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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): March 31, 2000
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Storm High Performance Sound Corp.
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(Exact name of registrant as specified in its charter)
Florida
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(State or other jurisdiction of incorporation)
0-29011 52-2048394
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(Commission File Number) (IRS Employer Identification No.)
8756 - 122nd Avenue N.E., Kirkland, WA 98033
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(Address of principal executive offices) (Zip Code)
(425) 827-7817
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Registrant's telephone number, including area code:
Hi Liner Group, Inc.
610 Newport Center Drive, Suite 800
Newport Beach, CA 92660
(949) 719-1977
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(Former name, address and telephone number)
<PAGE>
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
(a) Pursuant to a Stock Exchange Agreement (the "Exchange Agreement") dated
as of March 31, 2000 between MRC Legal Services LLC ("MRC"), a California
limited liability company and a majority shareholder of The Hi Liner Group, Inc.
("Hi Liner"), a Delaware corporation, and Storm High Performance Sound Corp.
("SHPE"), a Florida corporation, 800,000 of the outstanding shares of common
stock of Hi Liner held by MRC, representing approximately 80% of the issued and
outstanding common stock of Hi Liner, were exchanged for 1,500,000 shares of
common stock of SHPE in a transaction in which SHPE effectively became the
parent corporation of Hi Liner.
The Exchange Agreement was adopted by the unanimous consent of the Board of
Directors of Hi Liner, MRC and SHPE on March 31, 2000. No approval of the
shareholders of either SHPE or Hi Liner is required under applicable state
corporate law.
Prior to the merger, Hi Liner had 1,000,000 shares of common stock
outstanding of which 800,000 shares were exchanged by MRC for 1,500,000 shares
of common stock of SHPE. Immediately subsequent to the stock exchange, Hi Liner
agreed to complete a reorganization pursuant to which the remaining shareholders
were paid cash for their shares. By virtue of the exchange and the proposed
reorganization, SHPE acquired 100% of the issued and outstanding common stock of
Hi Liner.
SHPE also entered into a Consulting Agreement in connection with the
acquisition of Hi Liner with M. Richard Cutler, Brian A. Lebrecht, Vi Bui, Asher
Starik and Stephanie Crumpler (the "Consultants") pursuant to which SHPE agreed
to issue 2,000,000 shares of common stock of SHPE to the Consultants.
Prior to the effectiveness of the Exchange Agreement and Consulting
Agreement, SHPE had an aggregate of 8,606,815 shares of common stock, par value
$.0001, issued and outstanding, and no shares of preferred stock outstanding.
Upon closing of the Exchange Agreement and Consulting Agreement, SHPE had
an aggregate of 12,106,815 shares of common stock outstanding.
The officers of SHPE continue as officers of SHPE subsequent to the
Exchange Agreement. See "Management" below. The officers, directors, and
by-laws of SHPE will continue without change.
A copy of the Exchange Agreement is attached hereto as an exhibit. The
foregoing description is modified by such reference.
(b) The following table sets forth certain information regarding beneficial
ownership of the common stock of SHPE as of March 31, 2000 (subsequent to the
issuance of 3,500,000 shares pursuant to the Exchange Agreement and the
Consulting Agreement) by:
<PAGE>
o each person or entity known to own beneficially more than 5% of the common
stock;
o each of SHPE's directors;
o each of SHPE's named executive officers; and
o all executive officers and directors of SHPE as a group.
Title of Name of Beneficial Amount and Nature Percent of
Class Owner of Beneficial Owner Class
- ---------- ------------------- --------------------- ----------
Common Patrick F. Charles 3,326,540 (1) 27.00%
Stock 8756 122nd Avenue NE
Kirkland, WA 98033
Common Terrence K. Picken 3,326,540 (1) 27.00%
Stock 8756 122nd Ave NE
Kirkland, WA 98033
Common M. Richard Cutler 1,661,750 (2) 13.82%
610 Newport Center Dr.
Suite 800
Newport Beach, CA 92660
Common Asher Starik 875,000 7.28%
All Officers and Directors 6,653,080 54.00%
As a group (2 persons)
(1) 7,115,593 shares of common stock of Storm are presently owned by North Coast
of which the issued and outstanding voting common shares are owned 46.75% by
Patrick F. Charles and 46.75% by Terrence K. Picken who are also the only
officers and directors of North Coast.
(2) Of such shares, 731,250 are held by MRC Legal Services LLC. Mr. Cutler may
be deemed to be the beneficial owner of such shares.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) The consideration exchanged pursuant to the Exchange Agreement was
negotiated between MRC and SHPE.
In evaluating SHPE as a candidate for the proposed acquisition, MRC used
criteria such as SHPE's present stock price as set forth on the over-the-counter
bulletin board, its plan to produce and distribute film properties and other
anticipated operations, and SHPE's business name and reputation. MRC and SHPE
determined that the consideration for the merger was reasonable.
(b) SHPE intends to continue its historical businesses and proposed
businesses as set forth more fully immediately below.
<PAGE>
BUSINESS
Organization and General History
The Storm High Sound Performance Corporation, ("Storm") was organized and
incorporated under the laws of the State of Florida on June 12, 1997. Storm was
initially established to engage in the manufacture, marketing and distribution
of "high end" car stereo systems. However, due to certain technical and market
difficulties, the business of Storm did not develop as expected. As a result,
Storm ceased its operations in 1999 and began a search for new business
opportunities.
On January 28, 2000, Storm entered into a Stock Purchase Agreement,
("Agreement") with North Coast Productions, Inc., whereby, effective March 31,
2000, North Coast became the owner of 7,115,593 shares, of the 8,521,599 shares
of Storm common stock issued and outstanding at the time of the transaction.
Subsequent to the issuance of 3,500,000 shares pursuant to the Stock Exchange
Agreement and the Consulting Agreement (as previously discussed), North Coast
owns 54% of the total shares issued in Storm and as of the date of this filing
is Storm's parent company.
North Coast paid $300,000 for the Storm shares in the form of a cash infusion
into Storm. The proceeds were used to pay all of the then existing obligations
of Storm. All of the assets of Storm, prior to the effective date of the
Agreement were distributed to the former controlling shareholders of Storm as
consideration for 7,030,377 shares tendered to Storm by such shareholders, which
shares were retired and cancelled.
The Agreement calls for North Coast to be merged into Storm under provisions of
Florida Statutes, Annotated.
The consummation of the merger including the filing of the Articles of Merger
with the Secretary of State of the State of Florida is subject to approval of
shareholders. The shareholder action is pending at the present time; however
the holders of over 80% of the shares eligible to vote have firmly endorsed the
Agreement and intend to vote in favor of the merger.
The future operations of Storm as contemplated by the Agreement will be that of
North Coast. The following summarizes the organizational history of North
Coast Productions, Inc.:
North Coast was formed as a privately owned company and incorporated in the
State of Washington on December 29, 1999. The North Coast business plan adopted
in December of 1999 is to produce and distribute films for the entertainment
industry.
Business Activity
<PAGE>
In December 1999, North Coast adopted a business plan to actively pursue
production and distribution of film properties and the purchase of scripts that
management had become aware of. It is the overall business goal of North Coast
to become a full service film production and distribution company whose
productions may be completed and brought to market within a budget of $5 million
and under per project.
Distribution channels such as video, cable and foreign venues that are available
to the company should provide the company with receptive markets for its film
productions. North Coast's major upside potential will be realized when one of
its productions is accepted for wide spread USA theater distribution. North
Coast is targeting films that do not require USA theatrical showings to return a
profit to the company.
The company will be active in feature length movie productions, selected short
subject production as well as producing projects and series for Television.
PLAN OF OPERATIONS
The company's current plan is to concentrate its business development efforts on
opportunities available in the film production business, including made for TV
projects.
The company plans to hire a team of industry professionals. Contact has been
made with several industry experienced individuals who have expressed an
interest in joining North Coast. Day to day operations, the selection of
projects and the marketing of the company's productions and services will be by
industry professionals.
The company's plan is to become operational during the second quarter of 2000.
The development of two motion picture projects will receive the bulk of the
company's management time and financial resources, if and when the financial
resources become available.
North Coast is in the process of establishing itself as producer and distributor
of filmed entertainment products. Foreign or World Wide distribution of USA
produced entertainment projects is one of the fastest growing segments of the
industry. It is the intention of North Coast to exploit that market as the
foundation of the company's future.
The company's major marketing strategy is based on selling "within budget"
productions to the marketplace at competitive prices. This includes video and
cable distribution outlets in addition to the foreign markets. The growing
availability for viewers in countries outside the USA to receive USA cable
network productions from HBO, Show Time and others, has increased demand for the
type of programming that North Coast is planning to produce.
North Coast will establish distribution outlets, through strategic alliances,
through out its market place. A strong company representative network, coupled
with well-chosen, competently produced projects will provide a basis for
success.
<PAGE>
Under its marketing plan the company is also developing relationships with
writers and independent producers to assure that North Coast has a constant flow
of projects under review. Included in this stream of projects are feature
length films, made for TV films, mini series for TV and TV feature series.
While each has a different market place, they all, as in any business, want the
most for the least cost. The company has as one of its missions, the cost
efficient production of its projects. Cost efficiency will become a hallmark of
North Coast and will be the source of the company's internal growth.
The company plans to formulate an aggressive joint venture acquisition plan for
stimulating growth. As in most industries, the consolidation movement is
growing. North Coast management believes that growth by strategic acquisition
is necessary for the company to reach the company's full potential. Management
has significant M&A experience.
To date North Coast's current business activities have consisted primarily of
developing a business plan, assembling a management team, and pursuing film
production opportunities and financing. Options to purchase Magellan
Entertainment of Malibu, CA and Nickel Palace, Inc. of Hollywood, CA have been
signed. Definitive Agreements are under negotiation.
Magellan Entertainment owns the rights to Tuesday's Letters, a movie script that
is scheduled for production this summer. The budget for this project is $4.5
million. A division of Magellan, that will become the distribution arm of North
Coast is currently selling Tuesday's Letters into the foreign market place.
Magellan's management team brings 20 plus years of industry experience to North
Coast. Their experience includes acting, distribution and most importantly,
producing. They have first hand knowledge of industry cost controls which will
assist North Coast in reaching its goal of being cost efficient.
Nickel Palace owns the rights to Rennie's Landing, a movie script that is
scheduled for filming in June of this year. The budget for this project is
$980,000. The director and producers of this film are currently working on
bigger budget films for major studios. They are experienced, bright and have
the vision necessary to recognize what the viewing public, the 18 B 34 year old
wants to see. The addition of the Nickel executives to the North Coast
management team brings the X & Y generation vision to the company.
The company had no financial activity during the reporting period from
inception, December, 1999 through December 31, 1999.
DESCRIPTION OF PROPERTY
North Coast does not own any real property. The company's executive offices are
located in Kirkland, WA in 1300 square feet of office space provided to it under
a month to month administrative support services agreement with Coast Northwest
Inc., a company controlled by Patrick F. Charles and Terrence K. Picken,
Officers and Directors of North Coast. Administrative support services provided
under a verbal Agreement include use of office space, office equipment, clerical
services, data processing, local and long distance telephone service and other
miscellaneous administrative services for which the company is charged $5,000
per month. The company believes the office space will be adequate for the
foreseeable future.
<PAGE>
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
This table describes the Company's current Directors and Executive Officers.
NAME AGE TITLE
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Patrick F. Charles 58 President, Chief Executive Officer
Director
Terrence K. Picken 61 Executive Vice President,
Chief Operating Officer
Director
Patrick F. Charles is President and CEO and Chairman of the Board of Directors
of Storm effective March 31, 2000, the closing date of the Stock Purchase
Agreement between Storm and North Coast. Mr. Charles has been North Coast's
Chief Executive Officer and Chairman of the Board of Directors since the
company's inception. Mr. Charles is President and Chairman and CEO of Saratoga
International Holdings, Corp., a publicly traded company listed on the OTC
bulletin Board. Mr. Charles is also a founder, President and Chief Executive
Officer of Coast Northwest, Inc. a privately owned Washington Corporation, since
its inception in 1981. Coast Northwest provides financial and management
services to various clients. Mr. Charles has also served as national Director
of Legislative consulting services for the International accounting services
firm of PricewaterhouseCoopers. Mr. Charles is on the Board of Directors of
Absolute Future Tech.com, a publicly traded company providing high tech services
related to the Internet. Mr. Charles holds a Bachelor's Degree in Marketing
from Seattle University and an MBA from the University of Arizona.
Terrence K. Picken is Executive Vice President and Director of Storm effective
March 31, 2000 the closing date of the Stock Purchase Agreement between Storm
and North Coast. Mr. Picken is Executive Vice President and Director of
Saratoga International Holdings Corp., ("SHCC") a publicly traded company listed
on the OTC Bulletin Board. Mr. Picken has served North Coast as its Executive
Vice President and Director since its inception. Mr. Picken has served as
Executive Vice President and Director of Coast Northwest, Inc. since 1992.
Coast Northwest is a privately owned company which provides business management
and consulting services to various clients. Mr. Picken was a general practice
partner with PricewaterhouseCoopers an international CPA firm. Mr. Picken has
over 20 years of international accounting experience and was licensed as CPA in
Washington and California as well as a Chartered Accountant in Canada. He
graduated with a Chartered Accountant Degree from the University of Manitoba,
Canada.
EXECUTIVE COMPENSATION
<PAGE>
During North Coast's most recent operating period ended December 31, 1999, the
company had not paid any compensation to executive officers or directors. North
Coast plans to enter into employment contracts with its executive officers to
compensate them for services provided. This compensation is subject to and
dependent upon North Coast raising sufficient funds for operations.
Neither North Coast nor Storm have a stock option plan.
Summary Compensation Table
The following summary compensation table shows certain compensation
information for services rendered in all capacities for the three fiscal years
ended December 31, 1998 and 1999. Other than set forth herein, no executive
officer's salary and bonus exceeded $100,000 in any of the applicable years.
The following information includes the dollar value of base salaries, bonus
awards, the number of stock options granted and certain other compensation, if
any, whether paid or deferred.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
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Awards Payouts
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
Securities
Other Annual Restricted Underlying LTIP All Other
Name and Salary Bonus Compensation Stock Awards Options Payouts ($) Compensation
Principal Position Year ($) ($) ($) ($) SAR's (#) ($)
Patrick F. Charles 1999 -0- -0- -0- -0- -0- -0- -0-
(CEO & Chairman)
1998 -0- -0- -0- -0- -0- -0- -0-
Terrence K. Picken 1999 -0- -0- -0- -0- -0- -0- -0-
(Ex. V-P, COO)
1998 -0- -0- -0- -0- -0- -0- -0-
</TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
-------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Number of Securities Percent of Total
Underlying Options/SAR's
Options/SAR's Granted to Employees Exercise of Base Price
Name Granted (#) In Fiscal Year ($/Sh) Expiration Date
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Patrick F. Charles -0- - - -
Terrence K. Picken -0- - - -
</TABLE>
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Number of Unexercised
Securities Underlying Value of Unexercised In-
Options/SAR's At FY-End The-Money Option/SAR's
Shares Acquired (#) At FY-End ($)
Name On Exercise (#) Value Realized Exercisable/Unexercisable Exercisable/Unexercisable
($)
- ---------------------------------------------------------------------------------------------------------------------------
Patrick F. Charles -0- - - -
Terrence K. Picken -0- - - -
</TABLE>
Compensation of Directors
To date, Directors of the Company have not received any compensation for
serving in such capacity.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Coast Northwest, Inc. provided substantially all of North Coast's administrative
services since inception in December 1999. No payments have been made to Coast
Northwest for such services. Any future payment for past or future services
provided to North Coast will be subject to North Coast's success at raising the
necessary funds to finance operations.
North Coast's President Patrick F. Charles and Terrence K. Picken North Coast's
Executive Vice President collectively own a controlling interest in Coast
Northwest, Inc.
DESCRIPTION OF SECURITIES
Storm has one class of securities authorized, consisting of 50,000,000 shares of
common stock with a par value of $0.0001 per share.
The holders of common stock are entitled to one vote per share on all matters to
be voted on by shareholders and do not have cumulative voting rights. The
shares of common stock have no pre-emptive, subscription, conversion or
redemption rights and may be issued only as fully paid and non-assessable
shares. In the event of liquidation, dissolution or winding up of the company,
the holders of the common stock are entitled to share ratably in all assets
remaining which are available for distributing to them after payment of
liabilities and after provision has been made for each class or series of stock
having preference over the common stock. Holders of the common stock are
entitled to share pro rata in dividends and distributions with respect to the
common stock, as may be declared by the Board of Directors out of funds legally
available.
<PAGE>
MARKET PRICE AND DIVIDENDS ON STORM'S COMMON EQUITY AND OTHER STOCKHOLDER
MATTERS
Storms's common stock has traded on the OTC Bulletin Board under the trading
symbol SHPE since August 1998. The stock had trading volume on only 22 days from
August 1998 through December 31, 1999. The highest trading volume during that
time was 9,500 shares or 0.1% of the outstanding shares and the average volume
on a trading day was less than 3,000 shares or less than 0.04% of the
outstanding shares.
Quarter Ended High Low
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09/30/1998 14 trades this quarter $2.9375 $0.5625
12/31/1998 3 trades this quarter $1.0000 $1.0000
03/31/1999 No trades this quarter
06/30/1999 4 trades this quarter $2.0000 $1.2500
09/30/1999 1 trade this quarter $0.5625 $0.5625
12/31/1999 No trades this quarter
Quotations for Storm's common stock came from America Online and reflect
inter-dealer prices, without retail markups, markdowns or commissions and may
not represent actual transactions
Storm has approximately 62 holders of its common stock.
Storm has never declared or paid dividends nor does it expect to in the
foreseeable future. Storm currently has a retained deficit of approximately
$81,200 and no dividends would be declared or paid until or unless there are
adequate retained earnings from which to pay dividends and the Board of
Directors declares dividends from legally available funds.
