ACQUISITION AGREEMENT AND PLAN OF MERGER
DATED AS OF JANUARY 18, 2000
BETWEEN
PCG MEDIA, INC.
AND
HOME GAMBLING NETWORK, INC.
TABLE OF CONTENTS
ARTICLE 1. The Merger 4
Section 1.1.The Merger 4
Section 1.2.Effective Time 4
Section 1.3.Closing of the Merger 4
Section 1.4.Effects of the Merger 4
Section 1.5.Formation of PCG SUB Subsidiary Corp.: Officers and Directors
4
Section 1.6.Board of Directors and Officers of HGN 5
Section 1.7.Conversion of Shares 5
Section 0.0.Xxxxxxxx of Certificates 6
Section 1.9.Stock Options 6
Section 1.10. Cash Payments 6
Section 1.11. Taking of Necessary Action; Further Action 6
ARTICLE 2. Representations and Warranties of PCG 7
Section 2.1.Organization and Qualification 7
Section 2.2.Capitalization of PCG 7
Section 2.3.Authority Relative to this Agreement; Recommendation . 7
Section 2.4.SEC Reports; Financial Statements 8
Section 2.5.Consents and Approvals; No Violations 8
Section 0.0.Xx Default 9
Section 0.0.Xx Undisclosed Liabilities; Absence of Changes 9
Section 2.8.Litigation 9
Section 2.9.Compliance with Applicable Law 9
Section 2.10. Employee Benefit Plans; Labor Matters 10
Section 2.11. Environmental Laws and Regulations 10
Section 2.12. Tax Matters 11
Section 2.13. Title To Property 11
Section 2.14. Intellectual Property 11
Section 2.15. Insurance 12
Section 2.16. Vote Required 12
Section 2.17. Tax Treatment 12
Section 2.18. Affiliates 12
Section 2.19. Certain Business Practices 12
Section 2.20. Insider Interests 12
Section 2.21. Opinion of Financial Adviser 12
Section 2.22. Brokers 12
Section 2.23. Disclosure 12
Section 2.24. No Existing Discussion 12
Section 2.25. Material Contracts 12
ARTICLE 3. Representations and Warranties of HGN 13
Section 3.1.Organization and Qualification 13
Section 3.2.Capitalization of HGN 13
Section 3.3.Authority Relative to this Agreement; Recommendation14
Section 3.4.SEC Reports; Financial Statements 14
Section 3.5.Information Supplied 14
Section 3.6.Consents and Approvals; No Violations 15
Section 0.0.Xx Default 15
Section 3.8 No Undisclosed Liabilities; Absence of Changes 15
Section 3.9.Litigation 16
Section 3.10. Compliance with Applicable Law 16
Section 3.11. Employee Benefit Plans; Labor Matters 16
Section 3.12. Environmental Laws and Regulations 17
Section 3.13. Tax Matters 17
Section 3.14. Title to Property 17
Section 3.15. Intellectual Property 18
Section 3.16Insurance 18
Section 3.17. Vote Required 18
Section 3.18. Tax Treatment 18
Section 3.19. Affiliates 18
Section 3.20. Certain Business Practices 18
Section 3.21. Insider Interests 18
Section 3.22. Opinion of Financial Adviser 19
Section 3.23Broker 19
Section 3.24Disclosure 19
Section 3.25. No Existing Discussions 19
Section 3.26. Material Contracts 19
ARTICLE 4. Covenants 20
Section 4.1.Conduct of Business of PCG 20
Section 4.2.Conduct of Business of HGN 21
Section 4.3.Preparation of 8-K and the Proxy Statement 22
Section 4.4.Other Potential Acquirers 22
Section 4.5.Meetings of Stockholders 22
Section 4.6.Nasdaq Listing 23
Section 4.7.Access to Information 23
Section 4.8.Additional Agreements; Reasonable Efforts 23
Section 4.9.Employee Benefits; Stock Option and Employee Purchase Plans
23
Section 4.10. Public Announcements 24
Section 4.11. Indemnification 24
Section 4.12. Notification of Certain Matters 24
ARTICLE 5. Conditions to Consummation of the Merger
Section 5.1 Conditions to Each Party's Obligations to Effect the Merger
25
Section 5.2 Conditions to the Obligations of PCG 25
Section 5.3.Conditions to the Obligations of HGN. 26
ARTICLE 6. Termination; Amendment; Waiver 26
Section 6.1 Termination 26
Section 6.2.Effect of Termination 27
Section 6.3.Fees and Expenses 27
Section 6.4.Amendment 27
Section 6.5.Extension; Waiver 27
ARTICLE 7. Miscellaneous 27
Section 7.1.Nonsurvival of Representations and Warranties 27
Section 7.2.Entire Agreement; Assignment 27
Section 7.3.Validity 27
Section 7.4.Notices 27
Section 7.5.Governing Law 28
Section 7.6.Descriptive Headings 28
Section 7.7.Parties in Interest 28
Section 7.8.Certain Definitions 28
Section 7.9.Personal Liability 29
Section 7.10. Specific Performance 29
Section 7.11. Counterparts 29
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement"), dated as of
January 18, 2000, is between PCG MEDIA, INC., a Nevada corporation ("PCG"),
and HOME GAMBLING NETWORK, INC., a Nevada corporation ("HGN").
Whereas, the Boards of Directors of PCG and HGN each have, in light of
and subject to the terms and conditions set forth herein, (i) determined that
the Merger (as defined below) is fair to their respective stockholders and in
the best interests of such stockholders and (ii) approved the Merger in
accordance with this Agreement;
Whereas, for Federal income tax purposes, it is intended that the Merger
qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
Whereas, PCG and HGN desire to make certain representations, warranties,
covenants and agreements in connection with the Merger and also to prescribe
various conditions to the Merger.
Now, therefore, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, PCG and HGN hereby agree as follows:
ARTICLE I
The Merger
Section 1.1. The Merger. At the Effective Time (as defined below) and
upon the terms and subject to the conditions of this Agreement and in
accordance with the General Corporation Law of the state of Nevada (the
"NGCL"), PCG Subsidiary Corp. ("PCG SUB") shall be merged with and into HGN
(as defined below) (the "Merger"). Following the Merger, HGN shall continue
as the surviving corporation (the "Surviving Corporation"), shall continue to
be governed by the laws of the jurisdiction of its incorporation or
organization and the separate corporate existence of PCG SUB shall cease.
Concurrent with the Merger, PCG shall change its name to x0Xxxx.xxx. The
Merger is intended to qualify as a tax-free reorganization under Section 368
of the Code as relates to the non-cash exchange of stock referenced herein.
Section 1.2. Effective Time. Subject to the terms and conditions set
forth in this Agreement, a Certificate of Merger (the "Merger Certificate")
shall be duly executed and acknowledged by each of HGN, PCG and PCG SUB and
thereafter the Merger Certificate reflecting the Merger shall be delivered to
the Secretary of State of the State of Nevada for filing pursuant to the NGCL
on the Closing Date (as defined in Section 1.3). The Merger shall become
effective at such time as a properly executed and certified copy of the
Merger Certificate is duly filed by the Secretary of State of the State of
Nevada in accordance with the NGCL or such later time as the parties may
agree upon and set forth in the Merger Certificate (the time at which the
Merger becomes effective shall be referred to herein as the "Effective
Time").
Section 1.3. Closing of the Merger. The closing of the Merger (the
"Closing") will take place at a time and on a date to be specified by the
parties, which shall be no later than the second business day after
satisfaction of the latest to occur of the conditions set forth in Article 5
(the "Closing Date"), at the offices of Sperry Young & Xxxxxxxxxx, 0000 Xxxx
Xxxxxxxx Xx., Xxxxx 000, Xxx Xxxxx, Xxxxxx 00000, unless another time, date
or place is agreed to in writing by the parties hereto.
Section 1.4. Effects of the Merger. The Merger shall have the effects
set forth in the NGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the properties, rights,
privileges, powers and franchises of PCG SUB shall vest in the Surviving
Corporation, and all debts, liabilities and duties PCG SUB shall become the
debts, liabilities and duties of the Surviving Corporation.
Section 1.5. Formation of PCG SUB; Officers and Directors.
(a) Prior to the Effective Time, PCG and HGN agree to take such action
as is necessary to form a new corporation, with the name of PCG SUB
Subsidiary Corp. ("PCG SUB"), under the laws of a jurisdiction to be mutually
agreed upon by PCG and HGN and shall amend this Agreement to add PCG SUB as a
party. PCG and HGN agree to take such action as is necessary to cause PCG SUB
to perform the various covenants and agreements contained herein which are
contemplated herein to be performed by PCG SUB. Any covenants or agreements
of PCG SUB contained herein shall be binding on PCG SUB as of the time PCG
SUB becomes a party to this Agreement.
(b) The Board of Directors of PCG SUB and officers of PCG SUB shall be
designated by PCG and HGN upon the formation of PCG SUB.
Section 1.6. Board of Directors and Officers of HGN.
(a) At or prior to the Effective Time, each of HGN and PCG agrees to
take such action as is necessary (i) to cause the number of directors
comprising the full Board of Directors of HGN to be six (6) persons and (ii)
to cause Xxxxxxx Xxxx Xxxxxx (the "VCG Designee") and Xxxxxxx X. Xxxxxxx,
xxxxxx Xxxxxxx, Xxxxxxxxxxx Xxxx Xxxxxx, Xxxx X. Xxxxxxxx, and H. Yale
Gutnick, (the "HGN Designee") to be elected as directors of HGN. In addition,
the stockholders of HGN prior to the Effective Time shall take all action
necessary to cause, to the greatest extent practicable, the PCG Designees and
the HGN Designees to serve on HGN's Board of Directors until the 2000 Annual
Meeting. If any of the PCG Designees or the HGN Designees, respectively,
shall decline or be unable to serve as a director prior to the Effective
Time, PCG (if such person was a PCG Designee) or HGN (if such person was a
HGN Designee), as the case may be, shall nominate another person to serve in
such person's stead which such person shall be subject to approval of the
other party. If any of the PCG Designees or the HGN Designees, respectively,
shall decline or be unable to serve as a director during his initial term
following the Effective Time, the remaining PCG Designees (if such person was
a PCG Designee) or the HGN Designees (if such person was a HGN Designee), as
the case may be, shall nominate another person to serve in such person's
stead, which such person shall be subject to the approval of the other
party's designees.
(b) From and after the Effective Time, and until successors are duly
elected or appointed and qualified in accordance with applicable law, xxxxxx
Xxxxxxx shall be President and Chairman, and Xxx Xxxxxxx shall be shall be
Secretary, Treasurer of HGN.
Section 1.7. Conversion of Shares.
(a) At the Effective Time, each share of common stock, par value $.001
per share of HGN (individually a "HGN Share" and collectively, the "HGN
Shares") issued and outstanding immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of HGN,
PCG, PCG SUB or the holder thereof, be converted into and shall become fully
paid and nonassessable PCG Common Share(s). PCG Shares and HGN Shares are
sometimes referred to collectively herein as "Shares." In exchange for each
of their shares in HGN, each stockholder of HGN shall receive, at Closing;
twenty-four (24) shares of PCG restricted common shares, $0.001 par value. By
way of example, a stockholder of HGN holding 80,000 of HGN shares would
receive 1,920,000 shares of PCG Shares.
(b) At the Effective Time, each HGN Share held in the treasury of HGN,
by HGN immediately prior to the Effective Time shall, by virtue of the Merger
and without any action on the part of PCG SUB, HGN or PCG be canceled,
retired and cease to exist and no payment shall be made with respect thereto.
Section 1.8. Exchange of Certificates.
