun Vista Ct.
-------------------
E Treasure Island, FL 33706
---------------------------
/s/ Louis Bruno
---------------------------------------
Louis Bruno
No. of Target Shares Owned: 160
---
Address: 421 Evergreen Drive,
--------------------
Oldsmar, FL 34677
-----------------
/s/ Deborah E. McCafferty
---------------------------------------
Deborah E. McCafferty
No. of Target Shares Owned: 160
---
Address: 6020 Bahia Del Mar #121
-----------------------
St. Petersburg, FL 33715
------------------------
Agreement and Plan of Reorganization
TeleServices Internet Group, Inc. --- Parent
The Affinity Group, Inc. --- Target
November 29, 2000
Page 44 of 44