LEGAL PROCEEDINGS
Neither Storm nor North Coast is a party to any pending legal proceedings.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
There have not been any changes in or disagreements with Accountants.
RECENT SALES OF UNREGISTERED SECURITIES
In June 1998 Storm sold 166,666 shares of common stock to a Corporation for
$0.27 per share for a total of $45,000. These shares were sold for cash without
the use of an underwriter and there were no discounts or commissions. These
shares were issued without registration in reliance on Rule 504 of Regulation D
of the Securities Act of 1933.
In June 1998 Storm sold 283,333 shares of common stock to a Corporation for
$0.353 per share for a total of $100,000. These shares were sold for cash
without the use of an underwriter and there were no discounts or commissions.
These shares were issued without registration in reliance on Rule 504 of
Regulation D of the Securities Act of 1933.
<PAGE>
In March 2000, North Coast issued convertible debentures with a face value
of $1,000,000 under Rule 504 of Regulation D. The debentures are convertible
into shares of common stock at a 30% discount. As of the date of this report,
no portion of the Debenture has been converted.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Storm's Articles of Incorporation provide that the directors shall be protected
from personal liability to the fullest extent provided by applicable law.
RISK FACTORS
LIMITED OPERATING HISTORY; LOSSES.
RISK OF PROPOSED NEW BUSINESS, LACK OF ASSETS OR REVENUES. Storm was
originally incorporated to develop and market automotive audio equipment.
However, due to certain technical and market difficulties, Storm's business did
not develop as expected. As a result, we decided to cease operations in 1999
and begin a search for new business opportunities. As previously discussed,
North Coast recently acquired a majority of our common stock and it is the
intention of both Storm and North Coast to merge into one company. As a result,
Storm will adopt the proposed business plan of North Coast and seek to develop
low cost B low budget films. However, we have very little experience with the
production of such films and there is a risk that we will not be able to
implement our new strategy or if our films will be commercially successful.
Additionally, we currently have no assets and no revenue and do not expect to
generate any revenue until subsequent to our proposed merger with North Coast,
and our subsequent production of motion movies and made for TV films as
currently planned.
NEED FOR ADDITIONAL FINANCING. We have very limited funds, and such funds may
not be adequate to take advantage of any available business opportunities. Even
if our funds prove to be sufficient to acquire an interest in, or complete a
transaction with, a business opportunity, we may not have enough capital to
exploit the opportunity. Our ultimate success may depend upon our ability to
raise additional capital. We have not investigated the availability, source, or
terms that might govern the acquisition of additional capital and will not do so
until we determine a need for additional financing. If additional capital is
needed, there is no assurance that funds will be available from any source or,
if available, that they can be obtained on terms acceptable to us. If not
available, our operations will be limited to those that can be financed with our
modest capital.
REGULATION OF PENNY STOCKS. Our securities are subject to a Securities and
Exchange Commission rule that imposes special sales practice requirements upon
broker-dealers who sell such securities to persons other than established
customers or accredited investors. For purposes of the rule, the phrase
"accredited investors" means, in general terms, institutions with assets in
excess of $5,000,000, or individuals having a net worth in excess of $1,000,000
or having an annual income that exceeds $200,000 (or that, when combined with a
spouse's income, exceeds $300,000). For transactions covered by the rule, the
broker-dealer must make a special suitability determination for the purchaser
and receive the purchaser's written agreement to the transaction prior to the
sale. Consequently, the rule may affect the ability of broker-dealers to sell
our securities and also may affect the ability of shareholders to sell their
securities.
<PAGE>
In addition, the Securities and Exchange Commission has adopted a number of
rules to regulate "penny stocks." Such rules include Rules 3a51-1, 15g-1,
15g-2, 15g-3, 15g-4, 15g-5, 15g-6, and 15g-7 under the Securities Exchange Act
of 1934, as amended. Because our securities may constitute "penny stocks"
within the meaning of the rules, the rules would apply to us and to our
securities. The rules may further affect the ability of owners of our
securities to sell our securities.
Shareholders should be aware that, according to Securities and Exchange
Commission Release No. 34-29093, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse. Such patterns include (i)
control of the market for the security by one or a few broker-dealers that are
often related to the promoter or issuer; (ii) manipulation of prices through
prearranged matching of purchases and sales and false and misleading press
releases; (iii) "boiler room" practices involving high-pressure sales tactics
and unrealistic price projections by inexperienced sales persons; (iv) excessive
and undisclosed bid-ask differentials and markups by selling broker-dealers; and
(v) the wholesale dumping of the same securities by promoters and broker-dealers
after prices have been manipulated to a desired level, along with the resulting
inevitable collapse of those prices and with consequent investor losses. We are
aware of the abuses that have occurred historically in the penny stock market.
Although we do not expect to be in a position to dictate the behavior of the
market or of broker-dealers who participate in the market, management will
strive within the confines of practical limitations to prevent the described
patterns from being established with respect to our securities.
LIMITED PUBLIC MARKET EXISTS. There is a limited public market for our
common stock, and no assurance can be given that a market will continue or that
a shareholder ever will be able to liquidate his investment without considerable
delay, if at all. The market price for our stock may be highly volatile.
Factors such as those discussed in this "Risk Factors" section may have a
significant impact upon the market price of our securities. Owing to the low
price of the securities, many brokerage firms may not be willing to effect
transactions in the securities. Even if a purchaser finds a broker willing to
effect a transaction in these securities, the combination of brokerage
commissions, state transfer taxes, if any, and any other selling costs may
exceed the selling price. Further, many lending institutions will not permit
the use of such securities as collateral for any loans.
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS. Management believes that
this Report on Form 8-K contains forward-looking statements, including
statements regarding, among other items, our future plans and growth strategies
and anticipated trends in the industry in which we operate. These
forward-looking statements are based largely on our control. Actual results
could differ materially from these forward-looking statements as a result of
factors we describe herein, including, among others, regulatory or economic
influences.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 5. OTHER EVENTS
Successor Issuer Election.
<PAGE>
Upon execution of the Exchange Agreement and delivery of the SHPE shares to
MRC as the sole shareholder of Hi Liner, pursuant to Rule 12g-3(a) of the
General Rules and Regulations of the Securities and Exchange Commission, SHPE
became the successor issuer to Hi Liner for reporting purposes under the
Securities Exchange Act of 1934 and elected to report under the Act effective
March 31, 2000.
ITEM 6. RESIGNATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
Not applicable.
ITEM 7. FINANCIAL STATEMENTS
The financial statements of SHPE for the fiscal years ending December
31, 1998 and December 31, 1999 are included herein in reliance on the report of
Stokes & Company, P.C., our independent public accountants.
THE STORM HIGH PERFORMANCE SOUND CORPORATION
Financial Statements
and
Independent Auditor's Report
December 31, 1999 and 1998
<PAGE>
CONTENTS
PAGE
----
INDEPENDENT AUDITOR'S REPORT 3
FINANCIAL STATEMENTS
Balance Sheets 4
Statements of Operations 5
Statements of Changes in Stockholders' Equity (Deficit) 6
Statements of Cash Flows 7
Notes to Financial Statements 8 - 11
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Stockholders
The Storm High Performance Sound Corporation
We have audited the accompanying balance sheets of The Storm High Performance
Sound Corporation as of December 31, 1999 and 1998, and the related statements
of operations, changes in stockholders' equity (deficit) and cash flows for the
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Storm High Performance
Sound Corporation as of December 31, 1999 and 1998, and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
/s/ Stokes & Company, P.C.
STOKES & COMPANY, P.C.
Washington, D.C.
February 29, 2000
<PAGE>
<TABLE>
<CAPTION>
THE STORM HIGH PERFORMANCE SOUND CORPORATION
BALANCE SHEETS
DECEMBER 31, 1999 and 1998
<S> <C> <C>
1999 1998
---------- ----------
ASSETS
CURRENT ASSETS
Cash $ 130 $ 93
Accounts receivable - trade - 2,528
Inventory 8,058 10,559
---------- ----------
Total current assets 8,188 13,180
PROPERTY AND EQUIPMENT
Demonstration vehicle and office equipment, net of accumulated
depreciation of $13,256 and $7,085 17,736 23,907
OTHER ASSETS
Goodwill, net of accumulated amortization of $4,911 and $3,274 60,562 62,199
$ 86,486 $ 99,286
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 58,911 $ 45,025
Notes payable 26,912 25,925
Officer's loan payable 81,876 72,122
Customer deposits - 828
Total current liabilities 167,699 143,900
---------- ----------
LONG-TERM LIABILITIES
Notes payable, less current portion - 1,303
---------- ----------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $.0001 par value; 50,000,000 shares
authorized; 8,521,600 shares issued and outstanding 852 852
Additional paid in capital 429,948 429,948
Retained earnings (deficit) (510,854) (477,005)
Accumulated other comprehensive income (expense) (1,159) 288
(81,213) (45,917)
---------- ----------
$ 86,486 $ 99,286
========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE STORM HIGH PERFORMANCE SOUND CORPORATION
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999 and 1998
<S> <C> <C>
1999 1998
--------- ----------
REVENUE
Sales $ 3,634 $ 13,842
COST OF MERCHANDISE SOLD 3,339 13,946
--------- ----------
Gross margin 295 (104)
--------- ----------
EXPENSES
Interest 2,130 4,335
Depreciation and amortization 7,808 7,409
Selling and administrative 26,582 143,789
--------- ----------
36,520 155,533
--------- ----------
Loss from operations (36,225) (155,637)
OTHER INCOME AND EXPENSE
Breach of contract loss - (150,000)
Other income 2,376 -
Net loss $(33,849) $(305,637)
========= ==========
EARNINGS (LOSS) PER COMMON SHARE
Net loss $ (0.004) $ (0.04)
========= ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE STORM HIGH PERFORMANCE SOUND CORPORATION
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
YEARS ENDED DECEMBER 31, 1999 and 1998
<S> <C> <C> <C> <C> <C> <C>
Accumulated
Additional Retained Other
Common Stock Paid-in Earnings Comprhensive
Shares Amount Capital (Deficit) Income Total
------------ --------- --------- -------------- -------- ----------
Balance, December 31, 1997 8,071,600 $ 807 $ 284,993 $ (171,368) $ - $ 114,432
Net proceeds from public offering of
shares of common stock, $.0001
per share 450,000 45 144,955 - - 145,000
Net Loss - - - (305,637) - (305,637)
Other comprhensive income:
Foreign currency translation adjustment - - - - 288 288
------------ --------- --------- -------------- -------- ----------
Balance, December 31, 1998 8,521,600 852 429,948 (477,005) 288 (45,917)
Net Loss - - - (33,849) - (33,849)
Other comprhensive income (expense):
Foreign currency translation adjustment - - - - (1,447) (1,447)
Balance, December 31, 1999 8,521,600 $ 852 $ 429,948 $ (510,854) $(1,159) $ (81,213)
============ ========= ========= ============== ======== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE STORM HIGH PERFORMANCE SOUND CORPORATION
STATEMENTS OF CASH FLOWS
DECEMBER 31, 1999 and 1998
<S> <C> <C>
1999 1998
--------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from sales $ 7,711 $ 17,228
Payments to vendors, suppliers and employees (15,665) (169,830)
NET CASH USED BY OPERATING ACTIVITIES (7,954) (152,602)
--------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment - (19,767)
Loans paid to and received from officers - 50,000
NET CASH PROVIDED BY INVESTING ACTIVITIES - 30,233
--------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans 10,741 15,042
Loan Repayments (1,303) (1,952)
Proceeds from sales of shares - 100,000
Increase (decrease) in accumulated other comprhensive income (expense) (1,447) 288
NET CASH PROVIDED BY FINANCING ACTIVITIES 7,991 113,378
--------- ----------
NET INCREASE (DECREASE) IN CASH 37 (8,991)
CASH at beginning of year 93 9,084
CASH at end of year $ 130 $ 93
RECONCILIATION OF NET LOSS TO NET CASH
USED BY OPERATING ACTIVITIES:
Net Loss $(33,849) $(305,637)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization 7,808 7,409
(Increase) decrease in assets:
Accounts receivable - trade 2,528 2,558
Deposit with suppliers - 110,000
Inventory 2,501 6,693
Increase (decrease) in liabilities:
Accounts payable 13,886 25,547
Customer deposits (828) 828
NET CASH USED BY OPERATING ACTIVITIES $ (7,954) $(152,602)
========= ==========
</TABLE>
<PAGE>
THE STORM HIGH PERFORMANCE SOUND CORPORATION
Notes to Financial Statements
Years Ended December 31, 1999 and 1998
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Organization
- ------------------------
The Storm High Performance Sound Corporation (the "Corporation") is a publicly
traded company. It is organized and incorporated under the laws of the State of
Florida. The Corporation is primarily engaged in the business of selling high
performance sound systems at wholesale. The Corporation conducted its
operations from its offices in Pembroke, Ontario, Canada and West Palm Beach,
Florida. During the year ending December 31, 1999, the Corporation ceased its
former operations and began searching for a merger partner. On January 28, 2000
the Company entered into an Agreement and Plan of Merger with North Coast
Productions, Inc. (See Note H).
Cash and cash equivalents
- ----------------------------
Cash and cash equivalents consist of high liquid debt instruments with original
maturities of three months or less. At December 31, 1999 and 1998 the company
did not have any cash equivalents.
Inventories
- -----------
Inventories consist of loudspeakers and related parts. The corporation values
its inventories at the lower of cost or market value using the first-in,
first-out method.
Property and Equipment
- ------------------------
Property and equipment are carried at cost. Depreciation of property and
equipment is provided using the straight-line method for financial reporting
purposes on the useful lives of the assets, which are estimated to be between 5
and 7 years. Expenditures for major renewals and improvements that extend the
useful lives of property and equipment are capitalized. Expenditures for
maintenance and repairs are charged to expense as incurred.
Use of estimates
- ------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
Income taxes
- -------------
Deferred tax assets are recognized for deductible temporary differences and
operating loss carryforwards, and deferred tax liabilities are recognized for
taxable temporary differences. Temporary differences are the differences between
the reported amounts of assets and liabilities and their tax bases. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion of or all of the deferred tax
assets will not be realized. Deferred tax assets and liabilities are adjusted
for the effects of changes in tax laws and rates on the date of enactment.
<PAGE>
THE STORM HIGH PERFORMANCE SOUND CORPORATION
Notes to Financial Statements (continued)
Years Ended December 31, 1999 and 1998
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Amortization of Goodwill
- --------------------------
Cost of investments in purchased companies in excess of the underlying fair
value of net assets at dates of acquisition are recorded as goodwill and
amortized over 40 years on a straight-line basis.
Foreign Currency Translation
- ------------------------------
Net exchange gains or losses resulting from the translation of assets and
liabilities of the Corporation's Canadian operations at December 31, 1999 and
1998, are accumulated in a separate section of the stockholders' equity titled,
"Accumulated other comprehensive income (expense)."
Earnings Per Share
- --------------------
Basic earnings per share (EPS) is computed by dividing net income (loss), which
constitutes the income available to common shareholders, by the weighted-average
number of common shares outstanding for the year. Diluted EPS reflects the
potential dilution that could occur if dilutive securities and other contracts
to issue common stock were exercised or converted into common stock or resulted
in the issuance of common stock that then shared in the earnings of the
Corporation. At December 31, 1999 and 1998 the Corporation did not have any
dilutive items.
The average shares outstanding for basic EPS during 1999 and 1998, were
8,521,600 and 8,368,822, respectively.
NOTE B - CASH IN EXCESS OF FDIC INSURANCE LIMITS
The Corporation maintains its cash at Toronto Dominion Bank and the United Bank.
Throughout the year the cash maintained in these accounts did not exceed the
Federal Deposit Insurance Corporation (FDIC) insurance limit.
NOTE C - PROPERTY AND EQUIPMENT
Property and equipment are summarized by major classifications as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
1999 1998
------- -------
Demonstration Vehicle $11,332 $11,332
Office Equipment 19,660 19,660
------- -------
30,992 30,992
Less accumulated depreciation 13,256 7,085
------- -------
$17,736 $23,907
======= =======
</TABLE>
<PAGE>
THE STORM HIGH PERFORMANCE SOUND CORPORATION
Notes to Financial Statements (continued)
Years Ended December 31, 1999 and 1998
NOTE D - INCOME TAXES
At December 31, 1999 and 1998, the Corporation has recorded deferred tax assets
of $76,802 and $71,508 related to the future benefit of a net operating loss
carryforward of $512,013 and $476,717, respectively. The loss carry forwards
begins to expire in 2012. No tax benefit has been reported because the company
believes there is at least a 50% chance that the benefit of the deductible
expenses and loss carryforward will not be realized. Accordingly, the total
deferred tax benefits of $76,802 and $71,508 for the years ended December 31,
1999 and 1998, has been offset by valuation allowances of the same amount.
NOTE E - NOTES PAYABLE
Notes payable consist of the following:
<TABLE>
<CAPTION>
<S> <C> <C>
1999 1998
------- -------
Prime plus 1%, variable rate demand
line of credit; secured by company
assets and shareholders personal guarantees;
total funds available for the loan are
$20,000 Canadian, $13,022 US. $17,301 $16,530
Prime plus 1%, installment note currently
at 7.75%; secured by company assets,
monthly payments of $250 Canadian. The
balance is due in July 2000. 1,033 3,321
Unsecured loan from a shareholder bearing
interest at the rate of 10% per annum. There is
no scheduled repayment date. The balance includes
accrued interest. 8,578 7,377
------- -------
26,912 27,228
Current portion of debt 26,912 25,925
------- -------
Long-term debt $ - $ 1,303
======= =======
</TABLE>
NOTE F - RELATED PARTY TRANSACTIONS
The following transactions occurred between the Corporation and its shareholders
or other company's owned by the controlling shareholders:
1. The Corporation has its offices in space provided by the Sound Shop,
which is owned by the controlling shareholder's relative. There is no formal
lease arrangement and the Corporation pays rent when it can. This lease is at
will and can be terminated without notice.