(a) Prior to the Effective Time, PCG SUB shall enter into an agreement
with, and shall deposit with Sperry Young & Xxxxxxxxxx, or such other agent
or agents as may be satisfactory to PCG and HGN (the "Exchange Agent"), for
the benefit of the holders of HGN Shares, for exchange through the Exchange
Agent in accordance with this Article I: (i) certificates representing the
appropriate number of PCG Shares to be issued to holders of HGN Shares and
(ii) cash to be paid in lieu of PCG Shares (such PCG Shares and such cash are
hereinafter referred to as the "Cash Fund") issuable pursuant to Section 1.7
in exchange for outstanding HGN Shares.
(b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding HGN Shares (the "Certificates") whose shares were converted into
the right to receive PCG Shares pursuant to Section 1.7: (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such
other provisions as HGN and PCG may reasonably specify) and (ii) instructions
for use in effecting the surrender of the Certificates in exchange for
certificates representing PCG Shares. Upon surrender of a Certificate to the
Exchange Agent, together with such letter of transmittal, duly executed, and
any other required documents, the holder of such Certificate shall be
entitled to receive in exchange therefore a certificate representing that
number of whole PCG Shares and, if applicable, a check representing the cash
consideration to which such holder may be entitled on account of the Cash
Fund, which such holder has the right to receive pursuant to the provisions
of this Article 1, and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of HGN Shares which are not
registered in the transfer records of HGN, a certificate representing the
proper number of PCG Shares may be issued to a transferee if the Certificate
representing such HGN Shares is presented to the Exchange Agent accompanied
by all documents required by the Exchange Agent or PCG SUB to evidence and
effect such transfer and by evidence that any applicable stock transfer or
other taxes have been paid. Until surrendered as contemplated by this Section
1.8, each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the certificate
representing PCG Shares and cash as contemplated by this Section 1.8.
(c) No dividends or other distributions declared or made after the
Effective Time with respect to PCG Shares with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the PCG Shares represented thereby and no cash payment in
lieu of fractional shares shall be paid to any such holder pursuant to
Section 1.8(f) until the holder of record of such Certificate shall surrender
such Certificate.
(d) In the event that any Certificate for HGN Shares or PCG Shares
shall have been lost, stolen or destroyed, the Exchange Agent shall issue in
exchange therefore, upon the making of an affidavit of that fact by the
holder thereof such PCG Shares and cash in lieu of fractional PCG Shares, if
any, as may be required pursuant to this Agreement; provided, however, that
PCG or the Exchange Agent, may, in its respective discretion, require the
delivery of a suitable bond, opinion or indemnity.
(e) All PCG Shares issued upon the surrender for exchange of HGN Shares
in accordance with the terms hereof (including any cash paid pursuant to
Section 1.10) shall be deemed to have been issued in full satisfaction of all
rights pertaining to such HGN Shares. There shall be no further registration
of transfers on the stock transfer books of HGN of the HGN shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to HGN for any reason, they shall be
canceled and exchanged as provided in this Article 1.
(f) No fractional PCG Shares shall be issued in the Merger, but in lieu
thereof each holder of HGN Shares otherwise entitled to a fractional PCG
Share shall, upon surrender of its, his or her Certificate or Certificates,
be entitled to receive an amount of cash rounded to the nearest cent (without
interest) determined by multiplying the fair market value of a PCG Share as
determined by the PCG Board of Directors by the fractional share interest to
which such holder would otherwise be entitled. The parties acknowledge that
payment of the cash consideration in lieu of issuing additional shares was
separately bargained for consideration and may constitute taxable
consideration to the recipients.
(g) The PCG Shares issued herein, shall contain standard Rule 144
Restrictive Legends.
Section 1.9. Stock Options. At the Effective Time, each outstanding
option to purchase HGN Shares (a "HGN Stock Option" or collectively, "HGN
Stock Options") issued pursuant to any HGN Stock Option Plan or HGN Long Term
Incentive Plan whether vested or not, shall be canceled.
Section 1.10. Taking of Necessary Action; Further Action. If, at any
time after the Effective Time, PCG SUB, HGN or PCG reasonably determines that
any deeds, assignments, or instruments or confirmations of transfer are
necessary or desirable to carry out the purposes of this Agreement and to
vest PCG possession to all assets, property, rights, privileges, powers and
franchises of HGN, the officers and directors of PCG SUB, PCG and HGN are
fully authorized in the name of their respective corporations or otherwise to
take, and will take, all such lawful and necessary or desirable action.
ARTICLE 2
Representations and Warranties of PCG
Except as set forth on the Disclosure Schedule delivered by PCG to HGN
(the "PCG Disclosure Schedule"), PCG hereby represents and warrants to HGN as
follows:
Section 2.1. Organization and Qualification.
(a) PCG is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization and has all
requisite power and authority to own, lease and operate its properties and to
carry on its businesses as now being conducted, except where the failure to
be so organized, existing and in good standing or to have such power and
authority would not have a Material Adverse Effect (as defined below) on PCG.
When used in connection with PCG, the term "Material Adverse Effect" means
any change or effect (i) that is or is reasonably likely to be materially
adverse to the business, results of operations, condition (financial or
otherwise) or prospects of PCG, other than any change or effect arising out
of general economic conditions unrelated to any business in which PCG is
engaged, or (ii) that may impair the ability of PCG to perform its
obligations hereunder or to consummate the transactions contemplated hereby.
(b) PCG has heretofore delivered to HGN accurate and complete copies of
the Certificate of Incorporation and Bylaws (or similar governing documents),
as currently in effect, of PCG. Except as set forth on Schedule 2.1 of the
PCG Disclosure Schedule, PCG is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except in such jurisdictions where
the failure to be so duly qualified or licensed and in good standing would
not have a Material Adverse Effect on PCG.
Section 2.2. Capitalization of PCG.
(a) The authorized capital stock of PCG consists of. (i) Fifty Million
(50,000,000) PCG Shares at $.001 par value, of which, as of October 5, 1999,
7,985,855 PCG Shares were issued and outstanding, and no PCG Shares were held
in treasury. Prior to the Effective Time 1,985,855 PCG Shares are to be
canceled leaving 6,000,000 PCG Shares issued and outstanding at the Effective
Time. All of the outstanding PCG Shares have been duly authorized and validly
issued, and are fully paid, nonassessable and free of preemptive rights.
Except as set forth above, as of the date hereof, there are no outstanding
(i) shares of capital stock or other voting securities of PCG, (ii)
securities of PCG convertible into or exchangeable for shares of capital
stock or voting securities of PCG, (iii) options or other rights to acquire
from PCG and, except as defined herein no obligations of PCG to issue, any
capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of PCG, and (iv) equity
equivalents, interests in the ownership or earnings of PCG or other similar
rights (collectively, "PCG Securities"). As of the date hereof, except as set
forth on Schedule 2.2(a) of the PCG Disclosure Schedule there are no
outstanding obligations of PCG or its subsidiaries to repurchase, redeem or
otherwise acquire any PCG Securities or stockholder agreements, voting trusts
or other agreements or understandings to which PCG is a party or by which it
is bound relating to the voting or registration of any shares of capital
stock of PCG. For purposes of this Agreement, "Lien" means, with respect to
any asset (including, without limitation, any security) any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of
such asset.
(b) The PCG Shares constitute the only class of equity securities of PCG
registered or required to be registered under the Exchange Act.
(c) PCG does not own directly or indirectly more than fifty percent
(50%) of the outstanding voting securities or interests (including membership
interests) of any entity, other than as specifically disclosed in the
disclosure documents.
Section 2.3. Authority Relative to this Agreement; Recommendation.
(a) PCG has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of PCG (the "PCG Board") and no other corporate
proceedings on the part of PCG are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby, except, as referred to in
Section 2.17. This Agreement has been duly and validly executed and delivered
by PCG and constitutes a valid, legal and binding agreement of PCG,
enforceable against PCG in accordance with its terms.
(b) The PCG Board has resolved to recommend that the stockholders of PCG
approve and adopt this Agreement.
Section 2.4. SEC Reports; Financial Statements.
(a) PCG has filed all required forms, reports and documents with the
Securities and Exchange Commission (the "SEC") since December 31, 1999, each
of which has complied in all material respects with all applicable
requirements of the Securities Act of 1933, as amended (the "Securities
Act"), and the Exchange Act (and the rules and regulations promulgated
thereunder, respectively), each as in effect on the dates such forms, reports
and documents were filed. PCG has heretofore delivered or promptly will
deliver prior to the Effective Date to HGN, in the form filed with the SEC
(including any amendments thereto but excluding any exhibits), (i) its Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1999, (ii) all
definitive proxy statements relating to PCG's meetings of stockholders
(whether annual or special) held since December 31, 1998, if any, and (iii)
all other reports or registration statements filed by PCG with the SEC since
December 31, 1998 (all of the foregoing, collectively, the "PCG SEC
Reports"). None of such PCG SEC Reports, including, without limitation, any
financial statements or schedules included or incorporated by reference
therein, contained, when filed, any untrue statement of a material fact or
omitted to state a material fact required to be stated or incorporated by
reference therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited financial statements of PCG included in the PCG SEC Reports fairly
present, in conformity with generally accepted accounting principles applied
on a consistent basis (except as may be indicated in the notes thereto), the
financial position of PCG as of the dates thereof and its results of
operations and changes in financial position for the periods then ended. All
material agreements, contracts and other documents required to be filed as
exhibits to any of the PCG SEC Reports have been so filed.
(b) PCG has heretofore made available or promptly will make available to
HGN a complete and correct copy of any amendments or modifications which are
required to be filed with the SEC but have not yet been filed with the SEC,
to agreements, documents or other instruments which previously had been filed
by PCG with the SEC pursuant to the Exchange Act.
Section 2.5. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1916, as amended (the "HSR Act"), the rules of the National Association of
Securities Dealers, Inc. ("NASD"), the filing and recordation of the Merger
Certificate as required by the NGCL, and as set forth on Schedule 2.5 of the
PCG Disclosure Schedule no filing with or notice to, and no permit,
authorization, consent or approval of, any court or tribunal or
administrative, governmental or regulatory body, agency or authority (a
"Governmental Entity") is necessary for the execution and delivery by PCG of
this Agreement or the consummation by PCG of the transactions contemplated
hereby, except where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings or give such notice would not
have a Material Adverse Effect on PCG.
Except as set forth in Section 2.5 of the PCG Disclosure Schedule,
neither the execution, delivery nor performance of this Agreement by PCG nor
the consummation by PCG of the transactions contemplated hereby will
(i) conflict with or result in any breach of any provision of the respective
Certificate of Incorporation or Bylaws (or similar governing documents) of
PCG, (ii) result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration or Lien) under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to
which PCG is a party or by which any of its properties or assets may be
bound, or (iii) violate any order, writ, injunction, decree, law, statute,
rule or regulation applicable to PCG or any of its properties or assets,
except in the case of (ii) or (iii) for violations, breaches or defaults
which would not have a Material Adverse Effect on PCG.
Section 2.6. No Default. Except as set forth in Section 2.6 of the PCG
Disclosure Schedule, PCG is not in breach, default or violation (and no event
has occurred which with notice or the lapse of time or both would constitute
a breach default or violation) of any term, condition or provision of (i) its
Certificate of Incorporation or Bylaws (or similar governing documents), (ii)
any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which PCG is now a party or by which any of
its respective properties or assets may be bound or (iii) any order, writ
injunction, decree, law, statute, rule or regulation applicable to PCG or any
of its respective properties or assets, except in the case of (ii) or (iii)
for violations, breaches or defaults that would not have a Material Adverse
Effect on PCG. Except as set forth in Section 2.6 of the PCG Disclosure
Schedule, each note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which PCG is now a party or by
which its respective properties or assets may be bound that is material to
PCG and that has not expired is in full force and effect and is not subject
to any material default thereunder of which PCG is aware by any party
obligated to PCG thereunder.
