EXHIBIT 2.2
SHARE EXCHANGE AGREEMENT AND PLAN OF MERGER
SHARE EXCHANGE AGREEMENT AND PLAN OF MERGER dated as of April 4, 2000
("Agreement"), between The Storm High Performance Sound Corporation , a Florida
Corporation ("Storm"), and North Coast Productions Inc., a State of Washington
Corporation hereinafter referred to as "North Coast".
BACKGROUND
Pursuant to a Stock Purchase Agreement dated January 28, 2000 entered
into by and between Storm and North Coast, Storm became, upon closing of the
Stock Purchase Agreement effective March 31, 2000, a subsidiary of North Coast
and North Coast agreed, subsequent to Storm becoming a subsidiary of North Coast
to merge North Coast into Storm with Storm being the surviving corporation and
North Coast ceasing to exist.
The respective Boards of Directors of Storm and North Coast have each
approved, upon the terms and subject to the conditions set forth in this
Agreement, the merger ("Merger") of North Coast with and into Storm whereby each
issued and outstanding share of common stock of North Coast not owned directly
or indirectly by North Coast will be converted into the common stock of Storm
("Common Stock") as set forth in Article I.
In consideration of the respective representations, warranties,
covenants and agreements contained in this Agreement, Storm and North Coast
hereby agree as follows:
ARTICLE I
THE MERGER
1.01 The Merger. Upon the terms and subject to the conditions hereof, and
in accordance with the relevant provisions of the Florida statutes annotated
("Florida Statute"), North Coast shall be merged with and into Storm subject to
the conditions set forth in Article VI. Following the Merger, Storm shall
continue as the surviving corporation ("Surviving Corporation") and shall
continue its existence under the laws of the State of Florida, and the separate
corporate existence of North Coast shall cease.
1.02 Effective Time. The Merger shall be consummated and shall become
effective at such time ("Effective Time") as the conditions set forth in Article
VI are satisfied or waived, if permissible.
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1.03 Effects of the Merger. The Merger shall have the effects specified in
the Florida Statute. This Plan of Merger is intended to constitute "a plan of
reorganization" within the meaning of Section 354 of the Internal Revenue Code,
1986 as amended. Further for federal income tax purposes it is intended that the
merger shall qualify as a reorganization as defined in Section 368 (a) of the
Internal Revenue Code.
1.04 Directors and Officers of the Surviving Corporation. From and after
the Effective Time, the directors and officers of the Surviving Corporation
shall be the persons set forth on Exhibit 1.04 hereto, until their successors
shall have been duly elected or appointed and qualified or until their earlier
death, resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and by laws.
1.05 Shares. At or prior to the Effective Time, by virtue of the Merger the
following events shall occur:
(a) Each share of common stock or preferred stock held by North Coast
as treasury stock shall be cancelled and retired and shall cease to exist,
and no payment or consideration shall be made with respect thereto;
(b) 7,115,593 shares of common stock of Storm owned by North Coast
shall be returned to Storm's treasury and Storm shall retire and cancel
such shares. (c) Storm shall arrange delivery of 25,000,000 common shares
to be issued from Storm's treasury which shall be issued to each of North
Coast's shareholders, as set forth on Exhibit 1.05(c) annexed hereto, in
the number of Common Stock shares set forth next to each name.
1.06 Private Placement.
(a) The Common Stock issued to North Coast's shareholders have not
been and will not be registered with the Securities and Exchange Commission
("SEC") or the securities commission of any state, including but not
limited to Florida and Washington state, pursuant to an exemption from
registration by virtue of Storm's intended compliance with the provisions
of Sections 4(2) and 4(6) of the Securities Act of 1933, as amended
("Securities Act"), and the Common Stock will be made available only to
"accredited investors" or Company shareholders who have used a "Purchaser
representative", as defined in Rule 501(a) of Regulation D promulgated
under the Securities Act. Such exemption limits the number and types of
investors to which the offering of Common Stock may be made and restricts
subsequent transfers of the Common Stock so offered which also may be
restricted by state securities laws. The Common Stock may not be resold or
otherwise disposed of by North Coast's shareholders unless, in the opinion
of counsel to Storm, registration under federal and applicable state
securities laws is not required or compliance is made with the registration
requirements of such laws.