<PAGE>
THE STORM HIGH PERFORMANCE SOUND CORPORATION
Notes to Financial Statements (continued)
Years Ended December 31, 1999 and 1998
NOTE F - RELATED PARTY TRANSACTIONS (continued)
2. The Corporation has borrowed monies from the controlling shareholders,
which are unsecured and non-interest bearing. As of December 31, 1999 and 1998,
the Corporation was indebted to these shareholders for $81,876 and $72,122,
respectively.
3. As discussed previously, the Corporation shares its offices with another
company owned by the controlling shareholders. The Sound Shop would pay for
expenses of the Corporation and receive merchandise in exchange, as payment.
During the years the payments by the Sound Shop, for which credits were applied
to sales invoices, totaled $2,261 and $9,614 for December 31, 1999 and 1998,
respectively.
NOTE G - BREACH OF CONTRACT LOSS
The Corporation entered into an agreement with a speaker supplier for the
production of inventory. During 1997 the Corporation deposited $110,000 with
the vendor and $40,000 in 1998, all of which was to be applied to the cost of
the manufacturing. Subsequently, the Corporation learned that the vendor had
ceased operations and closed the facility. The Corporation's efforts to locate
this vendor have been unsuccessful and the deposit was deemed uncollectible for
its year ending December 31, 1998.
NOTE H - REALIZATION OF ASSETS
The Corporation's financial statements show that a loss of $33,849 during the
year ended December 31, 1999, and as of that date the Corporation's current
liabilities, which are its total liabilities, exceeded its current assets by
$159,511 and its total assets by $81,213. These factors, as well as the
Corporation's poor sales performance during its 3 years of operation create an
uncertainty as to the Corporation's ability to continue as a going concern.
Realizing its need for a capital infusion and change in direction, the
Corporation has, subsequent to the balance sheet date, entered into an agreement
with North Coast Productions, Inc. (a Washington State corporation), whereby
North Coast Productions, Inc. will acquire 7,115,593 shares of the Corporation
for an amount approximating $300,000. Upon issuance of the shares, the
Corporation will then be a subsidiary of North Coast Productions, Inc.
Subsequent to the issuance of the shares, the Corporation will redeem 7,030,377
of its outstanding shares from Messrs. Hannaberry and Zacharoff, the present
majority shareholders. A transfer of the Corporation's assets, which it owns as
of January 28, 2000, plus $50,000 of the purchase price, will pay for the
redemption. Thereafter, the parent will merge into the subsidiary and North
Coast Productions, Inc. will cease to exist.
The proceeds of the capital infusion will be used to liquidate the Corporation's
existing debts to trade creditors, banks and officers of the Corporation.
The agreement contains various contingencies, which could negatively impact the
viability of the arrangement described above. The ability of the Corporation to
continue as a going concern is dependent upon the success of the plan. The
financial statements do not include any adjustments that might be necessary
should the Corporation be unable to continue as a going concern.
<PAGE>
ADDITIONAL INFORMATION
<PAGE>
THE STORM HIGH PERFORMANCE SOUND CORPORATION
SCHEDULES OF SELLING AND ADMINISTRATIVE EXPENSES
YEARS ENDED DECEMBER 31, 1999 and 1998
<TABLE>
<CAPTION>
<S> <C> <C>
1999 1998
------- --------
Advertising and promotion $ 2,072 $ 11,347
Bank fees 910 1,071
Consulting fees - -
Contract labor - 5,755
Insurance 59 -
Internet service 406 176
Miscellaneous 750 7,789
Office expense - 677
Payroll and other taxes - 3,459
Postage and shipping - 2,056
Printing and stationary 401 843
Professional fees 13,307 71,759
Property taxes 230 279
Rent 747 8,103
Repairs and maintenance - -
Stock transaction fees 7,700 4,388
Telephone - 2,414
Trade shows - 14,921
Travel - 8,617
Utilities - -
Vehicle operation cost - 135
$26,582 $143,789
======= ========
</TABLE>
<PAGE>
ITEM 8. CHANGE IN FISCAL YEAR
SHPE as the successor issuer has a fiscal year end of December 31. Hi
Liner's fiscal year was June 30. SHPE will retain its December 31 fiscal year
end.
EXHIBITS
2.1 Exchange Agreement between MRC Legal Services LLC and The Storm High
Performance Sound Corporation, dated as of March 31, 2000.
2.2 Consulting Agreement between The Storm High Performance Sound
Corporation and certain consultants dated as of March 31, 2000.
2.3 Stock Purchase Agreement by and between Storm High Performance Sound
Corporation and North Coast Productions, Inc.
3.1 Articles of Incorporation of the Company
3.2 Bylaws of the Company
23.1 Consent of Stokes & Company, P.C., independent public accountant
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report on Form 8-K to be signed on its behalf by
the undersigned hereunto duly authorized.
THE STORM HIGH PERFORMANCE SOUND CORPORATION
/s/ Patrick F. Charles
----------------------------------
President and Chief Executive
Officer
Date: April 3, 2000
STOCK EXCHANGE AGREEMENT
Agreement dated as of March 31, 2000 between The Storm High Performance
Sound Corporation, a Florida corporation ("SHPE"), on the one hand, and MRC
Legal Services LLC, a California limited liability company ("MRC" or the
"Shareholder"), on the other hand.
1. THE ACQUISITION.
1.1_ Purchase and Sale Subject to the Terms and Conditions of this
Agreement. At the Closing to be held as provided in Section 2, SHPE shall sell
the SHPE Shares (defined below) to the Shareholder and the Shareholder shall
purchase the SHPE Shares from SHPE, free and clear of all Encumbrances other
than restrictions imposed by Federal and State securities laws.
1.2 Purchase Price. SHPE will exchange 1,500,000 shares of its
restricted common stock (the "SHPE Shares") for 800,000 shares of Hi Liner
Group, Inc. a Delaware corporation ("Hi Liner"), representing approximately
80.0% of the issued and outstanding common shares of Hi Liner (the "Hi Liner
Shares"). Immediately after the Closing, the Shareholder will cause Hi Liner to
complete a reverse stock split (the "Reverse Stock Split") previously approved
by the directors of Hi Liner which will result in the remaining 200,000 shares
of Hi Liner being cashed out by the Shareholder at no additional cost to SHPE.
Immediately subsequent to the Reverse Stock Split, SHPE shall be the sole
shareholder of Hi Liner with 8 shares issued and outstanding. The SHPE Shares
shall be issued and delivered to the Shareholder or assigns as set forth in
Exhibit "A" hereto.
2. THE CLOSING.
2.1 Place and Time. The closing of the sale and exchange of the SHPE
Shares for the Hi Liner Shares (the "Closing") shall take place at Cutler Law
Group, 610 Newport Center Drive, Suite 800, Newport Beach, CA 92660 no later
than the close of business (Orange County California time) on or before April 4,
2000 or at such other place, date and time as the parties may agree in writing.
2.2 Deliveries by the Shareholders. At the Closing, the Shareholder
shall deliver the following to SHPE:
a. Certificates representing the Hi Liner Shares, duly endorsed for transfer
to SHPE and accompanied by appropriate medallion guaranteed stock powers; the
Shareholder shall immediately change those certificates for, and to deliver to
SHPE at the Closing, a certificate representing the Hi Liner Shares registered
in the name of SHPE (without any legend or other reference to any Encumbrance
other than appropriate federal securities law limitations).
b. The documents contemplated by Section 3.
<PAGE>
c. All other documents, instruments and writings required by this Agreement
to be delivered by the Shareholder at the Closing and any other documents or
records relating to Hi Liner's business reasonably requested by SHPE in
connection with this Agreement.
2.3 Deliveries by SHPE. At the Closing, SHPE shall deliver the
following to the Shareholder:
a. The SHPE Shares for further delivery to the Shareholder or assigns as
contemplated by section 1.
b. The documents contemplated by Section 4.
c. All other documents, instruments and writings required by this Agreement
to be delivered by SHPE at the Closing.
d. CONDITIONS TO SHPE'S OBLIGATIONS.
The obligations of SHPE to effect the Closing shall be subject to the
satisfaction at or prior to the Closing of the following conditions, any one or
more of which may be waived by SHPE:
3.1 No Injunction. There shall not be in effect any injunction, order
or decree of a court of competent jurisdiction that prevents the consummation of
the transactions contemplated by this Agreement, that prohibits SHPE's
acquisition of the Hi Liner Shares or the SHPE Shares or that will require any
divestiture as a result of SHPE's acquisition of the Hi Liner Shares or that
will require all or any part of the business of SHPE to be held separate and no
litigation or proceedings seeking the issuance of such an injunction, order or
decree or seeking to impose substantial penalties on SHPE or Hi Liner if this
Agreement is consummated shall be pending.
3.2 Representations, Warranties and Agreements. (a) The
representations and warranties of the Shareholder set forth in this Agreement
shall be true and complete in all material respects as of the Closing Date as
though made at such time, and (b) the Shareholder shall have performed and
complied in all material respects with the agreements contained in this
Agreement required to be performed and complied with by it at or prior to the
Closing.
3.3 Regulatory Approvals. All licenses, authorizations, consents,
orders and regulatory approvals of Governmental Bodies necessary for the
consummation of SHPE's acquisition of the Hi Liner Shares shall have been
obtained and shall be in full force and effect.
3.4 Resignations of Director. Effective on the Closing Date, all of
officers and directors shall have resigned as an officer, director and employee
of Hi Liner.
<PAGE>
4. CONDITIONS TO THE SHAREHOLDER'S OBLIGATIONS.
The obligations of the Shareholder to effect the Closing shall be subject
to the satisfaction at or prior to the Closing of the following conditions, any
one or more of which may be waived by the Shareholder:
4.1 No Injunction. There shall not be in effect any injunction, order
or decree of a court of competent jurisdiction that prevents the consummation of
the transactions contemplated by this Agreement, that prohibits SHPE's
acquisition of the Hi Liner Shares or the Shareholder's acquisition of the SHPE
Shares or that will require any divestiture as a result of SHPE's acquisition of
the Shares or the Shareholder's acquisition of the SHPE Shares or that will
require all or any part of the business of SHPE or Hi Liner to be held separate
and no litigation or proceedings seeking the issuance of such an injunction,
order or decree or seeking to impose substantial penalties on SHPE or Hi Liner
if this Agreement is consummated shall be pending.
4.2 Representations, Warranties and Agreements. (a) The
representations and warranties of SHPE set forth in this Agreement shall be true
and complete in all material respects as of the Closing Date as though made at
such time, and (b) SHPE shall have performed and complied in all material
respects with the agreements contained in this Agreement required to be
performed and complied with by it at or prior to the Closing.
4.3 Regulatory Approvals. All licenses, authorizations, consents,
orders and regulatory approvals of Governmental Bodies necessary for the
consummation of SHPE's acquisition of the Hi Liner Shares and the Shareholder's
acquisition of the SHPE Shares shall have been obtained and shall be in full
force and effect.
5. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER.
The Shareholder represents and warrants to SHPE that, to the Knowledge of
the Shareholder:
5.1 Authorization. The Shareholder is a limited liability company duly
organized, validly existing and in good standing under the laws of the state of
California. This Agreement constitutes a valid and binding obligation of the
Shareholder, enforceable against it in accordance with its terms.
5.2 Capitalization. The authorized capital stock of Hi Liner consists
of 20,000,000 authorized shares of stock, par value $.001, and 1,000,000
preferred shares, par value $.001, of which 1,000,000 common shares and no
preferred shares are presently issued and outstanding. No shares have been
registered under state or federal securities laws. As of the Closing Date there
will not be outstanding any warrants, options or other agreements on the part of
Hi Liner obligating Hi Liner to issue any additional shares of common or
preferred stock or any of its securities of any kind.
<PAGE>
5.3 Ownership of Hi Liner Shares. The delivery of certificates to SHPE
provided in Section 2.2 will result in SHPE's immediate acquisition of record
and beneficial ownership of the Hi Liner Shares, free and clear of all
Encumbrances subject to applicable State and Federal securities laws.
5.4 Consents and Approvals of Governmental Authorities. Except with
respect to applicable State and Federal securities laws, no consent, approval or
authorization of, or declaration, filing or registration with, any Governmental
Body is required to be made or obtained by Hi Liner or SHPE or any of its
Subsidiaries in connection with the execution, delivery and performance of this
Agreement by Hi Liner or the consummation of the sale of the Hi Liner Shares to
SHPE.
5.5 Financial Statements. Hi Liner has delivered to SHPE the
consolidated balance sheet of Hi Liner as at June 30, 1998 and June 30, 1999,
and statements of income and changes in financial position for the fiscal years
then ended and the period from inception to the period then ended, together with
the report thereon of Hi Liner's independent accountant (the "Hi Liner Financial
Statements"). The Hi Liner Financial Statements are accurate and complete in
accordance with generally accepted accounting principles. The independent
accountants for Hi Liner will furnish any and all work papers required by SHPE
and will sign any and all consents required to be signed to include the
financial statements of SHPE in any subsequent filing by SHPE.
5.6 Litigation. There is no action, suit, inquiry, proceeding or
investigation by or before any court or Governmental Body pending or threatened
in writing against or involving Hi Liner which is likely to have a material
adverse effect on the business or financial condition of Hi Liner, SHPE and any
of their Subsidiaries, taken as whole, or which would require a payment by Hi
Liner in excess of $2,000 in the aggregate or which questions or challenges the
validity of this Agreement. Hi Liner is not subject to any judgment, order or
decree that is likely to have a material adverse effect on the business or
financial condition of Hi Liner, SHPE or any of their Subsidiaries, taken as a
whole, or which would require a payment by Hi Liner in excess of $2,000 in the
aggregate.
5.7 Absence of Certain Changes. Since the date of the Hi Liner
Financial Statements, Hi Liner has not:
a. suffered the damage or destruction of any of its properties or assets
(whether or not covered by insurance) which is materially adverse to the
business or financial condition of Hi Liner or made any disposition of any of
its material properties or assets other than in the ordinary course of business;
b. made any change or amendment in its certificate of incorporation or
by-laws, or other governing instruments;
<PAGE>
c. issued or sold any Equity Securities or other securities, acquired,
directly or indirectly, by redemption or otherwise, any such Equity Securities,
reclassified, split-up or otherwise changed any such Equity Security, or granted
or entered into any options, warrants, calls or commitments of any kind with
respect thereto;
d. organized any new Subsidiary or acquired any Equity Securities of any
Person or any equity or ownership interest in any business;
e. borrowed any funds or incurred, or assumed or become subject to, whether
directly or by way of guarantee or otherwise, any obligation or liability with
respect to any such indebtedness for borrowed money;
f. paid, discharged or satisfied any material claim, liability or obligation
(absolute, accrued, contingent or otherwise), other than in the ordinary course
of business;
g. prepaid any material obligation having a maturity of more than 90 days
from the date such obligation was issued or incurred;
h. canceled any material debts or waived any material claims or rights,
except in the ordinary course of business;
i. disposed of or permitted to lapse any rights to the use of any material
patent or registered trademark or copyright or other intellectual property owned
or used by it;
10. granted any general increase in the compensation of officers or
employees (including any such increase pursuant to any employee benefit plan);
j. purchased or entered into any contract or commitment to purchase any
material quantity of raw materials or supplies, or sold or entered into any
contract or commitment to sell any material quantity of property or assets,
except (i) normal contracts or commitments for the purchase of, and normal
purchases of, raw materials or supplies, made in the ordinary course business,
(ii) normal contracts or commitments for the sale of, and normal sales of,
inventory in the ordinary course of business, and (iii) other contracts,
commitments, purchases or sales in the ordinary course of business;
k. made any capital expenditures or additions to property, plant or
equipment or acquired any other property or assets (other than raw materials and
supplies) at a cost in excess of $100,000 in the aggregate;
l. written off or been required to write off any notes or accounts
receivable in an aggregate amount in excess of $2,000;
m. written down or been required to write down any inventory in an
aggregate amount in excess of $ 2,000;
15. entered into any collective bargaining or union contract or agreement;
or
<PAGE>
o. other than the ordinary course of business, incurred any liability
required by generally accepted accounting principles to be reflected on a
balance sheet and material to the business or financial condition of Hi Liner.
5.8 No Material Adverse Change. Since the date of the Hi Liner
Financial Statements, there has not been any material adverse change in the
business or financial condition of Hi Liner.
5.9 Brokers or Finders. The Shareholder has not employed any broker or
finder or incurred any liability for any brokerage or finder's fees or
commissions or similar payments in connection with the sale of the Hi Liner
Shares to SHPE.
6. REPRESENTATIONS AND WARRANTIES OF SHPE.
SHPE represents and warrants to the Shareholder that, to the Knowledge of
SHPE (which limitation shall not apply to Section 6.3). Such representations
and warranties shall survive the Closing for a period of two years.
6.1 Organization of SHPE; Authorization. SHPE is a corporation duly
organized, validly existing and in good standing under the laws of Florida with
full corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution, delivery and performance of
this Agreement have been duly authorized by all necessary corporate action of
SHPE and this Agreement constitutes a valid and binding obligation of SHPE;
enforceable against it in accordance with its terms.
6.2 Capitalization. The authorized capital stock of SHPE consists of
50,000,000 shares of common stock, par value $.0001 per share. As of the date
of this Agreement, SHPE had 8,606,815 shares of common stock issued and
outstanding, and no shares of Preferred Stock issued and outstanding. As of the
Closing Date, all of the issued and outstanding shares of common stock of SHPE
are validly issued, fully paid and non-assessable. The Common Stock of SHPE is
presently listed and trading on the Nasdaq Over-the-Counter Bulletin Board under
the symbol "SHPEE."
6.3 Ownership of SHPE Shares. The delivery of certificates to Hi Liner
provided in Section 2.3 will result in the Shareholder or assigns immediate
acquisition of record and beneficial ownership of the SHPE Shares, free and
clear of all Encumbrances other than as required by Federal and State securities
laws.