Section 2.7. No Undisclosed Liabilities; Absence of Changes. Except as
set forth in Section 2.7 of the PCG Disclosure Schedule and except as and to
the extent publicly disclosed by PCG in the PCG Form 15c2l1, as of December
31, 1998, PCG does not have any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, that would be required by
generally accepted accounting principles to be reflected on a balance sheet
of PCG (including the notes thereto) or which would have a Material Adverse
Effect on PCG. Except as publicly disclosed by PCG, since December 31, 1998,
PCG has not incurred any liabilities of any nature, whether or not accrued,
contingent or otherwise, which could reasonably be expected to have, and
there have been no events, changes or effects with respect to PCG having or
which reasonably could be expected to have, a Material Adverse Effect on PCG.
Except as and to the extent disclosed by PCG on 2.7 of the PCG Disclosure
Schedule, since December 31, 1998, there has not been (i) any material change
by PCG in its accounting methods, principles or practices (other than as
required after the date hereof by concurrent changes in generally accepted
accounting principles), (ii) any revaluation by PCG of any of its assets
having a Material Adverse Effect on PCG, including, without limitation, any
write-down of the value of any assets other than in the ordinary course of
business or (iii) any other action or event that would have required the
consent of any other party hereto pursuant to Section 4.1 of this Agreement
had such action or event occurred after the date of this Agreement.
Section 2.8. Litigation. Except as publicly disclosed by PCG herein,
there is no suit, claim, action, proceeding or investigation pending or, to
the knowledge of PCG, threatened against PCG or any of its subsidiaries or
any of their respective properties or assets before any Governmental Entity
which, individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect on PCG or could reasonably be expected to prevent
or delay the consummation of the transactions contemplated by this Agreement.
Except as disclosed herein, PCG is not subject to any outstanding order,
writ, injunction or decree which, insofar as can be reasonably foreseen in
the future, could reasonably be expected to have a Material Adverse Effect on
PCG or could reasonably be expected to prevent or delay the consummation of
the transactions contemplated hereby.
Section 2.9. Compliance with Applicable Law. Except as disclosed by PCG
herein, PCG holds all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the lawful conduct of
their respective businesses (the "PCG Permits"), except for failures to hold
such permits, licenses, variances, exemptions, orders and approvals which
would not have a Material Adverse Effect on PCG. Except as disclosed by PCG
herein, PCG is in compliance with the terms of the PCG Permits, except where
the failure so to comply would not have a Material Adverse Effect on PCG.
Except as disclosed herein, the business of PCG is not being conducted in
violation of any law, ordinance or regulation of any Governmental Entity
except that no representation or warranty is made in this Section 2.9 with
respect to Environmental Laws (as defined in Section 2.11 below) and except
for violations or possible violations which do not, and, insofar as
reasonably can be foreseen, in the future
will not, have a Material Adverse Effect on PCG. Except as disclosed by PCG
herein, no investigation or review by any Governmental Entity with respect to
PCG is pending or, to the knowledge of PCG, threatened, nor, to the knowledge
of PCG, has any Governmental Entity indicated an intention to conduct the
same, other than, in each case, those which PCG reasonably believes will not
have a Material Adverse Effect on PCG.
Section 2.10. Employee Benefit Plans; Labor Matters.
(a) Except as set forth in Section 2. 10(a) of the PCG Disclosure
Schedule with respect to each employee benefit plan, program, policy,
arrangement and contract (including, without limitation, any "employee
benefit plan," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), maintained or contributed to at
any time by PCG or any entity required to be aggregated with PCG pursuant to
Section 414 of the Code (each, a "PCG Employee Plan"), no event has occurred
and to the knowledge of PCG, no condition or set of circumstances exists in
connection with which PCG could reasonably be expected to be subject to any
liability which would have a Material Adverse Effect on PCG.
(b) (i) No PCG Employee Plan is or has been subject to Title IV of
ERISA or Section 412 of the Code; and (ii) each PCG Employee Plan intended to
qualify under Section 401(a) of the Code and each trust intended to qualify
under Section 501(a) of the Code is the subject of a favorable Internal
Revenue Service determination letter, and nothing has occurred which could
reasonably be expected to adversely affect such determination.
(c) Section 2.10(c) of the PCG Disclosure Schedule sets forth a true
and complete list, as of the date of this Agreement, of each person who holds
any PCG Stock Options, together with the number of PCG Shares which are
subject to such option, the date of grant of such option, the extent to which
such option is vested (or will become vested as a result of the Merger), the
option price of such option (to the extent determined as of the date hereof),
whether such option is a nonqualified stock option or is intended to qualify
as an incentive stock option within the meaning of Section 422(b) of the
Code, and the expiration date of such option. Section 2.10(c) of the PCG
Disclosure Schedule also sets forth the total number of such incentive stock
options and such nonqualified options. PCG has furnished HGN with complete
copies of the plans pursuant to which the PCG Stock Options were issued.
Other than the automatic vesting of PCG Stock Options that may occur without
any action on the part of PCG or its officers or directors, PCG has not taken
any action that would result in any PCG Stock Options that are unvested
becoming vested in connection with or as a result of the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby.
(d) PCG has made available to HGN (i) a description of the terms of
employment and compensation arrangements of all officers of PCG and a copy of
each such agreement currently in effect; (ii) copies of all agreements with
consultants who are individuals obligating PCG to make annual cash payments
in an amount exceeding $60,000; (iii) a schedule listing all officers of PCG
who have executed a non-competition agreement with PCG and a copy of each
such agreement currently in effect; (iv) copies (or descriptions) of all
severance agreements, programs and policies of PCG with or relating to its
employees, except programs and policies required to be maintained by law; and
(v) copies of all plans, programs, agreements and other arrangements of PCG
with or relating to its employees which contain change in control provisions
all of which are set forth in Section 2.10(d) of the PCG Disclosure Schedule.
(e) There shall be no payment, accrual of additional benefits,
acceleration of payments, or vesting in any benefit under any PCG Employee
Plan or any agreement or arrangement disclosed under this Section 2.10 solely
by reason of entering into or in connection with the transactions
contemplated by this Agreement.
(f) 'Mere are no controversies pending or, to the knowledge of PCG,
threatened, between PCG and any of their employees, which controversies have
or could reasonably be expected to have a Material Adverse Effect on PCG.
Neither PCG nor any of its subsidiaries is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by PCG or any of its subsidiaries (and neither PCG nor any of its
subsidiaries has any outstanding material liability with respect to any
terminated collective bargaining agreement or labor union contract), nor does
PCG know of any activities or proceedings of any labor union to organize any
of its or employees. PCG has no knowledge of any strike, slowdown, work
stoppage, lockout or threat thereof, by or with respect to any of its
employees.
Section 2.11. Environmental Laws and Regulations.
(a) Except as disclosed by PCG herein, (i) PCG is in material compliance
with all applicable federal, state, local and foreign laws and regulations
relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, ground water,
land surface or subsurface strata) (collectively, "Environmental Laws"),
except for non-compliance that would not have a Material Adverse Effect on
PCG, which compliance includes, but is not limited to, the possession by PCG
of all material permits and other governmental authorizations required under
applicable Environmental Laws, and compliance with the terms and conditions
thereof; (ii) PCG has not received written notice of, or, to the knowledge of
PCG, is the subject of, any action, cause of action, claim, investigation,
demand or notice by any person or entity alleging liability under or
non-compliance with any Environmental Law (an "Environmental Claim") that
could reasonably be expected to have a Material Adverse Effect on PCG; and
(iii) to the knowledge of PCG, there are no circumstances that are reasonably
likely to prevent or interfere with such material compliance in the future.
(b) Except as set forth in Section 2.11 of the PCG Disclosure Schedule,
there are no Environmental Claims which could reasonably be expected to have
a Material Adverse Effect on PCG that are pending or, to the knowledge of
PCG, threatened against PCG or, to the knowledge of PCG, against any person
or entity whose liability for any Environmental Claim PCG has or may have
retained or assumed either contractually or by operation of law.
Section 2.12. Tax Matters.
(a) Except as set forth in Section 2.12 of the PCG Disclosure Schedule:
(i) PCG has filed or has had filed on its behalf in a timely manner (within
any applicable extension periods) with the appropriate Governmental Entity
all income and other material Tax Returns (as defined herein) with respect to
Taxes (as defined herein) of PCG and all Tax Returns were in all material
respects true, complete and correct; (ii) all material Taxes with respect to
PCG have been paid in full or have been provided for in accordance with GAAP
on PCG's most recent balance, (iii) there are no outstanding agreements or
waivers extending the statutory period of limitations applicable to any
federal, state, local or foreign income or other material Tax Returns
required to be filed by or with respect to PCG; (iv) to the knowledge of PCG
none of the Tax Returns of or with respect to PCG is currently being audited
or examined by any Governmental Entity; and (v) no deficiency for any income
or other material Taxes has been assessed with respect to PCG which has not
been abated or paid in full.
(b) For purposes of this Agreement, (i) "Taxes" shall mean all taxes,
charges, fees, levies or other assessments, including, without limitation,
income, gross receipts, sales, use, ad valorem, goods and services, capital,
transfer, franchise, profits, license, withholding, payroll, employment,
employer health, excise, estimated, severance, stamp, occupation, property or
other taxes, customs duties, fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any taxing authority and (ii) "Tax Return"
shall mean any report, return, documents declaration or other information or
filing required to be supplied to any taxing authority or jurisdiction with
respect to Taxes.
Section 2.13. Title to Property. PCG has good and defensible title to
all of its properties and assets, free and clear of all liens, charges and
encumbrances except liens for taxes not yet due and payable and such liens or
other imperfections of title, if any, as do not materially detract from the
value of or interfere with the present use of the property affected thereby
or which, individually or in the aggregate, would not have a Material Adverse
Effect on PCG; and, to PCG's knowledge, all leases pursuant to which PCG
leases from others real or personal property are in good standing, valid and
effective in accordance with their respective terms, and there is not, to the
knowledge of PCG, under any of such leases, any existing material default or
event of default (or event which with notice of lapse of time, or both, would
constitute a default and in respect of which PCG has not taken adequate steps
to prevent such a default from occurring) except where the lack of such good
standing, validity and effectiveness, or the existence of such default or
event, would not have a Material Adverse Effect on PCG.
Section 2.14. Intellectual Property.
(a) PCG owns, or possesses adequate licenses or other valid rights to
use, all existing United States and foreign patents, trademarks, trade names,
service marks, copyrights, trade secrets and applications therefore that are
material to its business as currently conducted (the "PCG Intellectual
Property Rights").
(b) The validity of the PCG Intellectual Property Rights and the title
thereto of PCG is not being questioned in any litigation to which PCG is a
party.
(c) Except as set forth in Section 2.14(c) of the PCG Disclosure
Schedule, the conduct of the business of PCG as now conducted does not, to
PCG's knowledge, infringe any valid patents, trademarks, trade names, service
marks or copyrights of others. The consummation of the transactions completed
hereby will not result in the loss or impairment of any PCG Intellectual
Property Rights.
(d) PCG has taken steps it believes appropriate to protect and maintain
its trade secrets as such, except in cases where PCG has elected to rely on
patent or copyright protection in lieu of trade secret protection.
Section 2.15. Insurance. PCG maintains general liability, directors and
officers liability and other business insurance that PCG believes to be
reasonably prudent for its business.
Section 2.16. Vote Required. The affirmative vote of the holders of at
least a majority of the outstanding PCG Shares is the only vote of the
holders of any class or series of PCG's capital stock necessary to approve
and adopt this Agreement and the Merger.
Section 2.17. Tax Treatment. Neither PCG nor, to the knowledge of PCG,
any of its affiliates has taken or agreed to take action that would prevent
the Merger from constituting a reorganization qualifying under the provisions
of Section 368(a) of the Code.