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ARTICLE II
EXCHANGE OF SHARES
2.01 Issuance of Certificates. Promptly after the Effective Time, the
Surviving Corporation shall issue to each person set forth on Exhibit 1.05(c) a
certificate representing the Common Stock to be issued to each North Coast
shareholder and simultaneously each North Coast shareholder shall exchange and
surrender the certificate representing all of such North Coast shareholder's
shares in the Company. At the close of business on the day of the Effective
Time, the stock ledger of North Coast shall be closed.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
STORM
Storm represents and warrants to North Coast as of the date of this
Agreement and as of the Effective Time as follows:
3.01 Existence; Good Standing. Storm is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation.
3.02 Capitalization. The authorized capital stock of Storm consists of
50,000,000 shares of Common Stock, par value $0.0001 ("Shares") and no other
classes of stock, common or preferred, or other securities. As of March 31,
2000, there were 8,606,815 shares of Common Stock issued and outstanding. All
issued and outstanding shares of Common Stock are duly authorized, validly
issued, free of preemptive rights, and non-assessable. Storm is not a party to
or bound by any written or oral contract or agreement which grants to any person
an option, warrant or right of first refusal or other right of any character to
acquire at any time, or upon the happening of any stated events any shares of or
interest in Storm, whether or not presently authorized, issued or outstanding,
and (ii) there are outstanding (a) no shares of capital stock or other voting
securities of Storm, (b) no securities of Storm or any of its subsidiaries
convertible into or exchangeable for shares of capital stock or voting
securities of Storm, (c) no options or other rights to acquire from Storm or any
of its subsidiaries, and no obligation of Storm or any of its subsidiaries to
issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of Storm, and (d) no equity
equivalents, interests in the ownership or earnings of Storm or any of its
subsidiaries or other similar rights. Upon issuance of the Common Stock to North
Coast's shareholders, such shares of Common Stock shall be duly authorized,
validly issued, fully paid, non-assessable, and free of preemptive rights.
3.03 Authorization: Validity and Effect of Agreements. Storm has the
requisite corporate power and authority to execute and deliver this Agreement.
The consummation by Storm of the transactions contemplated hereby has been duly
authorized by all requisite corporate action and the issuance of the Common
Stock to North Coast's shareholders is required to be approved by the Board of
Directors of Storm and such approval was obtained. This Agreement constitutes
the valid and legally binding obligation of Storm, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and general principles of
equity.
3.04 No Violation. To the best of Storm's knowledge neither the execution
and delivery by Storm of this Agreement, nor the consummation by Storm of the
transactions contemplated hereby in accordance with the terms hereof, will: (i)
conflict with or result in a breach of any provisions of the Articles of
Incorporation or Bylaws of Storm (ii) violate, or conflict with, or result in a
breach of any provision of, or constitute a default (or an event
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which with notice or lapse of time or both, would constitute a default) under,
or result in the termination or in a right of termination or cancellation of, or
accelerate the performance required by, or result in the triggering of any
payment of compensation under, or result in the creation of any lien, security
interest, charge or encumbrance("Lien")upon any of the material properties of
Storm or its subsidiaries under, or result in being declared void, voidable, or
without further binding effect, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, deed of trust or any material license,
franchise permit, lease, contract, agreement or other instrument, commitment or
obligation to which Storm or any of Storm's subsidiaries if a party, or by which
Storm or any of Storm's subsidiaries or any of their respective properties is
bound or affected, except for any of the foregoing matters which would not have
a material adverse effect on the business, results of operations financial
condition or prospects of Storm and its subsidiaries taken as a whole ("Storm
Material Adverse Effect"); or (iii) other than the filings required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1978 ("HSR Act"), the Securities
Exchange Act of 1934, ("Exchange Act"), the Securities Act or applicable state
securities and "Blue Sky" laws or filings in connection with the maintenance of
its qualification to do business in other jurisdictions, and the filings
contemplated by Section 5.02 of this Agreement (collectively, "Regulatory
Filings"), require any material consent, approval or authorization of, or
declaration, filings or registration with, any domestic governmental or
regulatory authority, the failure to obtain or make which would have a Storm
Material Adverse Effect.