<PAGE>
6.4 No Conflict as to SHPE and Subsidiaries. Neither the execution and
delivery of this Agreement nor the consummation of the sale of the SHPE Shares
to the Shareholders will (a) violate any provision of the certificate of
incorporation or by-laws (or other governing instrument) of SHPE or any of its
Subsidiaries or (b) violate, or be in conflict with, 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 of, or accelerate the performance
required by, or excuse performance by any Person of any of its obligations
under, or cause the acceleration of the maturity of any debt or obligation
pursuant to, or result in the creation or imposition of any Encumbrance upon any
property or assets of SHPE or any of its Subsidiaries under, any material
agreement or commitment to which SHPE or any of its Subsidiaries is a party or
by which any of their respective property or assets is bound, or to which any of
the property or assets of SHPE or any of its Subsidiaries is subject, or (c)
violate any statute or law or any judgment, decree, order, regulation or rule of
any court or other Governmental Body applicable to SHPE or any of its
Subsidiaries except, in the case of violations, conflicts, defaults,
terminations, accelerations or Encumbrances described in clause (b) of this
Section 6.4, for such matters which are not likely to have a material adverse
effect on the business or financial condition of SHPE and its Subsidiaries,
taken as a whole.
6.5 Consents and Approvals of Governmental Authorities. No consent,
approval or authorization of, or declaration, filing or registration with, any
Governmental Body is required to be made or obtained by SHPE or any of either of
their Subsidiaries in connection with the execution, delivery and performance of
this Agreement by SHPE or the consummation of the sale of the SHPE Shares to the
Shareholders.
6.6 Other Consents. No consent of any Person is required to be obtained
by Hi Liner or SHPE to the execution, delivery and performance of this Agreement
or the consummation of the sale of the SHPE Shares to the Shareholders,
including, but not limited to, consents from parties to leases or other
agreements or commitments, except for any consent which the failure to obtain
would not be likely to have a material adverse effect on the business and
financial condition of Hi Liner or SHPE.
6.7 Financial Statements. Prior to closing, SHPE shall have delivered
to the Shareholder consolidated balance sheets of SHPE and its Subsidiaries as
at December 31, 1999 and 1998, and statements of income and changes in financial
position for each of the periods then ended, together with the report thereon of
SHPE's independent accountant (the "SHPE Financial Statements"). Such SHPE
Financial Statements and notes fairly present the consolidated financial
condition and results of operations of SHPE and its Subsidiaries as at the
respective dates thereof and for the periods therein referred to, all in
accordance with generally accepted United States accounting principles
consistently applied throughout the periods involved, except as set forth in the
notes thereto, and shall be utilizable in any SEC filing in compliance with Rule
310 of Regulation S-B promulgated under the Securities Act.
6.8 Brokers or Finders. Other than M. Richard Cutler, Brian Lebrecht,
Vi Bui,, Asher Starik and Stephanie Crumpler, SHPE has not employed any broker
or finder or incurred any liability for any brokerage or finder's fees or
commissions or similar payments in connection with the sale of the SHPE Shares
to the Shareholders.
<PAGE>
6.9 Purchase for Investment. SHPE is purchasing the Hi Liner Shares
solely for its own account for the purpose of investment and not with a view to,
or for sale in connection with, any distribution of any portion thereof in
violation of any applicable securities law.
7. Access and Reporting; Filings With Governmental Authorities; Other
Covenants.
7.1 Access Between the date of this Agreement and the Closing Date.
Each of the Shareholder and SHPE shall (a) give to the other and its authorized
representatives reasonable access to all plants, offices, warehouse and other
facilities and properties of Hi Liner or SHPE, as the case may be, and to its
books and records, (b) permit the other to make inspections thereof, and (c)
cause its officers and its advisors to furnish the other with such financial and
operating data and other information with respect to the business and properties
of such party and its Subsidiaries and to discuss with such and its authorized
representatives its affairs and those of its Subsidiaries, all as the other may
from time to time reasonably request.
7.2 Regulatory Matters. The Shareholder and SHPE shall (a) file with
applicable regulatory authorities any applications and related documents
required to be filed by them in order to consummate the contemplated transaction
and (b) cooperate with each other as they may reasonably request in connection
with the foregoing.
8. CONDUCT OF HI LINER'S BUSINESS PRIOR TO THE CLOSING. The Shareholder
shall use its best efforts to ensure the following:
8.1 Operation in Ordinary Course. Between the date of this Agreement
and the Closing Date, Hi Liner shall cause conduct its businesses in all
material respects in the ordinary course.
8.2 Business Organization. Between the date of this Agreement and the
Closing Date, Hi Liner shall (a) preserve substantially intact the business
organization of Hi Liner; and (b) preserve in all material respects the present
business relationships and good will of Hi Liner.
8.3 Corporate Organization. Between the date of this Agreement and the
Closing Date, Hi Liner shall not cause or permit any amendment of its
certificate of incorporation or by-laws (or other governing instrument) and
shall not:
a. issue, sell or otherwise dispose of any of its Equity Securities, or
create, sell or otherwise dispose of any options, rights, conversion rights or
other agreements or commitments of any kind relating to the issuance, sale or
disposition of any of its Equity Securities;
b. create or suffer to be created any Encumbrance thereon, or create, sell
or otherwise dispose of any options, rights, conversion rights or other
agreements or commitments of any kind relating to the sale or disposition of any
Equity Securities;
c. reclassify, split up or otherwise change any of its Equity Securities;
d. be party to any merger, consolidation or other business combination;
<PAGE>
4. sell, lease, license or otherwise dispose of any of its properties or
assets (including, but not limited to rights with respect to patents and
registered trademarks and copyrights or other proprietary rights), in an amount
which is material to the business or financial condition of Hi Liner except in
the ordinary course of business; or
5. organize any new Subsidiary or acquire any Equity Securities of any
Person or any equity or ownership interest in any business.
8.4 Other Restrictions. Between the date of this Agreement and the
Closing Date, Hi Liner shall not:
a. borrow any funds or otherwise become subject to, whether directly or by
way of guarantee or otherwise, any indebtedness for borrowed money;
b. create any material Encumbrance on any of its material properties or
assets;
c. increase in any manner the compensation of any director or officer or
increase in any manner the compensation of any class of employees;
d. create or materially modify any material bonus, deferred compensation,
pension, profit sharing, retirement, insurance, stock purchase, stock option, or
other fringe benefit plan, arrangement or practice or any other employee benefit
plan (as defined in section 3(3) of ERISA);
e. make any capital expenditure or acquire any property or assets;
f. enter into any agreement that materially restricts SHPE, Hi Liner or any
of their Subsidiaries from carrying on business;
g. pay, discharge or satisfy any material claim, liability or obligation,
absolute, accrued, contingent or otherwise, other than the payment, discharge or
satisfaction in the ordinary course of business of liabilities or obligations
reflected in the Hi Liner Financial Statements or incurred in the ordinary
course of business and consistent with past practice since the date of the Hi
Liner Financial Statements; or
h. cancel any material debts or waive any material claims or rights.
9. DEFINITIONS.
As used in this Agreement, the following terms have the meanings specified
or referred to in this Section 9.
9.1 "Business Day" C Any day that is not a Saturday or Sunday or a day
on which banks located in the City of New York are authorized or required to be
closed.
9.2 "Code" C The Internal Revenue Code of 1986, as amended.
9.3 "Encumbrances" C Any security interest, mortgage, lien, charge,
adverse claim or restriction of any kind, including, but not limited to, any
restriction on the use, voting, transfer, receipt of income or other exercise of
any attributes of ownership, other than a restriction on transfer arising under
Federal or state securities laws.
9.4 "Equity Securities" C See Rule 3aB11B1 under the Securities
Exchange Act of 1934.
9.5 "ERISA" C The Employee Retirement Income Security Act of 1974, as
amended.
<PAGE>
9.6 "Governmental Body" C Any domestic or foreign national, state or
municipal or other local government or multi-national body (including, but not
limited to, the European Economic Community), any subdivision, agency,
commission or authority thereof.
9.7 "Knowledge" C Actual knowledge, after reasonable investigation.
9.8 "Person" C Any individual, corporation, partnership, joint venture,
trust, association, unincorporated organization, other entity, or Governmental
Body.
9.9 "Subsidiary" C With respect to any Person, any corporation of which
securities having the power to elect a majority of that corporation's Board of
Directors (other than securities having that power only upon the happening of a
contingency that has not occurred) are held by such Person or one or more of its
Subsidiaries.
10. TERMINATION.
10.1 Termination. This Agreement may be terminated before the Closing
occurs only as follows:
a. By written agreement of the Shareholder and SHPE at any time.
b. By SHPE, by notice to the Shareholders at any time, if one or more of the
conditions specified in Section 3 is not satisfied at the time at which the
Closing (as it may be deferred pursuant to Section 2.1) would otherwise occur or
if satisfaction of such a condition is or becomes impossible.
c. By the Shareholder, by notice to SHPE at any time, if one or more of the
conditions specified in Section 4 is not satisfied at the time at which the
Closing (as it may be deferred pursuant to Section 2.1), would otherwise occur
of if satisfaction of such a condition is or becomes impossible.
d. By either the Shareholders or SHPE, by notice to the other at any time
after April 6, 2000, if the transaction has not been completed.
10.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 10.1, this Agreement shall terminate without any liability or further
obligation of any party to another.
13. NOTICES. All notices, consents, assignments and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given when (a) delivered by hand, (b) sent by telex or facsimile (with receipt
confirmed), provided that a copy is mailed by registered mail, return receipt
requested, or (c) received by the delivery service (receipt requested), in each
case to the appropriate addresses, telex numbers and facsimile numbers set forth
below (or to such other addresses, telex numbers and facsimile numbers as a
party may designate as to itself by notice to the other parties).
<PAGE>
(a) If to SHPE:
The Storm High Performance Sound Corporation
8756 B 122nd Avenue NE
Kirkland, WA 98033
Facsimile No.: (425) 827-2216
Attn: Patrick F. Charles, President and Chief Executive Officer
(b) If to the Shareholder:
c/o Cutler Law Group
610 Newport Center Drive, Suite 800
Newport Beach, CA 92660
Facsimile No.: (949) 719-1988
Attention: M. Richard Cutler, Esq.
14. MISCELLANEOUS.
14.2 Expenses. Each party shall bear its own expenses incident to the
preparation, negotiation, execution and delivery of this Agreement and the
performance of its obligations hereunder.
14.3 Captions. The captions in this Agreement are for convenience of
reference only and shall not be given any effect in the interpretation of this
agreement.
14.4 No Waiver. The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.
14.5 Exclusive Agreement; Amendment. This Agreement supersedes all prior
agreements among the parties with respect to its subject matter with respect
thereto and cannot be changed or terminated orally.
14.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be considered an original, but all of which
together shall constitute the same instrument.
14.7 Governing Law, Venue. This Agreement and (unless otherwise provided)
all amendments hereof and waivers and consents hereunder shall be governed by
the internal law of the State of California, without regard to the conflicts of
law principles thereof. Venue for any cause of action brought to enforce any
part of this Agreement shall be in Orange County, California.
<PAGE>
14.8 Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns,
provided that neither party may assign its rights hereunder without the consent
of the other, provided that, after the Closing, no consent of Hi Liner or the
Shareholder shall be needed in connection with any merger or consolidation of
SHPE with or into another entity.
IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement
to be executed by their respective offi-cers, hereunto duly authorized, and
entered into as of the date first above written.
THE STORM HIGH PERFORMANCE SOUND CORPORATION
a Florida corporation
/s/ Patrick F. Charles
____________________________________________________
By: Patrick F. Charles, President and Chief Executive Officer
MRC LEGAL SERVICES LLC
/s/ M. Richard Cutler
____________________________________________________
By: M. Richard Cutler, President
<PAGE>
EXHIBIT A
HI LINER SHAREHOLDER AND ASSIGNS
Shareholder SHPE Shares to be Issued
MRC Legal Services LLC 731,250
Brian A. Lebrecht 225,000
Vi Bui 168,750
Asher Starik 375,000
---------------
TOTAL 1,500,000
CONSULTING AGREEMENT
CONSULTING AGREEMENT dated as of March 31, 2000 between THE STORM HIGH
PERFORMANCE SOUND CORPORATION, a Florida corporation, ("SHPE"), on the one hand,
and M. RICHARD CUTLER ("Cutler"), BRIAN A. LEBRECHT ("Lebrecht"), VI BUI
("Bui"), ASHER STARIK ("Starik"), STEPHANIE CRUMPLER ("Crumpler", and, together
with Cutler, Lebrecht, Bui and Starik, the "Consultants"), on the other hand.
WHEREAS:
A. Consultants have agreed to render consulting services with regard to
the negotiation and completion of a stock exchange between SHPE and the majority
shareholder of Hi Liner Group, Inc., a Delaware corporation (the "Hi Liner
Shareholder").
B. In the event SHPE is able to complete the Stock Exchange with the Hi
Liner Shareholder, SHPE wishes to compensate Consultants for their consulting
services.
NOW THEREFORE, it is agreed:
1. Stock Compensation. SHPE shall pay and cause to be issued to the
Consultants a consulting fee of $125,000 cash, plus 2,000,000 shares of common
stock of SHPE (the "Shares") immediately upon the execution of a stock exchange
agreement with the Hi Liner Shareholder. Such shares shall be subject to
registration by SHPE on Form S-8 within 5 days of SHPE closing on the stock
exchange agreement with the Hi Liner Shareholder. The Consultants agree to
prepare and file the S-8 Registration Statement at their sole expense, except
for the filing fee associated therewith, which shall be reimbursed by SHPE. The
parties agree that the value of the Shares is equal to 50% of the closing bid
price on the date of this Agreement. The Shares shall be issued as follows:
930,000 to Cutler, 300,000 to Lebrecht, 225,000 to Bui, 500,000 to Starik and
45,000 to Crumpler.
2. Miscellaneous. This Agreement (i) shall be governed by the laws of
the State of California; (ii) may be executed in counterparts each of which
shall constitute an original; (iii) shall be binding upon the successors,
representatives, agents, officers and directors of the parties; and (iv) may not
be modified or changed except in a writing signed by all parties.
<PAGE>
This Consulting Agreement has been executed as of the date first above
written.
THE STORM HIGH PERFORMANCE SOUND CORPORATION
/s/ Patrick F. Charles
____________________________________________________
By: Patrick F. Charles, President and Chief Executive Officer
CONSULTANTS
/s/ M. Richard Cutler
____________________________________________________
M. Richard Cutler
/s/ Brian A. Lebrecht
____________________________________________________
Brian A. Lebrecht
/s/ Vi Bui
____________________________________________________
Vi Bui
/s/ Asher Starik
____________________________________________________
Asher Starik
/s/ Stephanie Crumpler
____________________________________________________
Stephanie Crumpler
NORTH COAST PRODUCTIONS, INC.,
THE STORM HIGH PERFORMANCE SOUND CORPORATION
STOCK PURCHASE AGREEMENT
This Agreement and Plan of Merger, dated January 28, 2000 is entered into
by and between The Storm High Performance Sound Corporation (hereinafter
referred to as "Storm" or "the Company"), and North Coast Productions, Inc.
(hereinafter referred to as North Coast or the "Buyer").
1. Storm is duly organized and existing as a corporation under the laws
of the State of Florida, having an authorized capital stock of 50,000,000
shares, par value $.001, of which 8,521,599 shares of common stock are issued
and outstanding.
2. North Coast is a corporation duly organized and existing under the
laws of the State of Washington having an authorized capital stock consisting of
100,000,000 shares of common stock, par value $.001, of which 5,000,000 shares
are issued and outstanding.
3. The board of directors of each of Storm and North Coast
(collectively the "Constituent Corporations") deem it advisable, for the general
welfare and advantage of the constituent corporations and their respective
shareholders that Storm issue 7,115,593 shares of Common Stock to North Coast in
exchange for a cash infusion of three hundred thousand dollars ($300,000), that
as a result of the transaction covered by this Agreement, Storm will become a
subsidiary of North Coast and North Coast will have full control of Storm, and
that subsequent to Storm becoming a subsidiary of North Coast, North Coast will
merge North Coast into Storm with Storm being the surviving corporation and
North Coast ceasing to exist (the "Merger").
4. The Buyer warrants on or before March 31, 2000, it will duly combine
the Constituent Corporations in accordance with the provisions of the Florida
Statutes Annotated. The Buyer warrants that by March 31, 2000, it will duly
file Articles of Merger with the Secretary of the State of the State of Florida
to effect the Merger. Said filing shall be the sole responsibility of the
Buyer.
Amended and Restated Articles of Incorporation
5. The Buyer warrants that on or before March 31, 2000, as part of the
Merger, the Amended and Restated Articles of Incorporation of the Surviving
Corporation shall be amended to read as follows: (the term "Corporation" as used
in this article referring to the "Surviving Corporation"):
(a) First: The name of the Corporation is North Coast Productions,
Inc.
(b) Second: The principal office of the Corporation is
located at 8756 122nd Avenue, NE Kirkland, Washington 98033.
(c) Third: The Corporation is formed for the purpose of making of
movies in the entertainment industry, consultation and operation and for doing
all things of every kind incident to the business, including but not limited to:
(d) Engaging in any lawful activity and to manufacture, purchase
or otherwise acquire, invest in, own mortgages, pledge, sell, assign and
transfer or otherwise dispose of, trade, deal in and deal with goods, wares and
merchandise and personal property of every class and description;
(e) Holding, purchasing and conveying real and personal property
and to mortgage or lease any such real and personal property with its franchises
and to take the same devise or bequest;
(f) Acquiring, and paying for in cash, stocks, bonds or any other
security of this Company, the good will, rights assets and property and to
undertake or assume the whole or any part of the obligations or liabilities for
any person, firm, association or corporation;
(g) Acquiring, holding, using, selling, leasing, granting
licenses in respect of, mortgage or otherwise, disposing of letters of patents
of the United States or any foreign country, patent rights, licenses and
privileges, inventions, improvement and processes, copyright, trademarks and
trade names relating useful in connection with any business in this Corporation;
(h) Borrowing money and contracting debts when necessary for the
transaction of its business, or for the exercise of its corporate rights,
privileges or franchises, or for any other lawful purpose of its incorporation;
issuing bonds, promissory notes, bills of exchange, debentures and other
obligations and evidence of indebtedness, payable at specified time or times or
payable upon the happening of a specified event or events, whether secured by
mortgage, pledge or otherwise, or unsecured for money borrowed, or in payment
for property purchased, or acquired, or for any other lawful objects;
(i) Doing all and everything necessary and proper for the
accomplishment of the objects enumerated in this plan or necessary or incidental
to the protection and benefit of the Corporation and, in general, carrying on
any lawful business necessary or incidental to the attainment of the objects of
the Corporation, whether or not such business is similar in nature to the
objects herein set forth above.