Section 2.18. Affiliates. Except for Principal PCG Stockholder ("PCS")
and the directors and executive officers of PCG, each of whom is listed in
Section 2.18 of the PCG Disclosure Schedule, there are no persons who, to the
knowledge of PCG, may be deemed to be affiliates of PCG under Rule 1-02(b) of
Regulation S-X of the SEC (the "PCG Affiliates").
Section 2.19. Certain Business Practices. None of PCG or any directors,
officers, agents or employees of PCG has (i) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties
or campaigns or violated any provision of the Foreign Corrupt Practices Act
of 1977, as amended (the "FCPA"), or (iii) made any other unlawful payment.
Section 2.20. Insider Interests. Except as set forth in Section 2.20 of
the PCG Disclosure Schedule, neither PCG nor any officer or director of PCG
has any interest in any material property, real or personal, tangible or
intangible, including without limitation, any computer software or PCG
Intellectual Property Rights, used in or pertaining to the business of PCG,
expect for the ordinary rights of a stockholder or employee stock
optionholder.
Section 2.21. Opinion of Financial Adviser. No advisers, as of the date
hereof, have delivered to the PCG Board a written opinion to the effect that,
as of such date, the exchange ratio contemplated by the Merger is fair to the
holders of PCG Shares.
Section 2.22. Brokers. No broker, finder or investment banker (other
than the PCG Financial Adviser, a true and correct copy of whose engagement
agreement has been provided to HGN) is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of PCG.
Section 2.23. Disclosure. No representation or warranty of PCG in this
Agreement or any certificate, schedule, document or other instrument
furnished or to be furnished to HGN pursuant hereto or in connection herewith
contains, as of the date of such representation, warranty or instrument, or
will contain any untrue statement of a material fact or, at the date thereof,
omits or will omit to state a material fact necessary to make any statement
herein or therein, in light of the circumstances under which such statement
is or will be made, not misleading.
Section 2.24. No Existing Discussions. As of the date hereof, PCG is not
engaged, directly or indirectly, in any discussions or negotiations with any
other party with respect to any Third Party Acquisition (as defined in
Section 4.4).
Section 2.25. Material Contracts.
(a) PCG has delivered or otherwise made available to HGN true, correct
and complete copies of all contracts and agreements (and all amendments,
modifications and supplements thereto and all side letters to which PCG is a
party affecting the obligations of any party thereunder) to which PCG is a
party or by which any of its properties or assets are bound that are,
material to the business, properties or assets of PCG taken as a whole,
including, without limitation, to the extent any of the following are,
individually or in the aggregate, material to the business, properties or
assets of PCG taken as a whole, all: (i) employment, product design or
development, personal services, consulting, non-competition, severance,
golden parachute or indemnification contracts (including, without limitation,
any contract to which PCG is a party involving employees of PCG); (ii)
licensing, publishing, merchandising or distribution agreements; (iii)
contracts granting rights of first refusal or first negotiation; (iv)
partnership or joint venture agreements; (v) agreements for the acquisition,
sale or lease of material properties or assets or stock or otherwise entered
into since December 1, 1998; (vi) contracts or agreements with any
Governmental Entity. and (vii) all commitments and agreements to enter into
any of the foregoing (collectively, together with any such contracts entered
into in accordance with Section 4.1 hereof, the "PCG Contracts"). PCG is not
a party to or bound by any severance, golden parachute or other agreement
with any employee or consultant pursuant to which such person would be
entitled to receive any additional compensation or an accelerated payment of
compensation as a result of the consummation of the transactions contemplated
hereby.
(b) Each of the PCG Contracts is valid and enforceable in accordance
with its terms, and there is no default under any PCG Contract so listed
either by PCG or, to the knowledge of PCG, by any other party thereto, and no
event has occurred that with the lapse of time or the giving of notice or
both would constitute a default thereunder by PCG or, to the knowledge of
PCG, any other party, in any such case in which such default or event could
reasonably be expected to have a Material Adverse Effect on PCG.
(c) No party to any such PCG Contract has given notice to PCG of or made
a claim against PCG with respect to any breach or default thereunder, in any
such case in which such breach or default could reasonably be expected to
have a Material Adverse Effect on PCG.
ARTICLE 3
Representations and Warranties of HGN
Except as set forth on the Disclosure Schedule delivered by HGN to PCG
(the "HGN Disclosure Schedule"), HGN hereby represents and warrants to PCG as
follows:
Section 3.1. Organization and Qualification.
(a) Each of HGN and its subsidiaries is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation
or organization and has all requisite power and authority to own, lease and
operate its properties and to carry on its businesses as now being conducted,
except where the failure to be so organized, existing and in good standing or
to have such power and authority would not have a Material Adverse Effect (as
defined below) on HGN. When used in connection with HGN, the term "Material
Adverse Effect" means any change or effect (i) that is or is reasonably
likely to be materially adverse to the business, results of operations,
condition (financial or otherwise) or prospects of HGN and its subsidiaries,
taken as a whole, other than any change or effect arising out of general
economic conditions unrelated to any businesses in which HGN and its
subsidiaries are engaged, or (ii) that may impair the ability of HGN to
consummate the transactions contemplated hereby.
(b) HGN has heretofore delivered to PCG accurate and complete copies of
the Certificate of Incorporation and Bylaws (or similar governing documents),
as currently in effect, of HGN. Each of HGN and its subsidiaries is duly
qualified or licensed and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary except in such jurisdictions where the failure to be so duly
qualified or licensed and in good standing would not have a Material Adverse
Effect on HGN.
Section 3.2. Capitalization of HGN.
(a) As of December 31, 1999, the authorized capital stock of HGN
consists of Fifteen Million (15,000,000) HGN Common Shares $.001 par value
and Ten Million (10,000,000) Preferred Shares $.001 par value. One Million
(1,000,000) Common Shares were issued and were outstanding and no preferred
shares were outstanding. All of the outstanding HGN Shares have been duly
authorized and validly issued, and are fully paid, non-assessable and free of
preemptive rights.
(b) Except as set forth in Section 3.2(b) of the HGN Disclosure
Schedule, HGN is the record and beneficial owner of all of the issued and
outstanding shares of capital stock of its subsidiaries.
(c) Except as set forth in Section 3.2(c) of the HGN Disclosure
Schedule, between December 31, 1998 and the date hereof, no shares of HGN's
capital stock have been issued and no HGN Stock options have been granted.
Except as set forth in Section 3.2(a) above, as of the date hereof, there are
no outstanding (i) shares of capital stock or other voting securities of HGN,
(ii) securities of HGN or its subsidiaries convertible into or exchangeable
for shares of capital stock or voting securities of HGN, (iii) options or
other rights to acquire from HGN or its subsidiaries, or obligations of HGN
or its subsidiaries to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of HGN, or (iv) equity equivalents, interests in the ownership or
earnings of HGN or its subsidiaries or other similar rights (collectively,
"HGN Securities"). As of the date hereof, there are no outstanding
obligations of HGN or any of its subsidiaries to repurchase, redeem or
otherwise acquire any HGN Securities. There are no stockholder agreements,
voting trusts or other agreements or understandings to which HGN is a party
or by which it is bound relating to the voting or registration of any shares
of capital stock of HGN.
(d) Except as set forth in Section 3.2(d) of the HGN Disclosure
Schedule, there are no securities of HGN convertible into or exchangeable
for, no options or other rights to acquire from HGN, and no other contract,
understanding, arrangement or obligation (whether or not contingent)
providing for the issuance or sale, directly or indirectly, of any capital
stock or other ownership interests in, or any other securities of, any
subsidiary of HGN.
(e) The HGN Shares constitute the only class of equity securities of HGN
or its subsidiaries.
(f) Except as set forth in Section 3.2(f) of the HGN Disclosure
Schedule, HGN does not own directly or indirectly more than fifty percent
(50%) of the outstanding voting securities or interests (including membership
interests) of any entity.
Section 3.3. Authority Relative to this Agreement; Recommendation.
(a) HGN has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of HGN (the "HGN Board"), and no other corporate
proceedings on the part of HGN are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby, except, as referred to in
Section 3.17, the approval and adoption of this Agreement by the holders of
at least a majority of the then outstanding HGN Shares. This Agreement has
been duly and validly executed and delivered by HGN and constitutes a valid,
legal and binding agreement of HGN, enforceable against HGN in accordance
with its terms.
(b) The HGN Board has resolved to recommend that the stockholders of HGN
approve and adopt this Agreement.
Section 3.4. SEC Reports; Financial Statements. HGN is not required to
file forms, reports and documents with the SEC.
Section 3.5. Information Supplied. None of the information supplied or
to be supplied by HGN for inclusion or incorporation by reference to (i) the
8-K will, at the time the 8-K is filed with the SEC and at the time it
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and (ii)
the Proxy Statement will, at the date mailed to stockholders of PCG, if any,
and at the times of the meeting or meetings of stockholders of PCG to be held
in connection with the Merger, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Proxy Statement,
insofar as it relates to the meeting of HGN's stockholders to vote on the
Merger, will comply as to form in all material respects with the provisions
of the Exchange Act and the rules and regulations thereunder, and the 8-K
will comply as to form in all material respects with the provisions of the
Securities Act and the rules and regulations thereunder.
Section 3.6. Consents and Approvals; No Violations. Except as set forth
in Section 3.6 of the HGN Disclosure Schedule, and for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the HSR Act, the rules of the NASD, and the
filing and recordation of the Merger Certificate as required by the NGCL, no
filing with or notice to, and no permit, authorization, consent or approval
of, any Governmental Entity is necessary for the execution and delivery by
HGN of this Agreement or the consummation by HGN of the transactions
contemplated hereby, except where the failure to obtain such permits,
authorizations consents or approvals or to make such filings or give such
notice would not have a Material Adverse Effect on HGN.
Neither the execution, delivery and performance of this Agreement by
HGN nor the consummation by HGN of the transactions contemplated hereby will
(i) conflict with or result in any breach of any provision of the respective
Certificate of Incorporation or Bylaws (or similar governing documents) of
HGN or any of HGN's subsidiaries, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, amendment, cancellation or
acceleration or Lien) under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which HGN or any of HGN's subsidiaries is a
party or by which any of them or any of their respective properties or assets
may be bound or (iii) violate any order, writ, injunction, decree, law,
statute, rule or regulation applicable to HGN or any of HGN's subsidiaries or
any of their respective properties or assets, except in the case of (ii) or
(iii) for violations, breaches or defaults which would not have a Material
Adverse Effect on HGN.
Section 3.7. No Default. None of HGN or any of its subsidiaries is in
breach, default or violation (and no event has occurred which with notice or
the lapse of time or both would constitute a breach, default or violation) of
any term, condition or provision of (i) its Certificate of Incorporation or
Bylaws (or similar governing documents), (ii) any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or
obligation to which HGN or any of its subsidiaries is now a party or by which
any of them or any of their respective properties or assets may be bound or
(iii) any order, writ, injunction, decree, law, statute, rule or regulation
applicable to HGN, its subsidiaries or any of their respective properties or
assets, except in the case of (ii) or (iii) for violations, breaches or
defaults that would not have a Material Adverse Effect on HGN. Each note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which HGN or any of its subsidiaries is now a
party or by which any of them or any of their respective properties or assets
may be bound that is material to HGN and its subsidiaries taken as a whole
and that has not expired is in full force and effect and is not subject to
any material default thereunder of which HGN is aware by any party obligated
to HGN or any subsidiary thereunder.