3.05 Documents. Storm has delivered to North Coast the following reports
and/or statements:
Audited financial statements for the year ended December 31, 1999.
Issuer Information and Disclosure Statement Pursuant to Rule 15 c
2-11(a)(5)
Form 8-K with March 31, 2000 Date of Report
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF NORTH COAST
North Coast represents and warrants to Storm as of the date of this
Agreement and as of the Effective Time as follows:
4.01 Existence; Good Standing; Corporate Authority; Compliance with Law
North Coast is a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. The copies of
North Coast's Articles of Incorporation and by laws previously delivered to
Storm are true and correct and have not since been amended, modified or
rescinded.
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4.02 Authorization, Validity and Effect of Agreements. North Coast has the
requisite corporate power and authority to execute and deliver this Agreement,
and has obtained the approval of the Merger by the shareholders of North Coast.
The consummation by North Coast of all transactions contemplated hereby has been
duly authorized by all requisite corporate action. This Agreement constitutes
the valid and legally binding obligation of North Coast, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights and general
principles of equity.
4.03 Capitalization. The authorized capital stock of North Coast consists
of 100,000,000 shares of common stock, par value $.001 per share, and no other
classes of stock, common or preferred, or other securities. There are 5,000,000
shares of common stock issued and outstanding as of April 4, 2000. All issued
and outstanding shares of common stock are duly authorized, validly issued,
fully paid, non-assessable and free of preemptive rights. North Coast is not a
party to or bound by any written or oral contract or agreement which grants to
any person an option, warrant or right of first refusal or other right of any
character to acquire at any time, or upon the happening of any stated events,
any shares of or interest in North Coast, whether or not presently authorized,
issued or outstanding. North Coast shares of capital stock or other voting
securities of North Coast, (ii) no securities of North Coast or any of its
subsidiaries convertible into or exchangeable for shares of capital stock or
voting securities of North Coast, (iii) no options or other rights to acquire
from North Coast or any of its subsidiaries, and no obligations of North Coast
or any of its subsidiaries to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of North Coast, and (iv) no equity equivalents, interest in the
ownership or earnings of North Coast or any of its subsidiaries or other similar
rights. There are no outstanding obligations of North Coast or any of its
subsidiaries to repurchase, redeem or otherwise acquire any securities of North
Coast.
4.04 No Violation. Neither the execution and delivery by North Coast of
this Agreement nor the consummation by North Coast of the transactions
contemplated hereby in accordance with the terms hereof will: (i) conflict with
or result in a breach of any provisions of the Articles of Incorporation or
Bylaws of North Coast or its subsidiaries, (ii) violate, or conflict with, or
result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination or in a right of termination or cancellation of, or
accelerate the performance required by, or result in the triggering of any
payment or compensation under, or result in the creation of any Lien upon any of
the properties of North Coast or its subsidiaries under, or result in being
declared void, voidable, or without further binding effect, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust
or any material license, franchise, permit, lease, contract, agreement or other
instrument, commitment or obligation of which North Coast or its subsidiaries is
a party, or by which North Coast or its subsidiaries or any of their respective
properties or assets is bound or affected, except for any of the foregoing
matters which, singularly or in the aggregate, would not have a North Coast
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Material Adverse Effect; (iii) other than the Regulatory filings, require any
material consent, approval or authorization of, or declaration, filing or
registration with, any domestic governmental or regulatory authority, the
failure to obtain or make which would have a North Coast Material Adverse
Effect, as defined in Section 7.01(c) below, or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to North Coast, any
of its subsidiaries or any of their assets, except for violations which in the
aggregate would not have a North Coast Material Adverse Effect or materially
adversely affect the ability of North Coast to consummate the Merger.