(j) Fourth: Section 1. The maximum number of shares which the
Corporation is authorized to have outstanding is 100,000,000 shares, which shall
be classified as common stock.
Authorization and Sale of the Shares
6.1 Authorization. Storm is authorized to issue pursuant to the terms
and conditions hereof of up to 7,115,593 (seven million one hundred fifteen
thousand five hundred ninety-three) shares of Storm's Common Stock.
6.2 Sale. Subject to the terms and conditions hereof, Storm will issue
to the Buyer and the Buyer will purchase from Storm shares of Common Stock (the
"Securities") at a purchase price of three hundred thousand dollars ($300,000)
(the "Purchase Price") . Of the $300,000 Purchase Price, the initial fifty
thousand dollars ($50,000) shall be placed in an escrow account (the "Escrow
Account") as set forth in the Escrow Agreement attached hereto as Exhibit A. The
title on the Escrow Account is as follows:
SHPE/NCPI
The parties hereto acknowledge that the Buyer has tendered to the Escrow Agent,
the Law Firm of Larson-Jackson, P.C., an initial payment in connection with this
Share Purchase a check made payable to SHPE/NCPI in the amount of Ten Thousand
Dollars ($10,000.00). Said funds were immediately and without delay deposited
in the Escrow Account created specifically for this transaction and were paid
for the purposes set forth in paragraph. This ten thousand dollar payment is a
partial payment of the $50,000 to be deposited in the Escrow Account. The
pertinent banking coordinates and other information for the Escrow Account are
as follows:
Name of Bank: The Adams National Bank
Address: 1627 K Street NW
Washington, D.C. 20006
Telephone No.: (202) 466-4090
Fax No.: (202) 833-8875
Bank Contact: Catherine Upshur Purnell
Vice President/ Branch Manager
Account Title: SHPE/NCPI Escrow Account
Account No.: 40841705
ABA No.: 054001314
7. Payment to Storm by Buyer. By February 4, 2000, the Buyer shall
tender to the Escrow Agent a non-refundable deposit of fifty thousand dollars
($50,000) (the "Non-Refundable Deposit"). The Buyer may request an extension of
time to make the Non-Refundable Deposit but the right to grant the extension
shall be the sole right of Storm and Storm may set the new payment date for the
Non-Refundable Deposit. If the Buyer fails to tender the Non-Refundable Deposit
and Storm declines to grant an extension, the Buyer shall be in breach of this
Agreement. By February 4, 2000, the Buyer shall open an account with the Adams
National Bank ("Adams Bank") at 1627 K Street, NW, Washington, D.C. 20006 for
the purpose of depositing the Buyer's payments which shall total $250,000
exclusive of the $50,000 to be deposited in the Escrow Account. The Buyer shall
provide instructions to Adams Bank authorizing Adams Bank to respond to balance
verification requests of the Escrow Agent. On or before March 31, 2000, the
Buyer shall deposit or cause to be deposited in the Deposit Account at Adams
Bank, $250,000 as payment to Storm. If by March 31, 2000, the Buyer has not
successfully deposited or caused to be deposited a minimum of seventy-five
percent (75%), or two hundred thirty-two thousand five hundred dollars,
($232,500.00) under the aforementioned Deposit Escrow Agreement, such failure
shall constitute a material breach of this Agreement. As a result of such
material breach and as liquidated damages, Storm is entitled to keep the
Non-Refundable deposit of fifty thousand dollars ($50,000.00) deposited in the
Escrow Account. In the event the Buyer so breaches this Agreement and forfeits
$50,000 as liquidated damages, the remaining balance paid by the Buyer shall be
returned to the Buyer without delay.
8. In the event the Buyer has, in fact, deposited or caused to be
deposited a minimum of two hundred thirty-two thousand five hundred dollars
($232,500.00), the Buyer may request an extension to pay the balance of the
Purchase Price, but Storm shall have the sole right in its discretion to grant
the extension to a date Storm deems appropriate.
9. Closing Date; Delivery and Effective Date
(a) The closing of the purchase and sale of the Securities to the
Buyer shall occur contemporaneously at Adams National Bank in Washington, D.C.
The official closing date ("Closing Date") of this Agreement shall be March 31,
2000, unless extended by Storm in accordance with Section 8 of this Agreement.
(b) Delivery. At the Closing, Storm shall cause to be delivered,
via overnight delivery, to the Buyer the Securities to be purchased by the Buyer
from Storm, in accordance with the terms of the Escrow Agreement. Namely, the
Buyer shall deposit in the aggregate three hundred thousand dollars
($300,000.00) at Adams National Bank in Washington, D.C. for the purpose of
performing this Agreement. The Escrow Account titled SHPE/NCPI shall have the
sum of fifty thousand dollars ($50,000.00). Mr. Patrick Charles ("Mr. Charles"),
a principal of the Buyer, will open a separate and subsequent deposit account
(the "Deposit Account") to receive the balance of two hundred and fifty thousand
dollars ($250,000). The Deposit Account shall remain under the full and
complete control of Mr. Charles. However, Mr. Charles will instruct Adams
National Bank, in writing, with a copy to the Escrow Agent, to allow the Escrow
Agent access to information about the money deposited into the Deposit Account.
Once $250,000 have been deposited into the Deposit Account and $50,000 have been
deposited into the Escrow Account such that the Buyer has deposited an aggregate
of $300,000, Storm will transfer or cause the Securities to be transferred to
the Buyer. The Buyer and Storm agree that the funds held in the Escrow Account
referred to herein shall be disbursed in accordance with the Escrow Agreement
executed by the parties. The Escrow Agreement shall be effective
contemporaneously with this Agreement and is annexed as part of this Agreement
as Exhibit "A". On or prior to closing, Mr. Charles, representing the Buyer,
and Steve Larson-Jackson on behalf of the Escrow Agent, shall jointly appear at
Adams Bank and jointly issue and verify payment to the list of creditors as set
forth in the schedule of payments attached hereto as Exhibit B.
<PAGE>
(c) Effective Date: The Effective Date of this Agreement shall be
January 28, 2000.
(d) Post Delivery of Stock Certificates. The post delivery
allocation of the securities of Storm shall be as follows:
SHAREHOLDERS AMOUNT PERCENTAGE
----------- -------
NCPI Shareholders 7,115,593 83.50
Pre-Combination Storm Shareholders* 1,198,999 14
Mr. Robert Hannaberry 103,504 1.25
Mr. Leonard Zacharoff 103,503 1.25
----------- -------
TOTAL ISSUED AND OUTSTANDING 8,521,599 100
*Exclusive of Messrs. Hannaberry and Zacharoff.
10.0 Contemporaneously with Storm's delivery of the Shares to the Buyer
pursuant to 9(b) of this Agreement, Messrs. Robert Hannaberry and Leonard
Zacharoff, the majority shareholders of Storm collectively owning 7,237,384
shares of Storm Common Stock, shall tender 7,030,377 shares back to Storm and
Storm shall retire such shares. In exchange for such shares, Storm shall convey
to Messrs. Hannaberry and Zacharoff all of Storm's assets that Storm owns as of
January 28, 2000, but not including assets acquired by Storm after January 28,
2000. The parties hereto acknowledge that Storm presently has no operations and
that Storm's remaining shareholders will benefit from the contemplated Merger in
that an operating company will be merged into Storm.
10.1 The parties hereto acknowledge that Messrs. Hannaberry and
Zacharoff have personally sold an amount of shares equal to one percent (1% ) of
the total shares outstanding of Storm to the Buyer in the open market pursuant
to Rule 144 in the amount of $10,652. The $300,000 Purchase Price for Storm's
shares under this Agreement is exclusive of the shares personally sold by
Messrs. Hannaberry and Zacharoff and the amount received for such personal sale
shall not be included in any amounts upon which any other calculations are made
in this Agreement or any other agreement.
10.2 After consummation of this Agreement, the remaining shares held by
Messrs. Hannaberry and Zacharoff shall be subject to a lock-up agreement
effective contemporaneously with Storm's issuance of the Securities. Messrs.
Hannaberry and Zacharoff shall be prohibited from selling such shares (the
"Lock-up Shares") into the securities markets during the period beginning on
January 7, 2000, and ending July 7, 2000. The shares personally sold by Messrs.
Hannaberry and Zacharoff as set forth in 10.1 are not included in the Lock-up
Shares. Beginning on July 8, 2000 Messrs. Hannaberry and Zacharoff are each
permitted to sell a maximum of twenty-five percent ( 25%) of their respective
stock on a monthly basis. However, in the event either Mr. Hannaberry or Mr.
Zacharoff does not sell his respect 25% allotment in any particular month, he
will be permitted to add the unsold portion to the amount he can sell in the
following month. The Buyer shall have the first right of refusal to acquire
shares so offered for sale by Messrs. Hannaberry and Zacharoff at the Common
Stock's closing price on the date immediately prior to Mr. Hannaberry's or Mr.
Zacharoff's offer to sell their respective shares. Should the Buyer exercise
its first right of refusal, it will have five (5) business days to close on a
purchase of the stock.
10.3 Upon the Buyer's tender of $50,000 to the Escrow Agent, Messrs.
Robert Hannaberry and Leonard Zacharoff, being the only officers and directors
of Storm, shall tender their resignations as officers and directors. In their
capacity as majority shareholders, Messrs. Robert Hannaberry and Leonard
Zacharoff shall appoint by consent Messrs. Patrick Charles and Terrence K.
Picken to serve as directors of Storm for a special term to end on Mach 31,
2000. In their capacity as directors, Messrs. Charles and Picken shall appoint
themselves as the sole officers of Storm. In their capacity as directors,
Messrs. Charles and Picken shall only be empowered to take those steps necessary
to duly effect a lawful offering of Storm's securities solely in the State of
Washington, and shall not take any other action on behalf of Storm without
majority shareholder approval. Messrs. Charles and Picken shall not disburse
any proceeds from such offering except to the extent necessary to tender payment
for the shares being sold under this Agreement should some of the proceeds from
such offering be used in such manner. The parties hereto acknowledge that the
offering is anticipated to be the source of payment for the Purchase Price
though it need not be the exclusive source for such payment. Otherwise, the
proceeds shall not be disbursed for any reason until after the Buyers have paid
the full Purchase Price as set forth herein. Any such offering of Storm's
securities shall be limited to an amount of securities such that Messrs.
Hannaberry and Zacharoff shall retain a majority of the voting power of all the
shares in Storm. Should said offering be unsuccessful in raising an amount
sufficient to pay the Purchase Price set forth herein, any funds raised pursuant
to said offering shall remain the property of Storm and upon the termination of
Messrs. Charles and Picken's terms as directors on March 31, 2000, Messr.
Hannaberry and Zacharoff may reelect themselves as directors, or any other
persons to serve as directors as Messrs. Hannaberry and Zacharoff deem in the
best interest of Storm. Any violation of this provision by Messrs. Charles or
Picken shall be considered a material breach of this Agreement and shall result
in the termination of this Agreement with any money paid to the Escrow Agent
being forfeited by the Buyer as liquidated damages. The resignations and
resolutions to appoint Messrs. Charles and Picken as directors shall be in a
form as set forth in Exhibits D, E and F attached hereto.
Representations and Warranties of Storm and Buyer
11. Storm hereby represents and warrants to the Buyer as follows:
11.1 Organization and Standing; Articles and Bylaws. Storm is a
corporation duly organized and existing under, and by virtue of, the laws of the
State of Florida and is in good standing under such laws. Storm has the
requisite corporate power to own and operate its properties and assets, and to
carry on its business. Storm is qualified, licensed or domesticated as a
foreign corporation in all jurisdictions where the nature of its activities or
of its properties owned or leased makes such qualification, licensing or
domestication necessary at this time. Storm has furnished or shall cause to be
furnished to the Buyer copies of its Articles of Incorporation and Bylaws. Said
copies are true, correct and complete and contain all amendments through the
date of this Agreement.
11.2 Corporate Power. Storm has now, or will have at the Closing Date,
all requisite legal and corporate power to enter into this Agreement, to sell
the securities hereunder, and to carry out and perform its obligations under the
terms of this Agreement.
11.3 Subsidiaries. Storm has no subsidiaries. Storm does not own,
directly or indirectly, shares of stock or other interests in any other
corporation, association, joint venture, or business organization.
11.4 Capitalization. The authorized capital stock of Storm is
50,000,000 shares of Common Stock. 8,521,599 shares of Common Stock are issued
and outstanding. The issued and outstanding shares of Common Stock have been
duly authorized and validly issued, are fully paid and nonassessable and were
issued in compliance with applicable state and federal laws concerning the
issuance of securities. There are no outstanding rights, warrants, conversion
rights, or agreements for the purchase or acquisition from Storm of any shares
of its capital stock, except (i) options for 30,000 shares of Common Stock at an
exercise price of $.10, and 10,000 shares of Common Stock at an exercise price
of $1.00. Such options have been granted to Storm's market maker, Equitrade
Securities Corporation. Said options have existed for more than one (1) year
prior the instant Agreement.
12.0 Authorization of Storm
(a) All corporate action on the part of Storm, its officers,
directors, and stockholders are authorized in connection with the sale and
issuance of the securities pursuant hereto and the performance of Storm's
obligations hereunder including the consent of a majority of the outstanding
shares. Director and President, Mr. Robert Hannaberry, and Director and
Vice-President, Mr. Leonard Zacharoff, control and own more than 80% of the
issued and outstanding securities of Storm and hereby consent to this Agreement
as evidenced by their signatures hereto. This Agreement is a legal, valid and
binding obligation of Storm, enforceable against Storm in accordance with its
terms, except as limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws of general application affecting enforcement of creditors'
rights, and except as limited by application of legal principles affecting the
availability of equitable remedies.
(b) The Securities, when issued in compliance with the provisions
of this Agreement, will be validly issued, fully paid and nonassessable, and
will be free of any liens or encumbrances; provided, however, that such shares
may be subject to restrictions on transfer under state and/or federal securities
laws as set forth herein, and as may be required by future changes in such laws.
In fact, no securities of Storm have been registered with the Commission.
(c) No shareholder of Storm has any right of first refusal or any
preemptive rights in connection with the issuance of the Securities or of the
Common Stock by Storm.
13. Financial Statements. (Storm's audited balance sheet and statement
of income and expenses for the fiscal year ended December 31, 1999, are
hereinafter collectively referred to as the "Financial Statements.") The Buyer
has been supplied interim, unaudited financial statements. The Buyer intends to
secure the services of an independent auditing firm to generate audited
financial statements for Storm. At the conclusion of said audit, the financial
statements will fairly present the financial condition of Storm and the results
of the operations, if any, of Storm as of the date. Storm warrants that it has
no liabilities other than those set forth in the schedule attached hereto as
part of this Agreement as Exhibit C.
14. Material Contracts and Commitments. All the material contracts,
commitments, agreements, and instruments to which Storm is a party are legal,
valid, binding, and in full force and effect in all material respects and
enforceable by Storm in accordance with their terms except as limited by
bankruptcy, insolvency, reorganization, moratorium, or similar laws of general
application affecting enforcement of creditors' rights, and except as limited by
application of legal principles affecting the availability of equitable
remedies. Storm hereby discloses that is has not generated more than nominal
revenue in the most recent fiscal year.
15. Compliance with Other Instruments. Storm is not in violation of
any term of its respective Articles of Incorporation or Bylaws, or in any
material respect of any contract, agreement, instrument, or, to the best
knowledge of Storm, any judgement, decree, order, statute, rule, or regulation
applicable to it. The execution, delivery, and performance of this Agreement by
Storm and the Buyer, and the issuance and sale of the Securities pursuant
hereto, will not result in any such violation or be in conflict with or
constitute a default under any such term, or cause the acceleration of maturity
of any loan or material obligation to which Storm is a party.
16. Litigation. There are no actions or proceedings against Storm
which might result in any adverse change in the prospects, conditions, affairs,
or operations if any of Storm or in any of its properties or assets, or in any
impairment of the right or ability of Storm to carry on its business as proposed
to be conducted.
17. Offering. The offer, sale and issuance of the Securities in
conformity with the terms of this Agreement will not violate the Securities Act.
18. Insurance. Storm does not currently have in force liability
insurance with insurer.
19. Taxes. Storm has timely filed tax returns that are required to
have been filed by them prior to the date of this Agreement with appropriate
taxation authorities.
20. Disclosure. This Agreement, the Financial Statements, and all
certificates delivered to the Buyer pursuant to this Agreement, when read
together, do not contain any untrue statement of a material fact and do not omit
to state a material fact necessary in order to make the statements contained
therein or herein not misleading. There is, to the best of Storm's knowledge,
no fact which materially adversely affects the prospects, condition, affairs or
operations of Storm or any of its properties or assets which has not been set
forth in this Agreement.
21. Representations and Warranties by Buyer. The Buyer represents and
warrants to Storm as follows:
(a) The Buyer is experienced in evaluating and investing in
companies such as Storm and has had the opportunity to discuss Storm's business,
management and financial affairs with its Chief Executive Officer, Mr. Robert
Hannaberry. The Buyer further warrants that it has received or shall request at
some future date prior to closing any and all information it requires prior to
the closing.