Section 3.8. No Undisclosed Liabilities; Absence of Changes. Except as
and to the extent disclosed by HGN in the HGN, none of HGN or its
subsidiaries had any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, that would be required by generally
accepted accounting principles to be reflected on a consolidated balance
sheet of HGN and its consolidated subsidiaries (including the notes thereto)
or which would have a Material Adverse Effect on HGN. Except as disclosed by
HGN, none of HGN or its subsidiaries has incurred any liabilities of any
nature, whether or not accrued, contingent or otherwise, which could
reasonably be expected to have, and there have been no events, changes or
effects with respect to HGN or its subsidiaries having or which could
reasonably be expected to have, a Material Adverse Effect on HGN. Except as
and to the extent disclosed by HGN there has not been (i) any material change
by HGN in its accounting methods, principles or practices (other than as
required after the date hereof by concurrent changes in generally accepted
accounting
principles), (ii) any revaluation by HGN of any of its assets having a
Material Adverse Effect on HGN, including, without limitation, any write-down
of the value of any assets other than in the ordinary course of business or
(iii) any other action or event that would have required the consent of any
other party hereto pursuant to Section 4.2 of this Agreement had such action
or event occurred after the date of this Agreement.
Section 3.9. Litigation. Except as set forth in Schedule 3.9 of the HGN
Disclosure Schedule there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of HGN, threatened against HGN or
any of its subsidiaries or any of their respective properties or assets
before any Governmental Entity which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on HGN or could
reasonably be expected to prevent or delay the consummation of the
transactions contemplated by this Agreement. Except as disclosed by HGN, none
of HGN or its subsidiaries is subject to any outstanding order, writ,
injunction or decree which, insofar as can be reasonably foreseen in the
future, could reasonably be expected to have a Material Adverse Effect on HGN
or could reasonably be expected to prevent or delay the consummation of the
transactions contemplated hereby.
Section 3.10. Compliance with Applicable Law. Except as disclosed by
HGN, HGN and its subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities necessary for
the lawful conduct of their respective businesses (the "HGN Permits"), except
for failures to hold such permits, licenses, variances, exemptions, orders
and approvals which would not have a Material Adverse Effect on HGN. Except
as disclosed by HGN, HGN and its subsidiaries are in compliance with the
terms of the HGN Permits, except where the failure so to comply would not
have a Material Adverse Effect on HGN. Except as disclosed by HGN, the
businesses of HGN and its subsidiaries are not being conducted in violation
of any law, ordinance or regulation of any Governmental Entity except that no
representation or warranty is made in this Section 3.10 with respect to
Environmental Laws and except for violations or possible violations which do
not, and, insofar as reasonably can be foreseen, in the future will not, have
a Material Adverse Effect on HGN. Except as disclosed by HGN no investigation
or review by any Governmental Entity with respect to HGN or its subsidiaries
is pending or, to the knowledge of HGN, threatened, nor, to the knowledge of
HGN, has any Governmental Entity indicated an intention to conduct the same,
other than, in each case, those which HGN reasonably believes will not have a
Material Adverse Effect on HGN.
Section 3.11. Employee Benefit Plans; Labor Matters.
(a) With respect to each employee benefit plan, program, policy,
arrangement and contract (including, without limitation, any "employee
benefit plan," as defined in Section 3(3) of ERISA), maintained or
contributed to at any time by HGN, any of its subsidiaries or any entity
required to be aggregated with HGN or any of its subsidiaries pursuant to
Section 414 of the Code (each, a "HGN Employee Plan"), no event has occurred
and, to the knowledge of HGN, no condition or set of circumstances exists in
connection with which HGN or any of its subsidiaries could reasonably be
expected to be subject to any liability which would have a Material Adverse
Effect on HGN.
(b) (i) No HGN Employee Plan is or has been subject to Title IV of
ERISA or Section 412 of the Code; and (ii) each HGN Employee Plan intended to
qualify under Section 401(a) of the Code and each trust intended to qualify
under Section 501 (a) of the Code is the subject of a favorable Internal
Revenue Service determination letter, and nothing has occurred which could
reasonably be expected to adversely affect such determination.
(c) Section 3.1 l(c) of the HGN Disclosure Schedule sets forth a true
and complete list, as of the date of this Agreement, of each person who holds
any HGN Stock Options, together with the number of HGN Shares which are
subject to such option, the date of grant of such option, the extent to which
such option is vested (or will become vested as a result of the Merger), the
option price of such option (to the extent determined as of the date hereof),
whether such option is a nonqualified stock option or is intended to qualify
as an incentive stock option within the meaning of Section 422(b) of the
Code, and the expiration date of such option. Section 3.11(c) of the HGN
Disclosure Schedule also sets forth the total number of such incentive stock
options and such nonqualified options. HGN has furnished PCG with complete
copies of the plans pursuant to which the HGN Stock Options were issued.
Other than the automatic vesting of HGN Stock Options that may occur without
any action on the part of HGN or its officers or directors, HGN has not taken
any action that would result in any HGN Stock Options that are unvested
becoming vested in connection with or as a result of the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby.
(d) HGN has made available to PCG (i) a description of the terms of
employment and compensation arrangements of all officers of HGN and a copy of
each such agreement currently in effect; (ii) copies of all agreements with
consultants who are individuals obligating HGN to make annual cash payments
in an amount exceeding $60,000; (iii) a schedule listing all officers of HGN
who have executed a non-competition agreement with HGN and a copy of each
such agreement currently in effect; (iv) copies (or descriptions) of all
severance agreements, programs and policies of HGN with or relating to its
employees, except programs and policies required to be maintained by law; and
(v) copies of all plans, programs, agreements and other arrangements of the
FIGN with or relating to its employees which contain change in control
provisions.
(e) Except as disclosed in Section 3.11 (e) of the FIGN Disclosure
Schedule there shall be no payment, accrual of additional benefits,
acceleration of payments, or vesting in any benefit under any FIGN Employee
Plan or any agreement or arrangement disclosed under this Section 3.11 solely
by reason of entering into or in connection with the transactions
contemplated by this Agreement.
(f) There are no controversies pending or, to the knowledge of HGN
threatened, between HGN or any of its subsidiaries and any of their
respective employees, which controversies have or could reasonably be
expected to have a Material Adverse Effect on HGN. Neither HGN nor any of its
subsidiaries is a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by FIGN or any of its
subsidiaries (and neither HGN nor any of its subsidiaries has any outstanding
material liability with respect to any terminated collective bargaining
agreement or labor union contract), nor does FIGN know of any activities or
proceedings of any labor union to organize any of its or any of its
subsidiaries' employees. HGN has no knowledge of any strike, slowdown, work
stoppage, lockout or threat thereof by or with respect to any of its or any
of its subsidiaries' employees.
Section 3.12. Environmental Laws and Regulations.
(a) Except as disclosed by HGN, (i) each of HGN and its subsidiaries is
in material compliance with all Environmental Laws, except for non-compliance
that would not have a Material Adverse Effect on HGN, which compliance
includes, but is not limited to, the possession by HGN and its subsidiaries
of all material permits and other governmental authorizations required under
applicable Environmental Laws, and compliance with the terms and conditions
thereof-, (ii) none of HGN or its subsidiaries has received written notice
of, or, to the knowledge of HGN, is the subject of, any Environmental Claim
that could reasonably be expected to have a Material Adverse Effect on HGN;
and (iii) to the knowledge of HGN, there are no circumstances that are
reasonably likely to prevent or interfere with such material compliance in
the future.
(b) Except as disclosed by HGN, there are no Environmental Claims which
could reasonably be expected to have a Material Adverse Effect on HGN that
are pending or, to the knowledge of HGN, threatened against HGN or any of its
subsidiaries or, to the knowledge of FIGN, against any person or entity whose
liability for any Environmental Claim HGN or its subsidiaries has or may have
retained or assumed either contractually or by operation of law.
Section 3.13. Tax Matters. Except as set forth in Section 3.13 of the
HGN Disclosure Schedule: (i) HGN and each of its subsidiaries has filed or
has had filed on its behalf in a timely manner (within any applicable
extension periods) with the appropriate Governmental Entity all income and
other material Tax Returns with respect to Taxes of HGN and each of its
subsidiaries and all Tax Returns were in all material respects true, complete
and correct; (ii) all material Taxes with respect to FIGN and each of its
subsidiaries have been paid in full or have been provided for in accordance
with GAAP on HGN's most recent balance sheet which is part of the FIGN SEC
Documents; (iii) there are no outstanding agreements or waivers extending the
statutory period of limitations applicable to any federal, state, local or
foreign income or other material Tax Returns required to be filed by or with
respect to HGN or its subsidiaries; (iv) to the knowledge of HGN none of the
Tax Returns of or with respect to HGN or any of its subsidiaries is currently
being audited or examined by any Governmental Entity; and (v) no deficiency
for any income or other material Taxes has been assessed with respect to HGN
or any of its subsidiaries which has not been abated or paid in full.
Section 3.14. Title to Property. HGN and each of its subsidiaries have
good and defensible title to all of their properties and assets, free and
clear of all liens, charges and encumbrances except liens for taxes not yet
due and payable and such liens or other imperfections of title, if any, as do
not materially detract from the value of or interfere with the present use of
the property affected thereby or which, individually or in the aggregate,
would not have a Material Adverse Effect on HGN; and, to HGN's knowledge, all
leases pursuant to which HGN or any of its subsidiaries lease from others
real or personal property are in good standing, valid and effective in
accordance with their respective terms, and there is not, to the knowledge of
HGN, under any of such leases, any existing material default or event of
default (or event which with notice or lapse of time, or both, would
constitute a material default and in respect of which HGN or such subsidiary
has not taken adequate steps to prevent such a default from occurring) except
where the lack of such good standing, validity and effectiveness, or the
existence of such default or event of default would not have a Material
Adverse Effect on HGN.
Section 3.15. Intellectual Property.
(a) Each of HGN and its subsidiaries owns, or possesses adequate
licenses or other valid rights to use, all existing United States and foreign
patents, trademarks, trade names, services marks, copyrights, trade secrets,
and applications therefore that are material to its business as currently
conducted (the "HGN Intellectual Property Rights").
(b) Except as set forth in Section 3.15(b) of the HGN Disclosure
Schedule the validity of the HGN Intellectual Property Rights and the title
thereto of HGN or any -subsidiary, as the case may be, is not being
questioned in any litigation to which HGN or any subsidiary is a party.
(c) The conduct of the business of HGN and its subsidiaries as now
conducted does not, to HGN's knowledge, infringe any valid patents,
trademarks, tradenames, service marks or copyrights of others. The
consummation of the transactions contemplated hereby will not result in the
loss or impairment of any HGN Intellectual Property Rights.
(d) Each of HGN and its subsidiaries has taken steps it believes
appropriate to protect and maintain its trade secrets as such, except in
cases where HGN has elected to rely on patent or copyright protection in lieu
of trade secret protection.
Section 3.16. Insurance. HGN and its subsidiaries maintain general
liability and other business insurance that HGN believes to be reasonably
prudent for its business.
Section 3.17. Vote Required. The affirmative vote of the holders of at
least a majority of the outstanding HGN Shares is the only vote of the
holders of any class or series of HGN's capital stock necessary to approve
and adopt this Agreement and the Merger.
Section 3.18. Tax Treatment. Neither HGN nor, to the knowledge of HGN,
any of its affiliates has taken or agreed to take any action that would
prevent the Merger from constituting a reorganization qualifying under the
provisions of Section 368(a) of the Code.
Section 3.19. Affiliates. Except for the directors and executive
officers of HGN, each of whom is listed in Section 3.19 of the HGN Disclosure
Schedule, there are no persons who, to the knowledge of HGN, may be deemed to
be affiliates of HGN under Rule 1-02(b) of Regulation S-x of the SEC (the
"HGN Affiliates").
Section 3.20. Certain Business Practices. None of HGN, any of its
subsidiaries or any directors, officers, agents or employees of HGN or any of
its subsidiaries has (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or
violated any provision of the FCPA, or (iii) made any other unlawful payment.