ARTICLE V
COVENANTS
5.01 Conduct of Business. From and after the date of this Agreement until
the Merger is affected or this Agreement is terminated, unless Storm has
consented in writing thereto, North Coast, and, with respect to (e) and (f)
below, Storm and North Coast:
(a) Shall, and shall cause its subsidiaries to, conduct its operations
according to its usual, regular and ordinary course in substantially the
same manner as heretofore conducted;
(b) Shall use reasonable efforts, and shall cause its subsidiaries to
use reasonable efforts, to preserve intact its business organization and
goodwill, keep available the services of its officers and employees and
maintain satisfactory relationships with those persons having business
relationships with it;
(c) Shall confer on a regular basis with one or more representatives
of Storm to report operational matters of materiality and any proposals to
engage in material transactions;
(d) Shall not amend its Articles of Incorporation or By Laws;
(e) Shall promptly notify the other parties hereto of any material
emergency or other material change in the condition (financial or
otherwise), business, properties, assets, liabilities, prospects or the
normal course of its businesses or in the operation of its properties, any
material litigation or material governmental complaints, investigations or
hearings (or communications indicating that the same may be contemplated),
or the breach in any material respect of any representation or warranty
contained herein;
(f) Shall promptly deliver to the other parties hereto true and
correct copies of any report, statement or schedule filed with or delivered
to the SEC, any other
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Governmental entity (other than routine corporate tax and other filings in
the ordinary course of business) or any shareholder of North Coast or
Storm, as the case may be, subsequent to the date of this Agreement;
(g) Shall not (i) issue, sell or pledge, or agree to issue, sell or
pledge, any shares of its capital stock, effect any stock split or
otherwise change its capitalization as it existed on the date hereof, (ii)
grant, confer or award any option, warrant, conversion, right or other
right to acquire any shares of its capital stock or grant any right to
convert or exchange any securities of North Coast for Common Stock, (iii)
increase any compensation or enter into or amend any employment agreement
with any of its present or future officers or directors, other than in the
ordinary course of North Coast's business, (iv) adopt any new employee
benefit plan, other than in the ordinary course of North Coast's business
(including any stock option, stock benefit or stock purchase plan) or amend
any existing employee benefit plan in any material respect, other than in
the ordinary course of business, except, in each case, for changes which
are less favorable to participants in such plans or as may be required by
applicable law, or (v) amend any Officer Employment Agreement or increase
any compensation payable pursuant to such Officer Employment Agreements;
(h) Shall not (i) except in the normal course of business as
consistent with prior practice, declare, set aside or pay any dividend
(whether in cash, stock or property) or make any other distribution or
payment with respect to any shares of its capital stock or (ii) directly or
indirectly redeem, purchase or otherwise acquire any shares of its capital
stock or make any commitment for any such action;
(i) Shall not, and shall not permit its subsidiaries to (i) sell,
lease or otherwise dispose of any assets of North Coast or its subsidiaries
(including capital stock) which are of a material amount, individually or
in the aggregate, or (ii) make any acquisition, by means of merger or
otherwise, of any assets or securities which are of a material amount,
individually or in the aggregate; and
(j) Shall not, and shall not permit its subsidiaries to, agree in
writing to take or otherwise take (i) any of the foregoing actions or (ii)
any action which would make any representation or warranty of North Coast
herein untrue or incorrect.
5.02 Filings; Other Action. Subject to the terms and conditions herein
provided, North Coast and Storm shall: (i) promptly make their respective
filings and thereafter make any other required submissions under the HSR act
with respect to the Merger if required; (ii) use all reasonable efforts to
cooperate with one another in (a) determining which filings are required to be
made prior to the Effective Time with, and which consents, approvals, permits or
authorizations are required to be obtained prior to the Effective Time from,
governmental or regulatory authorities of the United States, the several states,
and other jurisdictions in connection with the execution and delivery of this
Agreement and the consummation of the
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transactions contemplated hereby and (b) timely making all such filings and
timely seeking all such consents, approvals, permits or authorizations; and
(iii) use best efforts to take, or cause to be taken, all other action and do,
or cause to be done, all other things necessary, proper or appropriate to
consummate and make effective the transactions contemplated by this Agreement.