(b) The securities are being acquired for the account of the
Buyer, for investment and not with a view to, or for resale in connection with,
any distribution or public offering thereof within the meaning of the Securities
Act. To the extent a distribution or public offering occurs, it shall be
conducted in accordance with the applicable federal securities laws.
(c) The Buyer understands that Storm's shares have not been
registered with the U.S. Securities and Exchange Commission (the "SEC") pursuant
to Section 12 of the Securities Act of 1934, as amended, nor has Storm
registered any transactions pursuant to the Securities Act of 1933, as amended.
The Buyer further represents that as part of its performance pursuant to the
terms of this Agreement, the Buyer shall have the sole and complete
responsibility and shall use its best efforts to arrange for filing the
appropriate registration statement in connection with Storm to have Storm's
shares registered under Section 12(g) of the Securities Exchange Act of 1934, as
amended. (such registration statement and other documents filed with the SEC are
referred to herein as the "SEC Filings"). Said registration shall be completed
and filed with the SEC prior to April 1, 2000. The Buyer and Storm acknowledge
Storm will be delisted or be relegated to trading in the "pink sheets" upon the
failure to timely and successfully complete the registration process. All
parties hereto agree that failure to timely register Storm shall constitute a
material breach of this Agreement.
Any failure to timely and successfully complete the registration process
due to delays beyond the control of the Buyer, such as a failure of the auditors
to perform on a timely basis shall not constitute a material breach of this
Agreement by the Buyer.
(d) Notwithstanding that Storm has been publicly traded for more
than two years, the Buyer understands that only limited and nominal trading has
occurred in Storm's stock pursuant to its current listing on the Over the
Counter Bulletin Board ("OTCBB").
(e) The Buyer has the full right, power and authority to enter
into and perform this Agreement, and this Agreement constitutes a legal, valid
and binding obligation upon the Buyer, its successors, and assigns except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
of general application affecting enforcement of creditors' rights, and except as
limited by application of legal principles affecting the availability of
equitable remedies.
(f) The Buyer hereby acknowledges that it shall be responsible for
its own costs and expenses, including attorney's and auditor's fees, in
connection with the subject business combination. Buyer and Storm acknowledge
that each has or has had the opportunity to have its own legal representation by
its own securities counsel. Each party understands and agrees it is responsible
for payment of legal fees of its respective counsel.
22. Legends. Each instrument or certificate representing the
Securities may be presented with the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED
OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER
THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE
SECURITIES REASONABLY SATISFACTORY TO THE COMPANY STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
Conditions to Closing
23. Conditions to Storm's Obligations. Storm shall stand ready to sell
the Securities to the Buyer.
24. Conditions to Obligations of Storm. Storm's obligation to sell and
transfer the Securities to the Buyer at the Closing is subject to the
fulfillment of Storm's satisfaction on or prior to the Closing Date of the
following conditions, any of which may be waived by the Buyer in writing signed
by an authorized officer:
(a) The above representations and warranties made by Storm shall
be true and correct when made, and shall be true and correct on the Closing Date
with the same force and effect as if they had been made on and as of said date.
(b) Storm shall not make any public disclosure regarding this
Agreement unless required to do so under the applicable securities laws. The
parties hereby acknowledge Storm shall issue a press release upon execution of
the instant agreement.
(c) Storm shall cooperate with the auditors and provide all
requested information in a prompt and reasonable manner.
(d) Storm must cease and terminate any and all discussions with
other prospective acquirer or merger partners upon execution of this Agreement.
(e) Storm shall instruct and direct its agents, affiliates and
others to cooperate in the preparation of, and to timely file or provide
information to governmental authorities, self regulatory bodies or other third
parties to effectuate the subject business combination pursuant to the terms of
this agreement.
25. Waivers and Amendments. With the consent of the Buyer and of the
record or beneficial holders of more than 80 percent of the securities to be
purchased, the obligations of Storm's and the Buyer's rights under this
Agreement may be waived (either generally or in a particular instance, either
retroactively or prospectively and either for a specified period of time or
indefinitely), and with the same consent of Messrs. Hannaberry and Zacharoff,
may enter into a supplementary agreement with the Buyer to change in any manner
or eliminating any of the provisions of this Agreement; provided, however, that
no such waiver or supplemental agreement shall reduce the aforesaid percentage
of Securities to be acquired in this transaction. This Agreement or any
provision hereof may be changed, waived, discharged or terminated only by a
statement in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought.
26. Conditions to Buyer's Obligations. The Buyer's obligations to
purchase the securities at the Closing is subject to the fulfillment of the
Agreement to Messr's Hannaberry and Zacharoff's reasonable satisfaction on or
prior to the Closing Date of the following conditions:
(a) Representations and Warranties Correct; Performance of
Obligations. The representations and warranties made by the Buyer shall be true
and correct when made, and shall be true and correct on the Closing Date with
the same force and effect as if they have been made on and as of said date;
Storm shall not have been adversely affected in any way prior to Closing the
transaction unless Storm becomes a reporting issuer prior to the Closing; Storm
shall have performed all obligations and conditions herein or any other related
agreement required to be performed or observed by it on or prior to the Closing
date.
(b) Legitimate Investment. At the time of the Closing, the Buyer
of the Securities hereunder shall be legally permitted by the laws and
regulations to which the Buyer and Storm are subject.
(c) Due Diligence and Confidentiality. The Buyer shall provide
sufficient documents and other information upon the demand of Messrs. Hannaberry
and Zacharoff in order that the Messrs. Hannaberry and Zacharoff can conduct
their due diligence review with respect to the Buyer. In the course of the
parties' due diligence investigations, discussions and negotiations, each party
may disclose to the other certain proprietary, confidential or other non-public
information relating to its respective business, the proprietary, confidential
and non-public nature of which information both parties desire to maintain.
Except as set forth herein, no party shall reveal or make known to any person,
firm corporation or entity or utilize in its own business or make any other
usage of any information disclosed to it by the other in connection with the
discussions and negotiations in connection with the subject transaction. The
obligation to limit disclosure shall cease if the information becomes part of
the public domain or the party has independently developed the information
without the use of any information provided by the other party. In the event
the business combination does not occur and the transaction is not completed,
the parties agree to return all documents, including original and all copies in
their possession, which were obtained in connection with this Agreement and to
maintain the confidentiality of any information obtained hereunder for a period
not to exceed two (2) years.
DUE DILIGENCE REVIEW
Storm shall permit the Buyer's employees, agents, accountants, legal
counsel and other representatives to have access to Storm's books, records,
employees, counsel, accountants, engineers and other representatives at all
reasonable times for the purpose of conducting its due diligence investigation.
Storm will make available to the Buyer for examination and reproduction all
documents and data of every kind and character relating to this Agreement and
the transactions contemplated hereby, in possession or control of, or subject to
reasonable access by either party. All such due diligence investigations shall
be completed and the Buyer shall notify Storm in writing of the satisfaction or
removal of this due diligence review condition by no later than March 6, 2000.
Upon mutual agreement of the parties, additional time may be allowed to complete
such due diligence investigation. Should the Buyer or Storm (in the context of
the due diligence investigation, either party is referred to as the "Reviewing
Party") become aware of any information during its due diligence investigation
which, in the opinion of the Reviewing Party, could have material adverse impact
on this Agreement and/or the transactions contemplated hereby, the Reviewing
Party shall immediately notify the company whom the Reviewing Party investigated
(the "Receiving Party") in writing of such information and the concerns which
such information has caused. The Receiving Party shall have a reasonable time
to respond to those concerns. In the event that the concerns cannot be resolved
to the satisfaction of the Reviewing Party, the Reviewing Party shall have the
right to terminate this Agreement without further liability hereunder. Each
party shall bear the costs and expenses of the respective due diligence
investigation hereunder, including the fees and expenses of professional
advisors.
(d) Payment of Third Parties. The Buyer will certify or represent
to Storm that the Buyer has paid any all third parties in connection with
subject transaction, including but not limited to the accountants, in full prior
to or on the Closing Date.
(e) The Buyer hereby acknowledges that it shall be responsible for
its own costs and expenses, including attorney's and auditor's fees, in
connection with the subject business combination.
(f) The Buyer and Storm shall observe the spirit and intent of
this Agreement and other related agreement in connection with the sale of the
Control Block of Common Stock of Storm High Performance Sound Corporation.
27. Governing Law. This Agreement shall be governed in all respects by
the laws of the District of Columbia.
28. Survival. The representations, warranties, covenants, and
agreements made herein shall survive the Closing of the transactions
contemplated hereby.
29. Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
30. Entire Agreement. This Agreement and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties hereto with regard to the subjects hereof and thereof.
31. Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by first class mail,
postage prepaid, addressed (a) if to the Buyer, at such the Buyer's address set
forth below or at such other address as the Buyer shall have furnished to Storm
in writing, or (b) if to Storm at its address set forth below, or at such other
address as Storm shall have furnished to the Buyer.
<TABLE>
<CAPTION>
<S> <C> <C>
To Buyer: To Storm: To Escrow Agent:
- ------------------------------ ------------------------- -------------------------
Mr. Robert Hannaberry
Mr. Patrick Charles Storm High Performance Mr. Steve Larson-Jackson
North Coast Productions, Inc. Sound Corporation Law Firm of Larson-Jackson, P.C.
8756 122nd Avenue NE 626 Highway 17 West 1275 K Street, N.W., Suite 1101
Kirkland, WA 98033 Pembroke, Ontario K8A 7G9 Washington, D.C., 20005
(Tel) 425- 827-7817 (Tel.) 613- 735-7588 (Tel.) (202) 408-8180
(Fax) 425-827-2216 (Fax) 613-735-8228 (Fax) (202) 789-2216
</TABLE>
32. Separability. In case any provision of this Agreement, not
material to the benefits intended to be conferred hereby shall be invalid,
illegal, or unenforceable, the validity, legality, and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
33. Finder's Fees.
(a) Storm (i) represents and warrants that it has retained no
finder or broker in connection with the transactions contemplated by this
Agreement and (ii) hereby agrees to indemnify and to hold Buyer's officers,
directors and controlling persons harmless of and from any liability for
commission or compensation in the nature of a finder's fee to any broker or
other person or firm (and the costs and expenses of defending against such
liability or asserted liability) for which Storm, or any of its employees or
representatives, are responsible.
(b) The Buyer (i) represents and warrants that it has retained no
finder or broker in connection with the transactions contemplated by this
Agreement and (ii) hereby agree to indemnify and to hold Storm, and their
respective officers, directors and controlling persons, harmless of and from any
liability for any commission or compensation in the nature of a finder's fee to
any broker or other person or firm (and the costs and expenses of defending
against such liability or asserted liability) for which Storm, or any of its
employees or representatives, are responsible.
(c) The Buyer and Storm represent, warrant and covenant Sidney
Golub and Tuscan Capital Ltd. ("Tuscan Capital") have served as consultants to
Storm. As such, all parties agree he shall be paid for said services upon
consummation of the transaction. Payment to Mr. Golub or Tuscan Capital is
pursuant to a separate and independent agreement (Consulting Agreement) and
neither Mr. Golub nor Tuscan Capital shall receive compensation under this
Agreement except as set forth in the Consulting Agreement. The parties to this
Agreement shall in good faith execute such other and further instruments,
assignments or documents as may be necessary or advisable to carry out the
transactions contemplated by this Agreement.
34. Titles and Subtitles. The titles of the Sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement. References herein to exhibits to this
Agreement shall be deemed to incorporate such exhibits by reference.
35. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument, and which shall become effective when there
exist copies signed by Storm's directors, Messrs. Hannaberry and Zacharoff, and
the Buyer. All parties hereto agree that facsimiles of signatures and documents
including counterpart signatures shall be acceptable as signed copies of this
Agreement.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by their duly authorized representatives effective as of last date this
agreement is signed by one of the two below parties.
Storm High Performance Sound Corp. North Coast Productions, Inc. (Buyer)
By: /s/ Robert Hannaberry
- -------------------------------------------
Robert Hannaberry, Director By: /s/ Patrick F. Charles
---------------------------
Patrick Charles, President
North Coast Production, Inc.
8756 122nd Avenue, NE
By:/s/ Leonard Zacharoff Kirkland, Washington, WA 98033
- -------------------------------------------
Leonard Zacharoff, Director Buyer
Storm High Performance Sound Corp. (425) 827-7817
777 South Hagler Drive 8th Floor West Tower
West Palm Beach, Florida 33401
(613) 735-7558 Dated:
Dated:
<PAGE>
EXHIBIT A
DEPOSIT ESCROW AGREEMENT
DEPOSIT ESCROW AGREEMENT ("Deposit Agreement") dated January 27, 2000 by
and among Storm High Performance Sound Corporation, 626 Highway 17 West,
Pembroke, Ontario Canada K8A 7G9, phone number (613) 735-7588 (the "Company")
and North Coast Productions Inc., 8756 - 122nd Avenue NE, Kirkland, WA 98033,
phone number (425) 872-7817 ("Buyer").
WHEREAS, Buyer and the Company entered into a Stock Purchase Agreement
dated January 27, 2000, ("Stock Purchase Agreement") in which, inter alia, the
Company agreed to sell and Buyer agreed to purchase 7,115,793 shares of the
stock in the Company ("Shares").
WHEREAS, the Buyer has agreed to tender payment of $300,000 in
installments as payment for the shares in accordance with the Stock Purchase
Agreement;
WHEREAS, Buyer and the Company have agreed that the funds paid by
Buyer under the Stock Purchase Agreement shall be tendered to and held under
this Deposit Agreement and disbursed at closing as agreed to by the parties and
as described in this Deposit Agreement;
WHEREAS, upon Closing, the Shares to be delivered to Buyer shall be
issued in the name of Buyer or Buyers' designee as set forth in this Deposit
Agreement.
NOW THEREFORE, in consideration of the respective premises, mutual
covenants and agreements of the parties hereto, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Appointment of Escrow Agent. Law Firm of Larson-Jackson, P.C.
is hereby appointed as Escrow Agent hereunder ("Escrow Agent") and the Escrow
Agent hereby accepts such appointment. The Escrow Agent shall act in accordance
with the instructions set forth in this Deposit Agreement and any further
instructions given to it by written instrument signed by Buyer and the Company.
The Escrow Agent hereby discloses to all parties that it has in the past, and
continues to represent the Company. The Company and Buyer acknowledge the
instant disclosure and waive any conflicts of interest.
2. Payment of the Purchase Price by Buyer to the Escrow Agent.
Buyer shall deposit with the Escrow Agent payments as follows:
DUE DATE OF PAYMENT AMOUNT
On or before February 4, 2000 $ 50,000
Escrow Agent hereby acknowledges receipt of $10,000 from Buyer.
<PAGE>
3. By Febr
uary 4, 2000, Buyer shall open an account with the Adams National Bank ("Adams
Bank:"), 1627 K Street NW, Washington DC 70006 for the purpose of depositing
Buyer payments of $250,000.
4. As set forth herein, Buyer shall provide instructions to Adams Bank
authorizing Adams Bank to respond to balance verification requests of Escrow
Agent.
A. In the event the Company grants Buyer an extension on any
deadlines and the Buyer and Company jointly submit to Escrow Agent a copy of
notification of any such extension, the due date of such payments shall be the
due date set forth in the extension notification.
B. In the event Buyer has deposited payments aggregating $232,500
to the Escrow Agent and the Adams Bank account on or before the due date of the
$250,000 payment and Buyer and the Company jointly submit to Escrow Agent a copy
of written notification of the Company's granting of an extension of the due
date to pay the remaining balance due, the due date of the remaining payment due
and the Closing Date of this Deposit Agreement shall be extended in accordance
with such notification.
5. Delivery of Shares by Shareholders. Within seven days of the Buyer
depositing $50,000, the Company shall cause share certificates to be issued in
the name of Buyer for 7,115,793 fully paid and non-assessable shares of the
common stock, par value $.001 per share of the Company and place such
certificate with the Escrow Agent with documents necessary to deliver such
shares to Buyer on March 31, 2000.
6. Custody and Disposition of the Shares. The Escrow Agent shall hold
and dispose of the Certificates representing the Shares and any monies,
certificates, instruments or documents held by it hereunder only in accordance
with the terms of this Deposit Agreement.
7. Delivery of Shares Upon Closing. At the Closing (as defined in the
Stock Purchase Agreement), the Escrow Agent shall deliver to Buyer the
certificate or certificates representing the number of Shares to be delivered to
Buyer under the terms of the Stock Purchase Agreement and this Deposit
Agreement.
8. Distribution of Proceeds Received From Buyer. Upon receipt by
Escrow Agent of the $50,000 from Buyer and verification by Escrow Agent of the
$250,000 of funds deposited to the Adams Bank account by Buyer, the parties
hereto agree that the aggregate receipts of $300,000 shall be disbursed in
accordance with the payment schedule agreed upon by the parties per the Schedule
of Payments set forth in Exhibit "B" annexed to the Stock Purchase Agreement.
Thereto, Mr. Patrick Charles, representing Buyer, and Steve Larson-Jackson (as
Escrow Agent) shall jointly appear at Adams National Bank in Washington D.C. and
jointly issue and verify payment to the list of creditors as set forth in
Exhibit "B".
9. Waiver of Dividends and Other Distributions. During the period when
the Shares shall remain on deposit with the Escrow Agent, no dividends nor other
distributions shall be paid on the Shares. However, immediately upon delivery
of the Shares to Buyer or Buyer's designees, as the case may be, under the terms
of this Deposit Agreement, the Shares shall have the same status and rights as
all other shares of the Company's common stock of the same class, including but
not limited to full and complete rights to receive any dividends or
distributions payable or distributable to the holders of the Company's common
stock of the same class.