Section 3.21. Insider Interests. Except as set forth in Section 3.21 of
the HGN Disclosure Schedule, no officer or director of HGN has any interest
in any material property, real or personal, tangible or intangible, including
without limitation, any computer software or HGN Intellectual Property
Rights, used in or pertaining to the business of HGN or any subsidiary,
except for the ordinary rights of a stockholder or employee stock
optionholder.
Section 3.22. Opinion of Financial Adviser. HGN management has
determined, without the advise of an outside Financial Adviser, to the effect
that, as of such date the exchange ratio contemplated by the Merger is fair
to the holders of HGN Shares.
Section 3.23. Brokers. No broker, finder or investment banker (other
than the HGN Financial Adviser, a true and correct copy of whose engagement
agreement has been provided to PCG) is entitled to any brokerage, finders or
other fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of HGN.
Section 3.24. Disclosure. No representation or warranty of HGN in this
Agreement or any certificate, schedule, document or other instrument
furnished or to be furnished to PCG pursuant hereto or in connection herewith
contains, as of the date of such representation, warranty or instrument, or
will contain any untrue statement of a material fact or, at the date thereof,
omits or will omit to state a material fact necessary to make any statement
herein or therein, in light of the circumstances under which such statement
is or will be made, not misleading.
Section 3.25. No Existing Discussions. As of the date hereof, HGN is
not engaged, directly or indirectly, in any discussions or negotiations with
any other party with respect to any Third Party Acquisition (as defined in
Section 5.4).
Section 3.26. Material Contracts.
(a) HGN has delivered or otherwise made available to PCG true, correct
and complete copies of all contracts and agreements (and all amendments,
modifications and supplements thereto and all side letters to which HGN is a
party affecting the obligations of any party thereunder) to which HGN or any
of its subsidiaries is a party or by which any of their properties or assets
are bound that are, material to the business, properties or assets of HGN and
its subsidiaries taken as a whole, including, without limitation, to the
extent any of the following are, individually or in the aggregate, material
to the business, properties or assets of HGN and its subsidiaries taken as a
whole, all: (i) employment, product design or development, personal services,
consulting, non-competition, severance, golden parachute or indemnification
contracts (including, without limitation, any contract to which HGN is a
party involving employees of HGN); (ii) licensing, publishing, merchandising
or distribution agreements; (iii) contracts granting rights of first refusal
or first negotiation; (iv) partnership or joint venture agreements; (v)
agreements for the acquisition, sale or lease of material properties or
assets or stock or otherwise entered into since October 1, 1998, (vi)
contracts or agreements with any Governmental Entity; and (vii) all
commitments and agreements to enter into any of the foregoing (collectively,
together with any such contracts entered into in accordance with Section 5.2
hereof, the "HGN Contracts"). Neither HGN nor any of its subsidiaries is a
party to or bound by any severance, golden parachute or other agreement with
any employee or consultant pursuant to which such person would be entitled to
receive any additional compensation or an accelerated payment of compensation
as a result of the consummation of the transactions contemplated hereby.
(b) Each of the HGN Contracts is valid and enforceable in accordance
with its terms, and there is no default under any HGN Contract so listed
either by HGN or, to the knowledge of HGN, by any other party thereto, and no
event has occurred that with the lapse of time or the giving of notice or
both would constitute a default thereunder by HGN or, to the knowledge of
HGN, any other party, in any such case in which such default or event could
reasonably be expected to have a Material Adverse Effect on HGN.
(c) No party to any such HGN Contract has given notice to HGN of or
made a claim against HGN with respect to any breach or default thereunder, in
any such case in which such breach or default could reasonably be expected to
have a Material Adverse Effect on HGN.
ARTICLE 4
Covenants
Section 4.1. Conduct of Business of PCG. Except as contemplated by this
Agreement or as described in Section 4.1 of the PCG Disclosure Schedule,
during the period from the date hereof to the Effective Time, PCG will
conduct its operations in the ordinary course of business consistent with
past practice and, to the extent consistent therewith, with no less diligence
and effort than would be applied in the absence of this Agreement, seek to
preserve intact its current business organization, keep available the service
of its current officers and employees and preserve its relationships with
customers, suppliers and others having business dealings with it to the end
that goodwill and ongoing businesses shall be unimpaired at the Effective
Time. Without limiting the generality of the foregoing, except as otherwise
expressly provided in this Agreement or as described in Section 4.1 of the
PCG Disclosure Schedule, prior to the Effective Time, PCG will not, without
the prior written consent of HGN:
(a) amend its Certificate of Incorporation or Bylaws (or other similar
governing instrument);
(b) amend the terms of the PCG Options except as to comply with the
requirements of this Merger;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock, make any other actual, constructive or deemed distribution in respect
of its capital stock or otherwise make any payments to stockholders in their
capacity as such, or redeem or otherwise acquire any of its securities;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of PCG (other than the Merger);
(e) (i) incur or assume any long-term or short-term debt or issue any
debt securities except for borrowings or issuances of letters of credit under
existing lines of credit in the ordinary course of business; (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingent or otherwise) for the obligations of any other person.
(iii) make any loans, advances or capital contributions to, or investments
in, any other person; (iv) pledge or otherwise encumber shares of capital
stock of PCG; or (v) mortgage or pledge any of its material assets, tangible
or intangible, or create or suffer to exist any material Lien thereupon
(other than tax Liens for taxes not yet due);
(f) except as may be required by law, enter into, adopt or amend or
terminate any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, restricted stock, performance unit,
stock equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement,
trust, plan, fund or other arrangement for the benefit or welfare of any
director, officer or employee in any manner, or increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay
any benefit not required by any plan and arrangement as in effect as of the
date hereof (including, without limitation, the granting of stock
appreciation rights or performance units); provided, however, that this
paragraph (f) shall not prevent PCG from (i) entering into employment
agreements or severance agreements with employees in the ordinary course of
business and consistent with past practice or (ii) increasing annual
compensation and/or providing for or amending bonus arrangements for
employees for fiscal 1999 in the ordinary course of year-end compensation
reviews consistent with past practice and paying bonuses to employees for
fiscal 1999 in amounts previously disclosed to HGN (to the extent that such
compensation increases and new or amended bonus arrangements do not result in
a material increase in benefits or compensation expense to PCG);
(g) acquire, sell, lease or dispose of any assets in any single
transaction or series of related transactions (other than in the ordinary
course of business);
(h) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(i) revalue in any material respect any of its assets including, without
limitation, writing down the value of inventory or writing-off notes or
accounts receivable other than in the ordinary course of business;
(j) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof or any equity interest therein; (ii) enter into any contract
or agreement
other than in the ordinary course of business consistent with past practice
which would be material to PCG; (iii) authorize any new capital expenditure
or expenditures which, individually is in excess of $500,000 or, in the
aggregate, are in excess of $1,000,000; provided, however that none of the
foregoing shall limit any capital expenditure required pursuant to existing
contracts;
(k) make any tax election or settle or compromise any income tax
liability material to PCG;
(1) settle or compromise any pending or threatened suit, action or claim
which (i) relates to the transactions contemplated hereby or (ii) the
settlement or compromise of which could have a Material Adverse Effect on
PCG;
(m) commence any material research and development project or terminate
any material research and development project that is currently ongoing, in
either case, except pursuant to the terms of existing contracts or in the
ordinary course of business; or
(n) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4. 1 (a) through 4.1(m) or any action which would make
any of the representations or warranties of contained in this Agreement
untrue or incorrect.
Section 4.2. Conduct of Business of HGN. Except as contemplated by this
Agreement or as described in Section 4.2 of the HGN Disclosure Schedule
during the period from the date hereof to the Effective Time, HGN will
conduct its operations in the ordinary course of business consistent with
past practice and, to the extent consistent therewith, with no less diligence
and effort than would be applied in the absence of this Agreement, seek to
preserve intact its current business organization, keep available the service
of its current officers and employees and preserve its relationships with
customers, suppliers and others having business dealings with it to the end
that goodwill and ongoing businesses shall be unimpaired at the Effective
Time. Without limiting the generality of the foregoing, except as otherwise
expressly provided in this Agreement or as described in Section 4.2 of the
HGN Disclosure Schedule, prior to the Effective Time, HGN will not, without
the prior written consent of-
(a) amend its Certificate of Incorporation or Bylaws (or other similar
governing instrument);
(b) amend the terms of the HGN Warrants, authorize for issuance, issue,
sell, deliver or agree or commit to issue, sell or deliver (whether through
the issuance or granting of options, warrants, commitments, subscriptions,
rights to purchase or otherwise) any stock of any class or any other
securities (except bank loans) or equity equivalents (including, without
limitation, any stock options or stock appreciation rights;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock, make any other actual, constructive or deemed distribution in respect
of its capital stock or otherwise make any payments to stockholders in their
capacity as such, or redeem or otherwise acquire any of its securities;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger consolidation, restructuring, recapitalization or other reorganization
of HGN (other than the Merger);
(e) (i) incur or assume any long-term or short-term debt or issue any
debt securities except for borrowings or issuances of letters of credit under
existing lines of credit in the ordinary course of business. (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other person;
(iii) make any loans, advances or capital contributions to or investments in,
any other person; (iv) pledge or otherwise encumber shares of capital stock
of HGN or its subsidiaries; or (v) mortgage or pledge any of its material
assets, tangible or intangible, or create or suffer to exist any material
Lien thereupon (other than tax Liens for taxes not yet due);
(f) except as may be required by law, enter into, adopt or amend or
terminate any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, restricted stock, performance unit
stock equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement,
trust, plan, fund or other arrangement for the benefit or welfare of any
director, officer or employee in any manner, or increase in any manner the
compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any plan and arrangement as in
effect as of the date hereof (including, without limitation, the granting of
stock appreciation rights or performance units); provided, however, that this
paragraph (f) shall not prevent HGN or its subsidiaries from (i) entering
into employment agreements or severance agreements with employees in the
ordinary course of business and consistent with past practice or (ii)
increasing annual compensation and/or providing for or amending bonus
arrangements for employees for fiscal 1999 in the ordinary course of yearend
compensation reviews consistent with past practice and paying bonuses to
employees for fiscal 1999 in amounts previously disclosed to (to the extent
that such compensation increases and new or amended bonus arrangements do not
result in a material increase in benefits or compensation expense to HGN);
(g) acquire, sell, lease or dispose of any assets in any single
transaction or series of related transactions other than in the ordinary
course of business;
(h) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(i) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory of writing-off notes
or accounts receivable other than in the ordinary course of business;
(j) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership, or other business organization or
division thereof or any equity interest therein; (ii) enter into any contract
or agreement other than in the ordinary course of business consistent with
past practice which would be material to HGN; (iii) authorize any new capital
expenditure or expenditures which, individually, is in excess of $500,000 or,
in the aggregate, are in excess of $1,000,000: provided, however that none of
the foregoing shall limit any capital expenditure required pursuant to
existing contracts;
(k) make any tax election or settle or compromise any income tax
liability material to HGN and its subsidiaries taken as a whole;
(1) settle or compromise any pending or threatened suit, action or
claim which (i) relates to the transactions contemplated hereby or (ii) the
settlement or compromise of which could have a Material Adverse Effect on
HGN;
(m) commence any material research and development project or terminate
any material research and development project that is currently ongoing, in
either case, except pursuant to the terms of existing contracts or except in
the ordinary course of business; or
(n) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.2(a) through 4.2(m) or any action which would make
any of the representations or warranties of the HGN contained in this
Agreement untrue or incorrect.
Section 4.3. Preparation of 8-K and the Proxy Statement. HGN shall
promptly prepare and file with the SEC the Proxy Statement, if required by
counsel.