If, at any time after the Effective Time, any further action is necessary or
desirable to carry out the purpose of this Agreement, the proper officers and
directors of Storm and North Coast shall use best efforts to take all such
necessary action.
5.03 Inspection of Records. From the date hereof to the Effective Time,
each of Storm and North Coast shall allow all designated officers, attorneys,
accountants and other representatives of Storm and North Coast, as the case may
be, access at all reasonable times to the records and files, correspondence,
audits and properties, as well as to all information relating to commitments,
contracts, titles and financial position, or otherwise pertaining to the
business and affairs of Storm, North Coast and their subsidiaries.
5.04 Indemnification.
(a) (i) After the Effective Time, the Surviving Corporation
shall, to the fullest extent permitted, indemnify, defend and hold
harmless the present and former directors and officers of Storm and
North Coast and any subsidiaries and their respective heirs,
executors, administrators and legal representatives (individually, an
"Indemnified Party" and, collectively, the "Indemnified Parties" )
against all losses, expenses, claims, damages or liabilities arising
out of actions or omissions occurring on or prior to the Effective
Time (including, without limitation, acts or omissions relating to the
transactions contemplated by this Agreement (collectively "Losses")).
In connection with the foregoing obligations from and after the
Effective Time, the Surviving Corporation, shall bear the cost of
expenses incurred in defending against any claim, action, suit,
proceeding or investigation arising out of any alleged acts or
omissions occurring on or prior to the Effective Time (including,
without limitation, acts or omissions relating to the transactions
contemplated by this Agreement), as incurred to the fullest extent
permitted under applicable law. All rights to indemnification,
including provisions relating to advances, expenses and exculpation of
director liability, existing in favor of the Indemnified Parties as
provided in Storm's or North Coast's Articles of Incorporation and
Bylaws, as in effect as of the date of this Agreement, with respect to
matters occurring through the Effective Time, will survive the
Effective Time and will continue in full force and effect.
(ii) Any Indemnified Party will promptly notify the Surviving
Corporation of any claim, action, suit, proceeding or investigation
for which such party may seek indemnification under this Section (a
"Third Party Claim"). In the event of any such Third Party Claim, (x)
within twenty (20) days of receipt of such notice, the Surviving
Corporation will have the right to assume the defense thereof, and the
Surviving Corporation
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will not be liable to such Indemnified Parties for any legal expenses
of other counsel or any other expenses subsequently incurred
thereafter by such Indemnified Parties in connection with the defense
thereof, except that all Indemnified Parties (as a group) will have
the right to retain one separate counsel, acceptable to such
Indemnified Parties, as the expense of the Indemnifying Party if the
named parties to any such proceeding include both the Indemnified
Party and the Surviving Corporation and the representation of such
parties by the same counsel would be inappropriate due to a conflict
of interest between them, and each Indemnified Party will have the
right to retain a separate counsel, acceptable to such Indemnified
Party, at the expense of the Indemnifying Party, if representation of
such Indemnified Party and the other Indemnified Parties as a group
would be inappropriate due to a conflict of interest between them and
(y) the Indemnified Parties will cooperate in the defense of any such
matter. If the Surviving Corporation fails to take action within
twenty (20) days as set forth in (x) above, then the Indemnified Party
shall have the right to pay, compromise or defend any Third Party
Claim and to assert the amount of any payment on the Third Party Claim
plus the expense of defense or settlement as a Loss. The Surviving
Corporation will not be liable for any settlement affected without its
prior written consent, unless it has failed to take action within the
twenty (20) day period after receipt of notice as set forth above.
Notwithstanding the foregoing, the Surviving Corporation will not have
any obligation under this Section 5.04 to indemnify an Indemnified
Party when and if a court of competent jurisdiction ultimately
determines and such determination becomes final, that the
indemnification of such Indemnified Party in the manner contemplated
hereby is prohibited by applicable law.
(b) The Surviving Corporation shall pay all reasonable expenses,
including reasonable attorneys' fees, that may be incurred by any
Indemnified Parties in enforcing the indemnity and other obligations
provided for in this Section 5.04.