10. Indemnification. Buyer and the Company agree, jointly and
severally to indemnify, defend and hold harmless the Escrow Agent from and
against any and all costs (including, without limitation, legal fees and
expenses), liabilities, claims and losses arising out of or in connection with
this Deposit Agreement or any action or failure to act by the Escrow Agent under
this Deposit Agreement
11. Concerning the Escrow Agent. To induce the Escrow Agent to act
hereunder, it is further agreed by the undersigned that:
A. This Agreement expressly sets forth all the duties of the
Escrow Agent with respect to any and all matters pertinent hereto. No implied
duties or obligations shall be read into this Agreement against the Escrow
Agent. The Escrow Agent shall not be bound by the provisions of any agreement
among the other parties hereto except this Agreement.
B. The Escrow Agent shall not be liable for any action or failure
to act in its capacity as Escrow Agent hereunder unless such action or failure
to act shall constitute willful misconduct on the part of the Escrow Agent.
C. The Escrow Agent shall be entitled to rely upon any order,
judgment, certification, demand, notice, instrument or other writing delivered
to it hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof. The Escrow Agent may act in reliance upon any instrument or
signature believed by it to be genuine and may assume that any person purporting
to give notice or receipt or advice or make any statement or execute any
document in connection with the provisions hereof has been duly authorized to do
so.
D. The Escrow Agent may act pursuant to the advice of counsel with
respect to any matter relating to this Agreement and shall not be liable for any
action taken or omitted in accordance with such advice.
E. The Escrow Agent does not have any interest in the Shares or
any other property deposited hereunder but is serving as escrow holder only and
having only possession thereof. Buyer shall pay or reimburse the Escrow Agent
upon request for any transfer taxes relating to the Shares incurred in
connection herewith and shall indemnify and hold harmless the Escrow Agent from
any amounts that it is obligated to pay in the way of transfer taxes.
F. The Escrow Agent makes no representations as to the validity,
value or genuineness of any security or other document or instrument held by or
delivered to it.
G. The Escrow Agent (and any successor Escrow Agent) shall at any
time resign as such by delivering the Shares and the funds to any successor
Escrow Agent, jointly designated by the other parties hereto in writing, or to
any court of competent jurisdiction, whereupon the Escrow Agent shall be
discharged of and from any and all further obligations arising in connection
with this Agreement. The resignation of the Escrow Agent will take effect on
the earlier of (a) the appointment of a successor (including a court of
competent jurisdiction) or (b) the day which is 30 days after the date of
delivery of its written notice of resignation to the other parties hereto. If
at that time the Escrow Agent has not received a designation of a successor
Escrow Agent, the Escrow Agent's sole responsibility after that time shall be to
safekeep the Shares until receipt of a designation of successor Escrow Agent, or
a joint written disposition instruction by the other parties hereto or a final
order of a court of competent jurisdiction.
H. In the event of any disagreement between the other parties
hereto resulting in adverse claims or demands being made in connection with the
Shares, or in the event that the Escrow Agent shall be entitled to retain the
Shares until the Escrow Agent shall have received (i) a final nonappealable
order of a court of competent jurisdiction directing delivery of the Shares, or
(ii) a written agreement executed by the other parties hereto directing delivery
of the Shares, in which the Escrow Agent shall disburse the Shares in accordance
with such order or agreement. Any court order referred to in (i) above shall be
accompanied by a legal opinion by counsel for the presenting party satisfactory
to the Escrow Agent to the effect that said court order is final and
nonappealable. The Escrow Agent shall act on such court order and legal opinion
without further question.
I. This Agreement shall be binding upon and inure solely to the
benefit of the parties hereto and their respective successors (including
successors by way of merger) and assigns, heirs, administrators and
representatives and shall not be enforceable by or inure to the benefit of any
third party except as provided in paragraph (g) with respect to a resignation by
the Escrow Agent.
J. This Agreement may be modified by a writing signed by all the
parties hereto, and no waiver hereunder shall be effective unless in a writing
signed by the party to be charged.
12. Governing Law. This Agreement shall be governed in all respects by
the internal laws of the District of Columbia.
13. Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be delivered by hand or mailed by first
class registered or certified mail, return receipt requested, postage prepaid.
Each such notice or other communication shall for all purposes of this Agreement
be treated as effective or having been given when delivered if
<PAGE>
delivered pers
onally, or, if sent by mail, at the earlier of its receipt or 72 hours after the
same has been deposited with a postal employee or in a regularly maintained
receptacle for the deposit of mail, addressed and mailed as aforesaid.
14. 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
together shall constitute one and the same instrument.
15. Facsimile. The parties hereto agree the facsimile transmitted
version of the Agreement shall have the same force and effect as the original
"hard copy " of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered, as of the day and year first above written.
Escrow Agent:
LAW FIRM OF LARSON-JACKSON, P.C.
By: /s/ Steve Larson-Jackson
Steve Larson-Jackson, Esquire
Buyer:
NORTH COAST PRODUCTIONS INC.
By: /s/ Patrick F. Charles
Patrick F. Charles, President
The Company:
STORM HIGH PERFORMANCE SOUND CORP.
By: /s/ Robert Hannaberry
Robert Hannaberry, President
<PAGE>
EXHIBIT "B"
SCHEDULE OF PAYMENTS
A list of payables of the Company as of January 1, 2000 appended to the Stock
Purchase Agreement executed by and agreed to among the parties as Exhibit C
(copy of which is annexed hereto) sets forth the name of creditors and amounts
owing to such creditors by the Company:
The parties to this Deposit Agreement hereby agree that upon and at Closing
Buyer shall disburse proceeds deposited to the Adams Bank account in the
following order and amounts:
AMOUNT
CREDITOR
- --------------------------------------------------
Continental Stock Transfer $ 300.40
Toronto Dominion Bank in exchange
for release of liens and
encumbrances against the Company 19,036.46
County of West Palm Beach,
Property Taxes 254.00
Standard & Poor's 3,000.00
Shawn Sicard 8,250.00
Cassidy's Storage 746.80
Walsh Stewart Scott & Co. 8,600.34
IGS Renfrew County 176.49
The law firm of Larson-Jackson 34,249.44
Cygraphics 286.40
Eva Zacharoff 18,000.00
Eva Zacharoff 1,100.00
Robert Hannaberry & Leonard Zacharoff 39,175.00
Robert Hannaberry 3,028.28
Leonard Zacharoff 13,753.10
Tuscan Capital Ltd. 100,043.29
TOTAL $250,000.00
===========
The $50,000 of funds deposited with Escrow Agent shall be disbursed to in
accordance with instructions to be provided to Escrow Agent by Messrs.
Hannaberry and Zacharoff on or prior to Closing.
<PAGE>
EXHIBIT C
PAYABLES
AS OF JANUARY 1, 2000
Creditor Description Amount
- ------------------------------------ ----------------------- ----------
Toronto Dominion Bank Operating Loan $19,036.46
- ------------------------------------ ----------------------- ----------
Eva Zacharoff Payment on Loan 18,000.00
Eva Zacharoff Private Loan 1,100.00
Cassiday's Storage Storage 746.80
UPS Shipping 0.00
Buskie Office Supplies Office Supplies 0.00
Continental Stock Transfer Transfer Agent 300.40
County of West Palm Beach Property Taxes 254.00
Walsh Stewart Scott & Co. Accounting Fees 8,600.24
IGS Renfrew County Internet Service 176.49
Corporate Offices Rent 0.00
The Law Firm of Larson-Jackson, P.C. Legal fees 34,249.44
Cygraphics Printing 286.40
Flex 2000 Sales Commissions 0.00
Shawn Sicard Factoring Loan 8,250.00
Standard & Poor's Annual fee 3,000.00
Robert Hannaberry & Private loan 12/1/97 13,386.00
Leonard Zacharoff Private loan 12/1/97 25,789.00
Robert Hannaberry Private loan in 1998 3,028.28
Leonard Zacharoff Private loan in 1998 13,753.10
TOTAL PAYABLES $ 149,956.00
<PAGE>
RESIGNATION OF DIRECTOR
I, Robert Hannaberry, being a duly elected director of The Storm High
Performance Sound Corporation, hereby tender my resignation as a director
effective this ____ day of January, 2000.
__________________________________
Robert Hannaberry
<PAGE>
EXHIBIT E
RESIGNATION OF DIRECTOR
I, Leonard Zacharoff, being a duly elected director of The Storm High
Performance Sound Corporation, hereby tender my resignation as a director
effective this ____ day of January, 2000.
__________________________________
Leonard Zacharoff
<PAGE>
EXHIBIT E
RESOLUTION OF SHAREHOLDERS AND DIRECTORS
OF
STORM HIGH PERFORMANCE SOUND CORPORATION
(the "Company")
WHEREAS, Robert Hannaberry and Leonard Zacharoff collectively own 85.9% of
the outstanding Common Stock of the Company.
WHEREAS, The two shareholders comprise the Board of Directors and
Officers;
It is RESOLVED, that the shareholders wave the notice requirement of
Article I, Sections
2 and 4 of the Bylaws.
It is RESOLVED, that the shareholders consent to this action without a
meeting as
permitted by Article I, Section 9 of the Bylaws.
It is RESOLVED, that the undersigned, in their capacities as shareholders
hereby elect Patrick Charles and Terry Picken to the Company's Board of
Directors.
_________________________________
Robert Hannaberry
__________________________________
Leonard Zacharoff
<PAGE>
AMENDMENT TO STOCK PURCHASE AGREEMENT
1. Whereas, the parties hereto, North Coast Productions, Incorporated and
The Storm High Performance Sound Corporation, entered into a stock purchase
agreement dated January 28, 2000 and a Deposit Escrow Agreement dated January
27, 2000.
2. Whereas, the parties hereto acknowledge the instant writing constitutes
the first and only written amendments to the Stock Purchase Agreement and
Deposit Escrow Agreement.
3. Whereas, the parties hereto acknowledge and agree the instant amendment
is limited only to the express terms of the instant amendment and all other
provisions of the agreements shall remain the same.
4. The parties hereto agree the Articles of Merger shall be filed with the
applicable governmental agencies following the closing and in no event shall ten
(10) business days expire without the filing of the articles of merger.
North Coast Productions has the responsibility for preparing and filing the
Articles of Merger.
5. The parties hereto agree the balance of the purchase price in the amount
of Two Hundred and Fifty Thousand Dollars ($250,000.00) shall be transferred via
electronic wire on March 30, 2000 to Adams National Bank to the existing
Escrow Deposit Account. The wiring instructions and banking coordinates shall
remain the same as set forth in the original stock purchase agreement.
6. From the escrow account, Mr. Robert Hannaberry and Mr. Larson-Jackson
shall pay the accounts payable for Storm in the amount not to exceed One Hundred
Forty-Nine Thousand, Nine Hundred and Fifty Six Dollars and Zero Cents
($149,956.00). Any and all accounts payable shall be paid in full on March 31,
2000.
7. With respect to Item 21(c) of the stock purchase agreement, the parties
hereto agree the registration statement shall be completed and filed with the
U.S. Securities and Exchange Commission prior to April 15, 2000.
8. The parties hereto agree the executed facsimile containing each of the
three below signatures shall have the same force and effect as the original.
Buyer For the Company
NORTH COAST PRODUCTIONS INC. THE STORM HIGH PERFORMANCE SOUND CORP.
/s/ Patrick F. Charles /s/ Robert Hannaberry
Patrick F. Charles, President Robert Hannaberry, President
FAX #310-458-7912
Escrow Agent
Law Firm of Larson-Jackson, P.C.
/s/ Steve Larson-Jackson
Steve Larson-Jackson
AMENDED AND RESTATED ARTICLES OF INCORPORATION
(NOVEMBER 26, 1997)
<PAGE>
DIRECTORS RESOLUTION AMENDING ARTICLES
AND
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
THE STORM HIGH PERFORMANCE SOUND CORPORATION
Pursuant to Section 607.1007 of the Florida Statutes, The Storm High
Performance Sound Corporation, A Florida corporation (the "Corporation"),
certifies that:
(1) The original articles of incorporation of the Corporation were filed by
the Department of State on June 12, 1997;
(2) Amended and Restated Articles of Incorporation were duly adopted by the
Corporation's Board of Directors on July 22, 1997;
(3) Further Amended and Restated Articles of Incorporation were duly adopted
by the Corporation's Board of Directors on November 18, 1997.
RESOLVED, that the articles of incorporation of the Corporation are amended
as follows:
Article V reading as follows: "The Corporation shall have the authority to
issue 8,500,000 shares of common stock, par value zero per share.: is amended to
read "The Corporation shall have the authority to issue 50,000,000 shares, par
value $.0001 per share."
FURTHER RESOLVED, that on November 18, 1997, shareholders being collectively the
holders of not less than a majority of the outstanding shares entitled to vote
with respect to this amendment have waived notice and consented to this
amendment; and
FURTHER RESOLVED, that submission of a proposed amendment to each shareholder at
an annual or special meeting is unnecessary.
There are no discrepancies between the provisions of the Articles of
Incorporation, as amended, and the provisions of these Amended and Restated
Articles of Incorporation other than the inclusion of the foregoing amendments,
which were adopted pursuant to Section 607.1003, Florida Statutes, and the
omission of matters of historical interest.
The text of the Articles of Incorporation of the Corporation is restated with
the amendment described above, effective as of the date of filing with the
Department of State, to read as follows:
Article I. Name
The name of this Florida corporation is:
The Storm High Performance Sound Corporation
Article II. Address
The mailing address of the Corporation is:
The Storm High Performance Sound Corporation
Law Firm of Larson-Jackson, P.C.
1275 K Street N.W., Suite 1101
Washington, DC 20005
Article III. Registered Agent
The name and address of the registered agent of the Corporation is:
Corporate Creations Enterprises, Inc.
4521 PGA Boulevard #211
Palm Beach Gardens, FL 33418
Article IV. Board of Directors
The name of each member of the Corporation's Board of Directors is:
Robert Hannaberry
Loenard Zacharoff
The affairs of the Corporation shall be managed by a Board of Directors
consisting of no less than one director. The number of directors may be
increased or decreased from time to time in accordance with the Bylaws of the
Corporation. The election of directors shall be done in accordance with the
Bylaws. The directors shall be protected from personal liability to the fullest
extent permitted by applicable law.
Article V. Capital Stock
The corporation shall have the authority to issue 50,000,000 shares of common
stock, par value $.0001 per share.
Article VI. Incorporator
The name and address of the incorporator is:
Corporate Creations International Inc.
401 Ocean Drive #312 (Door Code 125)
Miami Beach, FL 33139-6629
Article VII. Corporate Existence
These Articles of Incorporation shall become effective and the corporate
existence will begin on June 12, 1997.
The undersigned have executed, subscribed and acknowledged these Amended
and Restated Articles of Incorporation on November 18, 1997.
/s/ Robert Hannaberry
Robert Hannaberry, President, Director, Shareholder
/s/ Leonard Zacharoff
Leonard Zacharoff, Director, Shareholder
BYLAWS
OF
THE STORM HIGH PERFORMANCE SOUND CORPORATION INC.
(A FLORIDA CORPORATION)
ARTICLE I. MEETINGS OF SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders of the
Corporation for the election of directors and for such other business as may
properly come before the meeting shall be held at such time and place as
designated by the Board of Directors.
Section 2. Special Meeting. Special meetings of the shareholders shall be held
when directed by the President or when requested in writing by shareholders
holding at least 50% of the Corporation's stock having the right and entitled to
vote at such meeting. A meeting requested by shareholders shall be called for
at a date not less than 10 nor more than 60 days after the request is made. The
call for the meeting shall be issued by the Secretary, unless the President, or
shareholders requesting the calling of the meeting designate another person to
do so. Only business within the purposes described in the notice required in
Section 4 of this Article may be conducted at a special shareholders' meeting.
Section 3. Place. Meetings of the shareholders will be held at the principal
place of business of the Corporation or at such other place as is designated by
the Board of Directors.
Section 4. Notice. A written notice of each meeting of shareholders, signed by
the Secretary or the person authorized to call the meeting, shall be mailed to
each shareholder having the right and entitled to vote at the meeting at the
address as it appears on the records of the Corporation, not less than 10 nor
more than 60 days before the date set for the meetings. The record date for
determining shareholders entitled to vote at the meeting will be the close of
business on the day before the notice is sent. The notice shall state the time
and place the meeting is to be held. A notice of a special meeting shall also
state the purposes of the meeting. A notice of meeting shall be sufficient for
that meeting and any adjournment of it. If a shareholder transfers any shares
after the notice is sent, it shall not be necessary to notify the transferee.
All shareholders may waive notice of a meeting before, at or after the meeting.
Section 5. Shareholder Quorum. A majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders. Any number of shareholders, even if less than a quorum, may
adjourn the meeting from time to time and place to place without further notice
until a quorum is obtained.
Section 6. Shareholder Voting. If a quorum is present, the affirmative vote of
a majority of the shares represented at the meeting and entitled to vote on the
subject matter shall be the act of the shareholders. Each shareholder entitled
to vote at any meeting of shareholders shall have one vote for each share held
by the shareholder that was voting power upon the matter in question. An
alphabetical list of all shareholders who are entitled to notice of a
shareholders' meeting along with their addresses and the number of shares held
by each shall be produced at a shareholders' meeting upon the request of any
shareholder.
Section 7. Proxies. A shareholder entitled to vote at any meeting of
shareholders or any adjournment thereof may vote in person or by proxy executed
in writing and signed by the shareholder or his attorney-in-fact. The
appointment of proxy will be effective when received by the shareholder or his
attorney-in-fact. The appointment or proxy will be effective when received by
the Corporation's Secretary or other officer or agent authorized to tabulate
votes. If a proxy designates two or more persons to act as proxies, a majority
of these persons present at the meeting, or if only one is present, that one,
has all of the powers conferred by the instrument upon all the persons
designated unless the instrument otherwise provides. No proxy shall be valid
more than 11 months after the date of its execution unless a longer term is
expressly stated in the proxy.
Section 8. Validation. If shareholders who hold a majority of the voting stock
entitled to vote at a meeting are present at the meeting, and sign a written
consent to the meeting on the record, the acts of the meeting shall be valid
even if the meeting was not legally called and noticed.