Section 4.4. Other Potential Acquirers. HGN, its affiliates and their
respective officers, directors, employees, representatives and agents shall
immediately cease any existing discussions or negotiations, if any, with any
parties conducted heretofore with respect to any Third Party Acquisition.
Section 4.5. Meetings of Stockholders. Each of HGN and PCG shall take
all action necessary, in accordance with the respective General Corporation
Law of its respective state, and its respective certificate of incorporation
and bylaws, to duly call, give notice of, convene and hold a meeting of its
stockholders as promptly as practicable, to consider and vote upon the
adoption and approval of this Agreement and the transactions contemplated
hereby. The stockholder votes required for the adoption and approval of the
transactions contemplated by this Agreement shall be the vote required by the
NGCL and its charter and bylaws, in the case of PCG and the Nevada General
Corporation Law of its respective state, and its charter and bylaws, in the
case of HGN. PCG and HGN will, through their respective Boards of Directors,
recommend to their respective stockholders approval of such matters
Section 4.6. Nasdaq Listing. The parties shall use all reasonable
efforts to cause the PCG Shares to be issued in the Merger and the PCG Shares
to be reserved for issuance upon exercise of PCG Stock Options or HGN Stock
Options to be approved for listing on the Nasdaq National Market ("Nasdaq"),
subject to official notice of issuance, prior to the Effective Time.
Section 4.7. Access to Information.
(a) Between the date hereof and the Effective Time, PCG will give HGN
and its authorized representatives, and HGN will give PCG and its authorized
representatives, reasonable access to all employees, plants, offices,
warehouses and other facilities and to all books and records of itself and
its subsidiaries, will permit the other party to make such inspections as
such party may reasonably require and will cause its officers and those of
its subsidiaries to furnish the other party with such financial and operating
data and other information with respect to the business and properties of
itself and its subsidiaries as the other party may from time to time
reasonably request.
(b) Between the date hereof and the Effective Time, PCG shall furnish to
HGN, and HGN will furnish to PCG, within 25 business days after the end of
each calendar month (commencing with January 2000, an unaudited balance sheet
of the party furnishing such information as of the end of the such month and
the related statements of earnings, stockholders' equity (deficit) and,
within 25 business days after the end of each calendar quarter cash flows for
the quarter then ended, each prepared in accordance with generally accepted
accounting principles in conformity with the practices consistently applied
by such party with respect to its monthly or quarterly financial statements.
All the foregoing shall be in accordance with the books and records of the
party furnishing such information and shall fairly present its financial
position (taking into account the differences between the monthly and
quarterly statements prepared by such party in conformity with its past
practices) as of the last day of the period then ended.
(c) Each of the parties hereto will hold and will cause its consultants
and advisers to hold in confidence all documents and information furnished to
it in connection with the transactions contemplated by this Agreement.
Section 4.8. Additional Agreements, Reasonable Efforts. Subject to the
terms and conditions herein provided, each of the parties hereto agrees to
use all reasonable efforts to take, or cause to be taken, all action, and to
do, or cause to be done, all things reasonably necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
(i) cooperating in the preparation and filing of the Proxy Statement and the
8-K, any filings that may be required under the HSR Act, and any amendments
to any thereof; (ii) obtaining consents of all third parties and Governmental
Entities necessary, proper or advisable for the consummation of the
transactions contemplated by this Agreement; (iii) contesting any legal
proceeding relating to the Merger and (iv) the execution of any additional
instruments necessary to consummate the transactions contemplated hereby.
Subject to the terms and conditions of this Agreement, HGN, PCG SUB and PCG
agree to use all reasonable efforts to cause the Effective Time to occur as
soon as practicable after the stockholder votes with respect to the Merger.
In case at any time after the Effective Time any further action is necessary
to carry out the purposes of this Agreement, the proper officers and
directors of each party hereto shall take all such necessary action.
Section 4.9. Employee Benefits; Stock Option and Employee Purchase
Plans.
(a) Subject to the provisions of Section 1.6(d) hereof, prior to the
Effective Time, PCG and HGN will take or cause to be taken all action
necessary to adopt and or revise the employment and/or consulting agreements
of Xxx Xxxxxxx, xxxxxx Xxxxxxx, Xxxxxxx Xxxxxxx, and Xxxxx Xxxxxx with HGN.
It is the parties' present intent to provide after the Effective Time to
employees of HGN employee benefit plans (stock options or other plans
involving the potential issuance of securities of PCG) which, in the
aggregate, are not less favorable than those currently provided by HGN.
Notwithstanding the foregoing, nothing contained herein shall be construed as
requiring the parties to continue any specific employee benefit plans.
Concurrent with the approval of the Merger, PCG shall adopt a stock option
plan, the 2000 Stock Option Plan, whereby up to 3,000,000 shares of common
stock of PCG will be authorized to be issued according to the terms of the
Plan.
(b) The parties agree to work together prior to the Effective Time to
cause PCG to develop and adopt an incentive plan for employees of HGN and its
subsidiaries and providing for a vesting period of not less than two years.
Section 4.10. Public Announcements. HGN, and PCG will consult with one
another before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement,
including, without limitation, the Merger, and shall not issue any such press
release or make any such public statement prior to such consultation, except
as may be required by applicable law or by obligations pursuant to any
listing agreement with the Nasdaq as determined by HGN or PCG.
Section 4.11. Indemnification.
(a) To the extent, if any, not provided by an existing right under one
of the parties' directors and officers liability insurance policies, from and
after the Effective Time, PCG shall, to the fullest extent permitted by
applicable law, indemnify, defend and hold harmless any individual who is
now, or has been at any time prior to the date hereof, or who becomes prior
to the Effective Time, a director, officer or employee of the parties hereto
or any subsidiary thereof (each an "Indemnified Party" and, collectively, the
"Indemnified Parties") against all losses, expenses (including reasonable
attorneys' fees and expenses), claims, damages or liabilities or, subject to
the proviso of the next succeeding sentence, amounts paid in settlement
arising out of actions or omissions occurring at or prior to the Effective
Time and whether asserted or claimed prior to, at or after the Effective
Time) that are in whole or in part (i) based on, or arising out of the fact
that such person is or was a director, officer or employee of such party or a
subsidiary of such party or (ii) based on, arising out of or pertaining to
the transactions contemplated by this Agreement. In the event of any such
loss expense, claim, damage or liability (whether or not arising before the
Effective Time), (i) PCG shall pay the reasonable fees and expenses of
counsel selected by the Indemnified Parties, which counsel shall be
reasonably satisfactory to PCG, promptly after statements therefore are
received and otherwise advance to such Indemnified Party upon request
reimbursement of documented expenses reasonably incurred, in either case to
the extent not prohibited by the NGCL or its certificate of incorporation or
bylaws, (ii) PCG will cooperate in the defense of any such matter and (iii)
any determination required to be made with respect to whether an Indemnified
Party's conduct complies with the standards set forth under the NGCL and
PCG's certificate of incorporation or bylaws shall be made by independent
counsel mutually acceptable to PCG and the Indemnified Party; provided,
however, that PCG shall not be liable for any settlement effected without its
written consent (which consent shall not be unreasonably withheld). The
Indemnified Parties as a group may retain only one law firm with respect to
each related matter except to the extent there is, in the opinion of counsel
to an Indemnified Party, under applicable standards of professional conduct,
conflict on any significant issue between positions of any two or more
Indemnified Parties.
(b) In the event PCG or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity or such consolidation or merger
or (ii) transfers all or substantially all of its properties and assets to
any person, then and in either such case, proper provision shall be made so
that the successors and assigns of PCG shall assume the obligations set forth
in this Section 4.11.
(c) To the fullest extent permitted by law, from and after the
Effective Time, all rights to indemnification now existing in favor of the
employees, agents, directors or officers of PCG and HGN and their
subsidiaries with respect to their activities as such prior to the Effective
Time, as provided in PCG's and HGN's certificate of incorporation or bylaws,
in effect on the date thereof or otherwise in effect on the date hereof,
shall survive the Merger and shall continue in full force and effect for a
period of not less than six years from the Effective Time.
(d) The provisions of this Section 4.11 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives.
Section 4.12. Notification of Certain Matters. The parties hereto shall
give prompt notice to the other parties, of (i) the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of which would be
likely to cause any representation or warranty contained in this Agreement to
be untrue or inaccurate in any material respect at or prior to the Effective
Time, (ii) any material failure of such party to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder, (iii) any notice of, or other communication relating to, a default
or event which, with notice or lapse of time or both, would become a default,
received by such party or any of its subsidiaries subsequent to the date of
this Agreement and prior to the Effective Time, under any contract or
agreement material to the financial condition, properties, businesses or
results of
operations of such party and its subsidiaries taken as a whole to which such
party or any of its subsidiaries is a party or is subject, (iv) any notice or
other communication from any third party alleging that the consent of such
third party is or may be required in connection with the transactions
contemplated by this Agreement, or (v) any material adverse change in their
respective financial condition, properties, businesses, results of operations
or prospects taken as a whole, other than changes resulting from general
economic conditions; provided, however, that the delivery of any notice
pursuant to this Section 4.12 shall not cure such breach or non-compliance or
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
ARTICLE 5
Conditions to Consummation of the Merger
Section 5.1. Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party hereto to effect the Merger
are subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) this Agreement shall have been approved and adopted by the
requisite vote of the stockholders of PCG and HGN;
(b) this Agreement shall have been approved and adopted by the Board of
Directors of PCG and HGN;
(c) no statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
United States court or United States governmental authority which prohibits,
restrains, enjoins or restricts the consummation of the Merger;
(d) any waiting period applicable to the Merger under the HSR Act shall
have terminated or expired, and any other governmental or regulatory notices
or approvals required with respect to the transactions contemplated hereby
shall have been either filed or received; and
Section 5.2. Conditions to the Obligations of PCG. The obligation of
PCG to effect the Merger is subject to the satisfaction at or prior to the
Effective Time of the following conditions:
(a) the representations of HGN contained in this Agreement or in any
other document delivered pursuant hereto shall be true and correct (except to
the extent that the breach thereof would not have a Material Adverse Effect
on HGN) at and as of the Effective Time with the same effect as if made at
and as of the Effective Time (except to the extent such representations
specifically related to an earlier date, in which case such representations
shall be true and correct as of such earlier date), and at the Closing HGN
shall have delivered to PCG a certificate to that effect;
(b) each of the covenants and obligations of HGN to be performed at or
before the Effective Time pursuant to the terms of this Agreement shall have
been duly performed in all material respects at or before the Effective Time
and at the Closing HGN shall have delivered to PCG a certificate to that
effect;
(c) HGN shall have obtained the consent or approval of each person
whose consent or approval shall be required in order to permit the succession
by PCG SUB pursuant to the Merger to any obligation, right or interest of HGN
under any loan or credit agreement, note, mortgage, indenture, lease or other
agreement or instrument, except those for which failure to obtain such
consents and approvals would not, in the reasonable opinion of PCG,
individually or in the aggregate, have a Material Adverse Effect on HGN;
(d) there shall have been no events, changes or effects with respect to
HGN or its subsidiaries having or which could reasonably be expected to have
a Material Adverse Effect on HGN; and
(e) PCG shall have received, prior to or concurrent with the Closing
Date, sufficient funds from PCG's investment banking sources, to comply with
the cash requirements of this Agreement.
Section 5.3. Conditions to the Obligations of HGN. 'Me respective
obligations of HGN to effect the Merger are subject to the satisfaction at or
prior to the Effective Time of the following conditions:
(a) the representations of PCG contained in this Agreement or in any
other document delivered pursuant hereto shall be true and correct (except to
the extent that the breach thereof would not have a Material Adverse Effect
on PCG) at and as of the Effective Time with the same effect as if made at
and as of the Effective Time (except to the extent such representations
specifically related to an earlier date, in which case such representations
shall be true and correct as of such earlier date), and at the Closing PCG
shall have delivered to HGN a certificate to that effect;
(b) each of the covenants and obligations of PCG to be performed at or
before the Effective Time pursuant to the terms of this Agreement shall have
been duly performed in all material respects at or before the Effective Time
and at the Closing PCG shall have delivered to HGN a certificate to that
effect; and
(c) there shall have been no events, changes or effects with respect to
PCG having or which could reasonably be expected to have a Material Adverse
Effect on PCG.