(c) The rights of each Indemnified Party hereunder shall be in
addition to any other rights such Indemnified Party may have under the
Articles of Incorporation or by laws of Storm, under the Florida Statute or
otherwise. The provisions of this Section shall survive the consummation of
the Merger and expressly are intended to benefit each of the Indemnified
Parties and will be binding on all successors and assigns of the Surviving
Corporation.
5.05 Further Action. Each party hereto shall, subject to the fulfillment at
or before the Effective Time of each of the conditions of performance set forth
herein or the waiver thereof, perform such further acts and execute such
documents as may be reasonably required to effect the Merger.
5.06 Expenses. Whether or not the Merger is consummated, except as provided
in Section 7.02 hereof or as provided otherwise herein, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses.
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5.07 Consent of Storm's Shareholders. North Coast shall submit the Merger
to the shareholders of the Company for their consideration in accordance with
Chapter 23B.11 of the Washington State Business Corporation Act and other
provisions of applicable law, and obtain the consent of its shareholders. North
Coast shall notify Storm in writing that the consent of the shareholders has
been obtained, and shall set forth the names of any dissenting shareholders at
least one (1) day prior to the Effective Time.
5.08 Publicity. The initial press release relating to this Agreement shall
be a joint press release and thereafter North Coast and Storm shall, subject to
their respective legal obligations (including requirements of the Nasdaq
National Market, stock exchanges and other similar regulatory bodies), consult
with each other, and use reasonable efforts to agree upon the text of any press
release, before issuing any such press release or otherwise making public
statements with respect to the transactions contemplated hereby and in making
any filings with any federal or state governmental or regulatory agency or with
Nasdaq National Market, or any national securities exchange with respect
thereto.
5.09 Best Efforts to Close. The parties hereto agree to use their best
efforts to close the transactions contemplated hereby by April 5, 2000.
ARTICLE VI
CONDITIONS TO CONSUMMATION
OF THE MERGER
6.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver, where permissible, prior to the Effective Time, of the
following conditions:
(a) This Agreement shall have been approved by the affirmative vote of
the shareholders of North Coast by the requisite vote in accordance with
applicable law and by the Board of Directors of Storm;
(b) No statute, rule, regulation, executive order, decree, injunction
or other order (whether temporary, preliminary or permanent), shall have
been enacted, entered, promulgated or enforced by any court or governmental
authority which is in effect and has the effect of prohibiting the
consummation of the Merger; provided, however, that each of the parties
shall have used its best efforts to prevent the entry of any injunction or
other order and to appeal as promptly as possible any injunction or other
order that may be entered;
(c) The waiting period (and any extension thereof ) applicable to the
consummation of the Merger under the HSR Act if required shall have expired
or been terminated;
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(d) Each of the consents listed on Schedule 6.01(d) hereto shall have
been obtained.
(e) North Coast has, or on or before the Effective Time of this
Agreement shall have completed the issuance of North Coast's Series A
Senior Subordinated Redeemable Convertible Debentures (the "Debentures") in
the face amount of $1,000,000 to Rock Solid Group LLC, a Colorado limited
liability company, upon the terms and conditions set forth in the
Subscription Agreement and other documentation relating to the issuance of
the Debentures. Subject to and upon the Closing of this Agreement, Storm
agrees to assume the liabilities and obligations of North Coast under the
Debentures as further set forth in this Agreement. On or prior to the
Effective Time, North Coast shall secure, in writing, from all of the
holders of the Debentures, their consent to Storm's assumption of North
Coast's liability and obligations to perform under the terms and conditions
of the Debenture Agreement.
(f) Upon the close of this Agreement the executive offices of the
Surviving Corporation shall be relocated to 0000 - 000xx Xxxxxx XX,
Xxxxxxxx, Xxxxxxxxxx 00000.