Section 9. Conduct of Business Without Meeting by Shareholders. Any action of
the shareholders may be taken without a meeting if written consents, setting
forth the action taken, are signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted, as is provided by law. The written consents must be
delivered to the Corporation's principal place of business, Secretary, or other
officer or agent of the Corporation having custody of the Corporation's books
within 60 days after the date that the earliest written consent was delivered.
Within 10 days after obtaining an authorization of an action by written
consent, notice shall be given to those shareholders who have not consented in
writing and to those shareholders who are not entitled to vote on the action.
The notice shall fairly summarize the material features of the authorized
action. If the action creates dissenters' rights, the notice shall contain a
clear statement of the rights of dissenting shareholders to be paid the fair
value of their shares upon compliance with and as provided for by the Florida
Business Corporation Act.
Section 10. Actions Requiring Board and Shareholder Approval. The following
matters require both (a) approval of the Board of Directors (as provided in
Article II. Section 8) and (b) the affirmative vote of 51% of the outstanding
shares.
a. Amendments to the Articles of Incorporation or the Bylaws;
b. The Corporation's contracting with or employing a shareholder or a member
of a shareholder's family, or increasing the salary, fee or other compensation
(direct or indirect) payable to a shareholder or member of a shareholder's
family (not including pro rata distributions to shareholders) if (a) the
starting compensation of the new employee exceeds $30,000, or (b) the person's
existing compensation rate exceeds $50,000 per year and the increase exceeds 10%
for any year or (c) the person's compensation rate is less than $50,000 per year
and the increase excels 15% for any year;
c. The Corporation's borrowing from a shareholder or a member of a
shareholder's family on other than fair market terms or the Corporation's
repaying indebtedness to a shareholder or a member of a shareholder's family
other than on fair market terms or in accordance with terms previously approved
in accordance with this Section;
d. The Corporation's incurring additional indebtedness in excess of $100,000
in any calendar year;
e. The Corporation's issuance of shares;
f. Sale of all or substantially all the assets of the Corporation;
g. Adopting resolutions dissolving the Corporation, approving a merger or
share exchange;
h. The Corporation's redemption of shares, other than in accordance with the
Shareholders' Agreement; and
i. All stock splits; recapitalizations and reverse stock splits.
ARTICLE II. DIRECTORS
Section 1. Function. All corporate powers shall be exercised by or under the
authority of the Board of Directors. The business and affairs of the
Corporation shall be managed under the direction of the Board of Directors.
Directors must be natural persons who are at least 18 years of age but need not
be residents of Florida or shareholders of the Corporation.
Section 2. Compensation. The shareholders shall have authority to fix the
compensation of directors. Unless specifically authorized by a resolution of
the shareholders, the directors shall serve in such capacity without
compensation.
Section 3. Presumption of Assent. A director who is present at a meeting of
the Board of Directors or a committee of the Board of Directors at which action
on any corporate matter is taken shall be presumed to have assented to the
action taken unless he objects at the beginning of the meeting (or promptly upon
arriving) to the holding of the meeting or transacting the specified business at
the meeting, or if the director votes against the action taken or abstains from
voting because of an asserted conflict of interest.
Section 4. Number. The Corporation shall have two directors. The number of
directors may be increased or decreased from time to time by a vote of the
holders of 51% or more of the voting shares, but the number of directors may not
be decreased to fewer than two or increased to more than five.
Section 5. Election and Term. At each annual meeting of shareholders, the
shareholders shall elect two directors. The shareholders may cumulate their
votes for directors. The elected directors shall hold office until the next
annual meeting or until their earlier resignation, removal from office or death.
Directors shall be elected by the shares entitled to vote in the election at a
meeting at which a quorum is present.
Section 6. Vacancies. Any vacancy occurring in the Board of Directors,
including a vacancy created by an increase in the number of directors, shall be
filled by vote of the shareholders. A director elected to fill a vacancy shall
hold office only until the next election of directors by the shareholders.
Section 7. Removal of Directors. At a meeting of shareholders, any director
may be removed, with or without cause, by the shareholders provided the notice
of the meeting states that one of the purposes of the meeting is the removal of
the director. A director may be removed only if the number of votes cast to
remove him exceeds the number of votes cast against removal.
Section 8. Quorum and Voting. A majority of the number of directors fixed by
these Bylaws shall constitute a quorum for the transaction of business. The act
of a majority of directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
Section 9. Executive and Other Committees. The Board of Directors, by
resolution adopted by a majority of the full Board of Directors, may designate
from among its members an executive committee and one or more other committees
each of which must have at least two members and, to the extent provided in the
resolution, shall have and may exercise all the authority of the Board of
Directors, except as provided by law.
Section 10. Place of Meeting. Regular and special meetings of the Board of
Directors shall be held at the principal place of business of the Corporation or
at another place designated by the person or persons giving notice or otherwise
calling the meeting.
Section 11. Time, Notice and Call of Meetings. Regular meetings of the Board
of Directors shall be held without notice at the time and on the date designated
by resolution of the Board of Directors. Written notice of the time, date and
place of special meetings of the Board of Directors shall be given to each
director by mail delivery at least two days before the meeting.
Notice of a meeting of the Board of Directors need not be given to a
director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting constitutes a waiver of notice of that
meeting and waiver of all objections to the place of the meeting, the time of
the meeting, and the manner in which it has been called or convened, except when
a director states at the beginning of the meeting or promptly upon arrival at
the meeting objection to the transaction of business because the meeting is not
lawfully called or convened.
Neither the business to be transacted at, nor the purpose of, any regular
or special meeting of the Board of Directors must be specified in the notice or
waiver of notice of the meeting.
A majority of the directors present, whether or not a quorum exists, may
adjourn any meeting of the Board of Directors to another time and place. Notice
of an adjourned meeting shall be given to the directors who were not present at
the time of the adjournment and, unless the time and place of the adjourned
meeting are announced at the time of the adjournment, to the other directors.
Meetings of the Board of Directors may be called by the President or the
Chairman of the Board of Directors
Members of the Board of Directors (and any committee of the Board) may
participate in a meeting of the Board (or committee) by means of a telephone
conference or similar communications equipment by means of which all persons
participating in the meeting can hear each other at the same time.
Participation by these means constitutes presence in person at a meeting.
Section 12. Action Without a Meeting. Any action required to be taken at a
meeting of the Board of Directors (or a committee of the Board), and any action
which may be taken at a meeting of the Board of Directors (or a committee of the
Board) may be taken without a meeting if a consent in writing, setting forth the
action to be taken and signed by all of the directors (or members of the
committee), is filed in the minutes of the proceedings of the Board. The action
taken shall be deemed effective when the 1st director signs the consent unless
the consent specifies otherwise.
ARTICLE III. OFFICERS
Section 1. Officers; Election; Resignations; Vacancies. The Corporation shall
have the officers and assistant officers that the Board of Directors appoint
from time to time. Except as otherwise provided in an employment agreement
which the Corporation has with an officer, each officer shall serve until a
successor is chosen by the directors at a regular or special meeting of the
directors or until removed. Officers and agents shall be chosen, save for the
terms, and have the duties determined by the directors. A person may hold two
or more offices.
Any officer may resign at any time upon written notice to the Corporation.
The resignation shall be effective upon receipt, unless the notice specifies a
later date. If the resignation is effective at a later date and the Corporation
accepts the future effective date, the Board of Directors may fill the pending
vacancy before the effective date provided the successor officer does not take
office until the future effective date.
Any vacancy occurring in any office of the Corporation by death,
resignation, removal or otherwise may be filled for the unexpired portion of the
term by the Board of Directors at any regular or special meeting.
Section 2. Powers and Duties of Officers. The officers of the Corporation
shall have such powers and duties in the management of the Corporation as may be
prescribed by the Board of Directors and, to the extent not so provided, as
generally pertain to their respective offices, subject to the control of the
Board of Directors.
Section 3. Removal of Officers. An officer or agent or member of a committee
elected or appointed by the Board of Directors may be removed by the Board with
or without cause whenever in its judgment the best interest of the corporation
will be served thereby, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Election or appointment of
an officer, agent or member of a committee shall not of itself create contract
rights. Any officer, if appointed by another officer, may be removed by that
officer.
Section 4. Absence or Incapacity of Officer. If an officer is absent or unable
to act, the Board of Directors may delegate his powers for the time being to any
other officer or person it selects.
Section 5. Salaries. The Board of Directors may cause the Corporation to enter
into employment agreements with any officer of the Corporation. Unless provided
for in an employment agreement between the Corporation and an officer, all
officers of the Corporation serve in their capacities without compensation.
Section 6. Bank Accounts. The Corporation shall have accounts with financial
institutions as determined by the Board of Directors.
ARTICLE IV. STOCK CERTIFICATES
Section 1. Issuance. Every holder of shares in the corporation shall be
entitled to have a certificate representing all shares to which he is entitled.
Each certificate issued shall be signed by the President and the Secretary.
Section 2. Registered Shareholders. No certificate shall be issued for any
shares until the share is fully paid. The Corporation shall be entitled to
treat the holder of record of shares as the holder in fact and, except as
otherwise provided by the laws of Florida, shall not be bound to recognize any
equitable or other claim to or interest in the shares.
Section 3. Transfer of Shares. Shares of the Corporation shall be transferred
on its books only after the surrender to the Corporation of the share
certificates duly endorsed by the holder of record or attorney-in-fact. If the
surrendered certificates are canceled, new certificates shall be issued to the
person entitled to them, and the transaction recorded on the books of the
Corporation.
Section 4. Lost, Stolen or Destroyed Certificates. If a shareholder claims to
have lost or destroyed a certificate of shares issued by the Corporation, a new
certificate shall be issued upon the delivery to the corporation of an affidavit
of that fact by the person claiming the certificate of stock to be lost, stolen
or destroyed, and, at the discretion of the Board of Directors, upon the deposit
of a bond or other indemnity as the Board reasonably requires.
ARTICLE V. DISTRIBUTIONS
The Board of Directors may, from time to time, declare distributions to its
shareholders in cash, property, or its own shares, unless the distribution would
cause (i) the Corporation to be unable to pay its debts as they become due in
the usual course of business, or (ii) the Corporation's assets to be less than
its liabilities plus the amount necessary, if the Corporation were dissolved at
the time of the distribution, to satisfy the preferential rights of shareholders
whose rights are superior to those receiving the distribution. The shareholders
and the Corporation may enter into an agreement requiring the distribution of
corporate profits, subject to the provisions of Florida Law.
ARTICLE VI. CORPORATE RECORDS
Section 1. Corporate Records.
(a) The Corporation shall keep as permanent records minutes of all
meetings of its shareholders and Board of Directors, a record of all actions
taken by the shareholders or Board of Directors without a meeting, and a record
of all actions taken by a committee of the Board of Directors on behalf of the
Corporation.
(b) The Corporation shall maintain accurate accounting records and a
record of its shareholders in a form that permits preparation of a list of the
names and addresses of all shareholders in alphabetical order by class of shares
showing the number and series of shares held by each.
(c) The Corporation shall keep a copy of its Articles of Incorporation
as restated Articles of Incorporation and all amendments to them currently in
effect; these Bylaws or restated Bylaws and all amendments currently in effect;
resolutions adopted by the Board of Directors creating one or more classes or
series of shares and fixing their relative rights, preferences, and limitations,
if shares issued pursuant to those resolutions are outstanding; the minutes of
all shareholders' meetings and records of all actions taken by shareholders
without a meeting for the past three years; written communications to all
shareholders generally or all shareholders of a class of series within the past
three years, including the financial statements furnished for the last three
years; a list of names and business street addresses of its current directors
and officers; and its most recent annual report delivered to the Department of
State.
(d) The Corporation shall maintain its records in written form or in
another form capable of conversion into written form within a reasonable time.
Section 2. Shareholders' Inspection Rights. A shareholder is entitled to
inspect and copy, during regular business hours at the Corporation's principal
office, any of the corporate records described in Section 1(c) of this Article
if the shareholder gives the Corporation written notice of the demand at least
five business days before the date on which he wished to inspect and copy the
records.
A shareholder is entitled to inspect and copy, during regular business
hours at a reasonable location specified by the Corporation, any of the
following records: (i) excerpts from minutes of any meeting of the Board of
Directors, records of any action of a committee of the Board of Directors while
acting in place of the Board on behalf of the Corporation; (ii) accounting
records; (iii) the record of shareholders; and (iv) any other books and records
of the Corporation. The shareholder must give the Corporation written notice of
this demand at least five business days before the date on which he wishes to
inspect and copy the record(s). The demand must be made in good faith and on
which he wishes to inspect and copy the record(s). The demand must be made in
good faith and for a proper purpose. The shareholder must describe with
reasonable particularity the purpose and the records he desires to inspect, and
the records must be directly connected with this purpose.
This section 2 does not affect the right of a shareholder to inspect and
copy the shareholders' list described in this Article if the shareholder is in
litigation with the Corporation. In such a case, the shareholder shall have the
same rights as any other litigant to compel the production of corporate records
for examination.
The Corporation may deny any demand for inspection if the demand was made
for an improper purpose or if the demanding shareholder has within the two years
preceding his demand, told or offered for sale any list of shareholders of the
Corporation or of any other corporation, has aided or abetted any person in
procuring any list of shareholders for that purpose, or has improperly used any
information secured through any prior examination of the records of the
Corporation or any other corporation.
Section 3. Financial Statements for Shareholders. Unless modified by
resolution of the shareholders within 120 days after the close of each fiscal
year, the Corporation shall furnish its shareholders with annual financial
statements which may be consolidated or combined statements of the Corporation
and one or more of its subsidiaries, as appropriate, that include a balance
sheet as of the end of the fiscal year, an income statement for that year, and a
statement of cash flows for that year. If financial statements are prepared for
the Corporation on the basis of generally accepted accounting principles, the
annual financial statements must also be prepared on that basis.
If the annual financial statements are reported upon by a public
accountant, his report must accompany them. If not, the statements must be
accompanied by a statement of the President or the person responsible for the
Corporation's accounting records stating his reasonable belief whether the
statements were prepared on the basis of generally accepted accounting
principles and, if not, describing the basis of preparation and describing any
respects in which the statements were not prepared on a basis of accountant
consistent with the statements prepared for the preceding year.
The Corporation shall mail the annual financial statements to each
shareholder within 120 days after the close of each fiscal year or within such
additional time thereafter as is reasonably necessary to enable the Corporation
to prepare its financial statements. Thereafter, on written request from a
shareholder who was not mailed the statements, the Corporation shall mail him
the latest annual financial statements.
Section 4. Other Reports to Shareholders. If the Corporation indemnifies or
advances expenses to any director, officer, employee or agent otherwise than by
court order or action by the shareholders or by an insurance carrier pursuant to
insurance maintained by the Corporation, the Corporation shall report the
indemnification or advance in writing to the shareholders with or before the
notice of the next annual shareholders' meeting, or prior to the meeting if the
indemnification or advance occurs after the giving of the notice but prior to
the time the annual meeting is held. This report shall include a statement
specifying the persons paid, the amounts paid, and the nature and status at the
time of such payment of the litigation or threatened litigation.
If the corporation issues or authorizes the issuance of shares for promises
to render services in the future, the Corporation shall report in writing to the
shareholders the number of shares authorized or issued, and the consideration
received by the corporation, with or before the notice of the next shareholders'
meeting.
ARTICLE VII. INDEMNIFICATION
Section 1. Right to Indemnification. The Corporation hereby indemnifies each
person (including the heirs, executors, administrators, or estate of such
person) who is or was a director or officer of the Corporation to the fullest
extent permitted or authorized by current or future legislation or by current or
future judicial or administrative decision (but, in the case of any future
legislation or decision, only to the extent that it permits the Corporation to
provide broader indemnification rights than permitted prior to the legislation
or decision), against all fines, liabilities, costs and expenses, including
attorneys' fees, asserted against him or incurred by him in his capacity as a
director, officer, agent, employee, or representative, or arising out of his
status as a director, officer, agent, employee or representative. The foregoing
right of indemnification shall not be exclusive of other rights to which hose
seeking an indemnification may be entitled. The Corporation may maintain
insurance, at its expense, to protect itself and all officers and directors
against fines, liabilities, costs and expenses, whether or not the Corporation
would have the legal power to indemnify them directly against such liability.
Section 2. Advances. Costs, charges and expenses (including attorneys fees)
incurred by a person referred to in Section 1 of this Article in defending a
civil or criminal suit, action or proceeding shall be paid by the Corporation in
advance of the final disposition thereof upon receipt of an undertaking to repay
all amounts advanced if it is ultimately determined that the person is no
entitled to be indemnified by the Corporation as authorized by this Article, and
upon satisfaction of other conditions required by current or future legislation
(but, with respect to future legislation, only to the extend that it provides
conditions less burdensome than those previously provided).
Section 3. Savings Clause. If this Article or any portion of it is invalidated
on any ground by a court of competent jurisdiction, the Corporation nevertheless
indemnifies each person described in Section 1 of this Article to the fullest
extent permitted by all portions of this Article that have not been invalidated
and to the fullest extend permitted by law.
ARTICLE VIII. AMENDMENT
These Bylaws may be altered, amended or repealed, and new Bylaws adopted,
as provided in Article II, Section 10 of these Bylaws.
ARTICLE IX. SEAL
The corporate seal shall be circular in form and include the name of the
Corporation
I certify that the directors of the Corporation adopted these Bylaws by
written consent effective as of July 23, 1997.
/s/ Leonard Zacharoff
Secretary
[Stokes & Company, P.C. Letterhead]
April 3, 2000
The Storm High Performance Sound Corporation
626 Hwy 17 West,
Pembroke, Ont., K8A 7G9
Gentlemen:
We consent to the use of our report dated February 29, 2000, with respect to the
financial statements of The Storm High Performance Sound Corporation that are
made part of this Current Report on Form 8K.
/s/ Stokes & Company, P.C.
Stokes & Company, P.C.
Washington, D.C.