ARTICLE 6
Termination; Amendment; Waiver
Section 6.1. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether
before or after approval and adoption of this Agreement by PCG's or HGN's
stockholders:
(a) by mutual written consent of PCG and HGN;
(b) by HGN or PCG if (i) any court of competent jurisdiction in the
United States or other United States Governmental Entity shall have issued a
final order, decree or ruling or taken any other final action restraining,
enjoining or otherwise prohibiting the Merger and such order, decree, ruling
or other action is or shall have become nonappealable or (ii) the Merger has
not been consummated by April 14, 2000; provided, however, that no party may
terminate this Agreement pursuant to this clause (ii) if such party's failure
to fulfill any of its obligations under this Agreement shall have been the
reason that the Effective Time shall not have occurred on or before said
date;
(c) by PCG if (i) there shall have been a breach of any representation
or warranty on the part of HGN set forth in this Agreement, or if any
representation or warranty of HGN shall have become untrue, in either case
such that the conditions set forth in Section 5.2(a) would be incapable of
being satisfied by February 15, 2000 (or as otherwise extended), (ii) there
shall have been a breach by HGN of any of their respective covenants or
agreements hereunder having a Material Adverse Effect on HGN or materially
adversely affecting (or materially delaying) the consummation of the Merger,
and HGN, as the case may be, has not cured such breach within 20 business
days after notice by PCG thereof, provided that PCG has not breached any of
its obligations hereunder, (iii) PCG shall have convened a meeting of its
stockholders to vote upon the Merger and shall have failed to obtain the
requisite vote of its stockholders; or (iv) PCG shall have convened a meeting
of its Board of Directors to vote upon the Merger and shall have failed to
obtain the requisite vote;
(d) by HGN if (i) there shall have been a breach of any representation
or warranty on the part of PCG set forth in this Agreement, or if any
representation or warranty of PCG shall have become untrue, in either case
such that the conditions set forth in Section 5.3(a) would be incapable of
being satisfied by February 15, 2000 (or as otherwise extended), (ii) there
shall have been a breach by PCG of its covenants or agreements hereunder
having a Material Adverse Effect on PCG or PCG SUB or materially adversely
affecting (or materially delaying) the consummation of the Merger, and PCG or
PCG SUB, as the case may be, has not cured such breach within twenty business
days after notice by HGN thereof, provided that HGN has not breached any of
its obligations hereunder, (iii) the PCG Board shall have recommended to
PCG's stockholders a Superior Proposal, (iv) the PCG Board shall have
withdrawn, modified or changed its approval or recommendation of this
Agreement or the Merger or shall have failed to call, give notice of, convene
or hold a stockholders' meeting to vote upon the Merger, or shall have
adopted
any resolution to effect any of the foregoing, (v) HGN shall have convened a
meeting of its stockholders to vote upon the Merger and shall have failed to
obtain the requisite vote of its stockholders or (vi) PCG shall have convened
a meeting of its stockholders to vote upon the Merger and shall have failed
to obtain the requisite vote of its stockholders.
Section 6.2. Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 6. 1, this Agreement shall
forthwith become void and have no effect, without any liability on the part
of any party hereto or its affiliates, directors, officers or stockholders,
other than the provisions of this Section 6.2 and Sections 4.7(c) hereof.
Nothing contained in this Section 6.2 shall relieve any party from liability
for any breach of this Agreement.
Section 6.3. Fees and Expenses. Each party shall bear its own expenses
in connection with this Agreement and the transactions contemplated hereby.
Section 6.4. Amendment. This Agreement may be amended by action taken
by PCG and HGN at any time before or after approval of the Merger by the
stockholders of PCG and HGN (if required by applicable law) but, after any
such approval, no amendment shall be made which requires the approval of such
stockholders under applicable law without such approval. This Agreement may
not be amended except by an instrument in writing signed on behalf of the
parties hereto.
Section 6.5. Extension; Waiver. At any time prior to the Effective
Time, each party hereto may (i) extend the time for the performance of any of
the obligations or other acts of any other party, (ii) waive any inaccuracies
in the representations and warranties of any other party contained herein or
in any document, certificate or writing delivered pursuant hereto or (iii)
waive compliance by any other party with any of the agreements or conditions
contained herein. Any agreement on the part of any party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party hereto to
assert any of its rights hereunder shall not constitute a waiver of such
rights.
ARTICLE 7
Miscellaneous
Section 7.1. Nonsurvival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement. This Section 7.1 shall not
limit any covenant or agreement of the parties hereto which by its terms
requires performance after the Effective Time.
Section 7.2. Entire Agreement; Assignment. This Agreement (a)
constitutes the entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all other prior agreements and
understandings both written and oral, between the parties with respect to the
subject matter hereof and (b) shall not be assigned by operation of law or
otherwise.
Section 7.3. Validity. If any provision of this Agreement, or the
application thereof to any person or circumstance, is held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other persons or circumstances, shall not be affected thereby,
and to such end, the provisions of this Agreement are agreed to be severable.
Section 7.4. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by
facsimile or by registered or certified mail (postage prepaid, return receipt
requested), to each other party as follows:
If to HGN:
xxxxxx Xxxxxxx
HOME GAMBLING NETWORK, INC.
XX Xxx 00000
Xxx Xxxxx, Xxxxxx 00000
Copy to:
Xxxxxx X. Xxxxxxxxxx, Esq.
Xxxxxx Xxxxx & Xxxxxxxxxx
0000 X. Xxxxxxxx Xx. Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
if to PCG:
PCG MEDIA, INC.
000 Xxxxx 000 Xxxx
Xxxx Xxxx Xxxx, Xxxx 00000
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Section 7.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada, without regard
to the principles of conflicts of law thereof.
Section 7.6. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of
or to affect the meaning or interpretation of this Agreement.
Section 7.7. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and its successors and
permitted assigns, and except as provided in Sections 4.9 and 4.11, nothing
in this Agreement, express or implied, is intended to or shall confer upon
any other person any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
Section 7.8. Certain Definitions. For the purposes of this Agreement,
the term:
(a) "affiliate" means (except as otherwise provided in Sections 2.19,
3.19 and 4.13) a person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
the first mentioned person;
(b) "business day" means any day other than a day on which Nasdaq is
closed;
(c) "capital stock" means common stock, preferred stock, partnership
interests, limited liability company interests or other ownership interests
entitling the holder thereof to vote with respect to matters involving the
issuer thereof,
(d) "knowledge" or "known" means, with respect to any matter in
question, if an executive officer of PCG or HGN or its subsidiaries, as the
case may be, has actual knowledge of such matter;
(e) "person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization or other
legal entity; and
(f) "subsidiary" or "subsidiaries" of PCG SUB, PCG, HGN or any other
person, means any corporation, partnership, limited liability company,
association, trust, unincorporated association or other legal entity of which
PCG SUB, PCG, HGN or any such other person, as the case may be (either alone
or through or together with any other subsidiary), owns, directly or
indirectly, 50% or more of the capital stock, the holders of which are
generally entitled to vote for the election of the board of directors or
other governing body of such corporation or other legal entity.
Section 7.9. Personal Liability. This Agreement shall not create or be
deemed to create or permit any personal liability or obligation on the part
of any direct or indirect stockholder of PCG, HGN or PCG SUB or any officer,
director, employee, agent, representative or investor of any party hereto.
Section 7. 10. Specific Performance. The parties hereby acknowledge and
agree that the failure of any party to perform its agreements and covenants
hereunder, including its failure to take all actions as are necessary on its
part to the consummation of the Merger, will cause irreparable injury to the
other parties for which damages, even if available, will not be an adequate
remedy. Accordingly, each party hereby consents to the issuance of injunctive
relief by any court of competent jurisdiction to compel performance of such
party's obligations and to the granting by any court of the remedy of
specific performance of its obligations hereunder; provided, however, that,
if a party hereto is entitled to receive any payment or reimbursement of
expenses pursuant to Sections 6.3(a), (b) or (c), it shall not be entitled to
specific performance to compel the consummation of the Merger.
Section 7.11. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same agreement.
In Witness Whereof, each of the parties has caused this Agreement to be duly
executed on its behalf as of the day and year first above written.
PCG MEDIA, INC.
By:/s/ Xxxx Xxxxxx
Name: Xxxx X. Xxxxxx
Title: President
HOME GAMBLING NETWORK, INC.
By:xxxxxx Xxxxxxx
Name: xxxxxx Xxxxxxx
Title: President
PCG MEDIA, INC. DISCLOSURE SCHEDULE
Schedule 2.1 Organization See Amended
Articles/Bylaws/Minutes
Schedule 2.5 Consents & Approvals None Required
Schedule 2.6 No Default Not Applicable
Schedule 2.7 No Undisclosed Liability None Exist
Schedule 2.8 Litigation None Exist
Schedule 2.9 Compliance with Applicable Law Not Applicable - full
disclosed in I OKSB
Schedule 2.10 Employee Benefit Plans Section 2.11 (a) Not
Applicable-None Exist
Section 2.11 (b) No Benefit Plan Exist
Section 2.11(c) No Options Exist
Section 2.11 (d) No Agreements Exist
Schedule 2.11 Environmental Laws and Regs Not Applicable
Schedule 2.12 Tax Matters None Exist
Schedule 2.14 Intellectual Property None Exist
Schedule 2.15 Insurance None Exist
Schedule 2.16 Vote Required See Shareholder Meeting
Certificate
Schedule 2.17 Tax Treatment Not Applicable
Schedule 2.18 Affiliates Xxxx X. Xxxxxx
Xxxxxxx X. Xxxxx
Schedule 2.19 Certain Business Practices None Exist
Schedule 2.20 Insider Interest None Exist
Schedule 2.21 Opinion of Financial Adviser Waived - None Exist
Schedule 2.24 Broker None Exist
Schedule 4.1 Conduct of Business See Amended & Restated
Articles
HOME GAMBLING NETWORK DISCLOSURE SCHEDULE
Schedule 3.2(b) Subsidiary Stock None Exist
Schedule 3.2(c) Capital Stock Rights None Exist other than
as in Articles
Schedule 3.2(d) Securities conversions None Exist
Schedule 3.2 (f) Subsidiaries None Exist
Schedule 3.6 Consents & Approvals None Required
Schedule 3.7 No Default Not Applicable
Schedule 3.8 No Undisclosed Liability None Exist
Schedule 3.9 Litigation None Exist
Schedule 3. 10 Compliance with Applicable Law Not Applicable
Schedule 3.11 Employee Benefit Plans Section 3.11(c) No Options
Exist
Section 3.1 l (e) No Agreements Exist
Schedule 3.12 Environmental Laws and Regs Not Applicable
Schedule 3.13 Tax Matters None Exist
Schedule 3.14 Title to Property None Exist
Schedule 3.15(b) Intellectual Property See Assignment attached
pertaining to
Patent No. 5800268
Schedule 3.16 Insurance None Exist
Schedule 3.17 Vote Required See Shareholder Meeting
Certificate
Schedule 3.18 Tax Treatment Not Applicable
Schedule 3.19 Affiliates Xxx Xxxxxxx
xxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
Schedule 3.20 Certain Business Practices None Exist
Schedule 3.21 Insider Interest None Exist
Schedule 3.22 Opinion of Financial Adviser Waived - None Exist
Schedule 2.23 Broker None Exist
Schedule 4.2 Conduct of Business See Amended