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
7.01 Closing and Termination. Except as otherwise set forth in this Section
7.01, this Agreement shall close by no later than 11:59 p.m. Seattle,
Washington, April 5, 2000, ("Closing Date") provided that either party may
extend this Agreement for an additional seven (7) day period by written notice
to the other party prior to the Closing Date. This Agreement shall terminate if
not closed by 11:59 p.m., Seattle, Washington, April 12, 2000. Notwithstanding
the foregoing and/or the approval of this Agreement by the shareholders of North
Coast and the Board of Directors of Storm, this Agreement may be terminated and
the Merger contemplated hereby may be abandoned at any time prior to the
Effective Time:
(a) By mutual written consent, duly authorized by their respective
Boards of Directors, by Storm and North Coast;
(b) By either Storm or North Coast
(i) if any court of competent jurisdiction or any other
governmental body shall have issued an order, decree or ruling or
taken any other action permanently enjoining, restraining or otherwise
permanently prohibiting the Merger and such order, decree, ruling or
other action shall have become final and non-appealable;
(ii) if, upon a vote at a duly held meeting or upon any
adjournment thereof, the shareholders of North Coast or the Board of
Directors of Storm shall have failed to give any required approvals;
or
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(c) By Storm if North Coast shall have breached any of its
representations and warranties or covenants contained herein and if such
breach or breaches, either individually or in the aggregate, will have, or
are reasonably likely to have, a material adverse effect on the business,
results of operations, financial condition or prospects of North Coast (a
"North Coast Material Adverse Effect"), unless, in the case of a breach of
covenant, such failure to perform has been caused by a breach of this
Agreement by North Coast.
(d) By North Coast if Storm shall have breached any of its
representations and warranties and such breach or breaches, either
individually or in the aggregate, will have, or are reasonably likely to
have, a Storm Material Adverse Effect, or if Storm shall have breached in
any material respect any of its covenants contained herein, unless, in the
case of a breach of any covenant, such failure to perform has been caused
by a breach of this Agreement by North Coast;
7.02 Effect of Termination. In the event of the termination and abandonment
of this Agreement pursuant to Section 7.01, this Agreement, except for the
obligations of the parties pursuant to this Section 7.02 and the provisions of
Section 5.06, shall forthwith become void and have no effect, without any
liability on the part of any party or its directors, officers or shareholders;
provided that nothing in this Section 7.02 shall relieve any party to this
Agreement of liability for breach of this Agreement.
7.03 Amendment. To the extent permitted by applicable law, this Agreement
may be amended by the parties, at any time before or after approval of this
Agreement and the merger by the shareholders of North Coast but, after any such
shareholder approval, no amendment shall be made that by law requires further
approval of such shareholders without the approval of such shareholders. This
Agreement may not be amended except by an instrument in writing signed on behalf
of all the parties.
7.04 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein by any other
applicable party or in any document, certificate or writing delivered pursuant
hereto by any other applicable party, or (iii) subject to the terms hereof,
waive compliance with any of the agreements or conditions of the other parties
contained herein. Any agreement on the part of any party 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 a party to this Agreement to assert any of
its rights under this Agreement shall not constitute a waiver of those rights.
7.05 Procedure for Closing, Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 7.01, an amendment of this
Agreement pursuant to Section 7.03 or an extension or waiver pursuant to Section
7.04 shall, in order to be effective, require (a) in the case of Storm, action
by its Board of Directors or the duly authorized designee of its Board of
Directors and (b) in the case of North Coast, action by its Board of Directors.
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ARTICLE VIII
MISCELLANEOUS
8.01 Nonsurvival of Representations, Warranties and Agreements. All
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall be deemed to be only
conditions to the Merger and shall not survive the Merger, provided, however,
that the representations and warranties contained in Section 1.07, and in this
Article VIII shall survive the Merger.
8.02 Assignment, Binding Effect; Benefit; Entire Agreement. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto or their respective heirs, successors, executors, administrators and
assign any rights, remedies, obligations or liabilities under or by reason of
this Agreement. This Agreement and any documents delivered by the parties in
connection herewith constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings (oral and written) among the parties with respect thereto. No
addition to or modification of any provision of this Agreement shall be binding
upon any party hereto unless made in writing and signed by all parties hereto.
8.03 Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or otherwise affecting the validity or enforceability of any of the
terms or provisions of this Agreement in any other jurisdiction. If any
provision, clause, section or port of this Agreement is so broad as to be
unenforceable, the provision, clause, section or part shall be interpreted to be
only so broad as is enforceable, and all other provisions, clauses, sections or
parts of this Agreement which can be effective without such unenforceable
provision, clause, section or part shall, nevertheless, remain in full force and
effect.
8.04 Notices. Any notice required to be given hereunder shall be sufficient
if in writing, and sent by facsimile transmission and by courier service (with
proof of service), hand delivery or certified or registered mail (return receipt
requested and first-class postage prepaid), addressed as follows:
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If to Storm, to
The Storm High Performance Sound Corporation
Xxxxxxx X. Xxxxxxx, President and CEO
0000 - 000xx Xxxxxx XX
Xxxxxxxx, XX 00000
Fax (000) 000-0000
If to North Coast, to
North Coast Productions Inc.
0000 000xx Xxxxxx XX
Xxxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxx, Executive Vice-President
Fax: 000-000-0000
With a copy to:
Xxxxxx X. Xxxxxxxxx
Attorney At Law
S.W. Fifth Avenue, Suite 1300
Xxxxxxxx, XX 00000-0000
Fax: 000-000-0000
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date it is
telecommunicated, personally delivered or mailed.
8.05 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida without regard to its rules of
conflict of laws.
8.06 Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled under the Arbitration
Rules of the State of Florida.
8.07 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.
8.08 Counterparts and Facsimile Signatures. This Agreement may be executed
by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a number
of copies of this Agreement
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each of which may be signed by less than all of the
parities hereto, but together all such copies shall constitute one and the same
instrument. Execution and delivery of this Agreement by exchange of facsimile
copies bearing the facsimile signature of a party hereto shall constitute a
valid and binding execution and delivery of this Agreement by such party. Such
facsimile copies shall constitute enforceable original documents.
8.09 Certain Definitions. For purposes of this Agreement, the following
terms shall have the meanings ascribed to them below:
(a) "Affiliate" of a person means 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) "Control" (including the terms "controlling", "controlled by" and
"under common control with") means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies
of a person, whether through ownership of voting securities, by contract,
or otherwise.
(c) "Person" means a natural person, company, corporation,
partnership, joint venture, association, trust, unincorporated organization
or other entity.
(d) "Subsidiary" of any person means a person in which such first
referenced person owns directly or indirectly an amount of the voting
securities, other voting ownership or voting partnership interest which is
sufficient to elect at least a majority of its Board of directors or other
governing body (or, if there are no such voting interest, owns directly or
indirectly 50% or more of the equity interest).
8.10 Waivers. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in the Agreement. The waiver by any party hereto to a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
8.11 Incorporation of Exhibits. All Exhibits and annexes attached hereto
and referred to herein are hereby incorporated herein and made a part hereof for
all purposes as if fully set forth herein.
8.12 Interpretation. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and vice
versa, words denoting any gender shall include all genders and words denoting
natural persons shall include corporations and partnerships and vice versa.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its respective officers thereunto duly authorized, all
as of the day and year first above written.
THE STORM HIGH PERFORMANCE SOUND CORPORATION
By:/s/ Xxxxxxx X. Xxxxxxx
______________________
Xxxxxxx X. Xxxxxxx, President and CEO
NORTH COAST PRODUCTIONS INC.
By:/s/ Xxxxxxxx X. Xxxxxx
______________________
Xxxxxxxx X. Xxxxxx, Executive Vice-President
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INDEX TO EXHIBITS
TO SHARE EXCHANGE AGREEMENT AND PLAN OF MERGER
DATED APRIL 4, 2000 BETWEEN STORM AND NORTH COAST
Exhibit 1.04 Directors and Officers of the surviving Corporation
Exhibit 1.05(c) North Coast's Shareholders to receive stock in
accordance with Section 1.05(c) of the Agreement
Exhibit 6.01(d)(a) Minutes of Meeting of Board of
Directors of Storm dated April 4, 2000
authorizing the Share Exchange Agreement
Exhibit 6.01(d)(b) Consent of Shareholders of North Coast dated April 4,
2000 authorizing the Share Exchange Agreement.
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