SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) February 25, 1997
TREASURY INTERNATIONAL, INC.
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(exact name of Registrant as specified in its charter)
DELAWARE 0-28514 98-0160284
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(State or other jurisdiction of Commission (I.R.S. Employer
incorporation or organization) File No. identification number)
7040 Tranmere Drive, Mississauga, Ontario L5S-1L9
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(Address of principal executive offices)
Registrant's telephone number, including area code: 905-673-1700
N/A
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Former name or former address, if changed since last report
Page 1 of 69;
Exhibit Index is on Page 3.
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ITEM 2. Acquisition or Disposition of Assets
Acquisition. On February 25, 1997 (the "Closing Date"), Treasury
International, Inc. (the "Company") acquired all of the issued and outstanding
capital stock (the "Silver Stock") of Silver 925, Inc. ("Silver"). Silver is a
corporation organized under the laws of the State of Florida.
Silver's primary business activity is selling jewelry to department stores,
home shopping television networks, catalog showrooms, mass merchandisers and
discounters. It leases office space at 168 S.E. 1st Street, Miami, Florida. The
Company intends to continue Silver's business at such premises.
Consideration Paid or Payable. Pursuant to an agreement dated as of June
18, 1996, made by and among the Company, Silver and each of the stockholders of
Silver (Moche Bendayan, Salomon Bendayan and Edward Kozial, collectively, the
"Selling Stockholders"), as amended as of February 25, 1997, (such agreement, as
amended, the "Acquisition Agreement"), the Company acquired the Silver Stock for
an aggregate purchase price of $2,000,000 (the "Purchase Price"). The Purchase
Price is payable in five annual installments of $400,000, with each such
installment payable 90% in shares of Common Stock of the Company (the "Share
Portion") and 10% in cash. The Share Portion of the first annual installment
thereof was fixed at 900,000 shares of Common Stock, and the number of shares of
each subsequent annual installment will be determined by dividing $360,000 by
the average of the closing bid price of the Company's Common Stock over the five
trading days preceding March 1 of 1998, 1999, 2000 and 2001. The Share Portion
of each annual installment of the Purchase Price is payable in 12 equal monthly
installments. The Company also agreed to issue 25,000 shares of its Common Stock
to Salomon Bendayan within ten days of the Closing Date in consideration of an
earlier extension of the Closing Date to no later than February 27, 1997.
On the Closing Date, in payment of the first monthly installment of the
Share Portion of the Purchase Price the Company issued 33,750 shares of Common
Stock to Salomon Bendayan, 33,750 shares to Moche Bendayan and 7,500 shares to
Edward Kozial. The Company's obligation to pay the balance of the Purchase Price
is secured by a junior lien upon all of the assets of Silver and by a first lien
upon the Silver Stock.
The Company agreed to use reasonable good faith efforts to file with the
Securities and Exchange Commission (the "SEC") by May 31, 1997 an appropriate
form of registration statement to register under the Securities Act of 1933, as
amended, the shares which constitute the Share Portion and to use reasonable
good faith efforts to cause such statement to become effective within ninety
(90) days from the date of filing and to keep such statement
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effective until all such shares constituting the Share Portion shall have been
sold by the Selling Stockholders or until such earlier time as such shares may
be sold without such registration pursuant to Rule 144(k) or other applicable
exemption under such Act.
The Purchase Price was agreed upon during arms length negotiations between
the President of the Company and the principal stockholders of Silver taking
into account Silver's earnings history, management and financial condition. The
Company did not retain any investment banker.
Source of Funds. The Company was not required to pay any part of the cash
portion of the Purchase Price on the Closing Date. The parties agreed that the
first $40,000 installment of the cash portion of the Purchase Price will be
deemed paid upon the payment by Silver to Salomon Bendayan of United States
Customs duty drawbacks to be received by Silver in the approximate amount of
$80,000 (the "Customs Reimbursement"), and that the second installment of the
cash portion of the Purchase Price will be deemed paid to the extent the Customs
Reimbursement paid to Salomon Bendayan by Silver exceeds $80,000. The Company
intends to use internally generated funds, the proceeds from the sales of its
debt or equity securities or institutional debt to fund the balance of the cash
portion of the Purchase Price. However, there can be no assurance that the
necessary monies will be available, or will be obtained from outside sources on
reasonable terms, or at all.
ITEM 7. Financial Statements and Exhibits
Financial Statements of Acquiree.
Pursuant to the instructions to Item 7 of Form 8-K, inasmuch as it is
impracticable presently to provide the financial statements for the
acquiree required to be provided pursuant to General Instruction C.3
to this Form 8-K, said financial statements will be filed within 75
days of the acquisition event reported herein.
Exhibits.
2.(a) Acquisition Agreement
2.(b) Amendment
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: March 14, 1997 TREASURY INTERNATIONAL, INC.
By: James Hal
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James Hal, President
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EXHIBIT 2(a)
AGREEMENT
dated as of June 18, 1996
by and among
TREASURY INTERNATIONAL, INC.,
SILVER 925, INC.,
MOCHE BENDAYAN,
SALOMON BENDAYAN
and
EDWARD KOZIAL
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TABLE OF CONTENTS
Page
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ARTICLE I. SALE AND PURCHASE OF SHARES .................................. 2
1.1 Purchase Price ........................................ 2
1.2 Payment of Purchase Price ............................ 2
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF SILVER AND
STOCKHOLDERS........................................ 3
2.1 Corporate Organization................................. 3
2.2 Authorization.......................................... 4
2.3 Governmental Consents and Approvals.................... 5
2.4 Capitalization......................................... 5
2.5 Ownership of Silver's Shares........................... 6
2.6 Subsidiaries; Joint Ventures........................... 6
2.7 Financial Statements................................... 7
2.8 Absence of Undisclosed Liabilities;
Books of Account..................................... 8
2.9 Absence of Certain Changes............................. 9
2.10 Ownership of Properties................................ 11
2.11 Real Property and Other Leases......................... 11
2.12 Inventory.............................................. 12
2.13 Machinery and Equipment................................ 12
2.14 Intellectual Property.................................. 12
2.15 Securities Matters..................................... 14
2.16 Accounts Receivable.................................... 15
2.17 Taxes.................................................. 15
2.18 Agreements, etc........................................ 19
2.19 Agreements Regarding Employees......................... 21
2.20 Absence of Defaults.................................... 24
2.21 Compliance with Laws................................... 24
2.22 Compliance with Laws - Environmental................... 24
2.23 Litigation............................................. 26
2.24 Violations............................................. 27
2.25 Finders' Fees.......................................... 27
2.26 Restrictions on Business Activities.................... 27
2.27 Board Approval......................................... 28
2.28 Questionable Payments.................................. 28
2.29 Accuracy of Representations and Warranties............. 29
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF TREASURY.................. 29
3.1 Organization........................................... 29
3.2 Corporate Authority, Etc............................... 29
3.3 Governmental Consents and Approvals.................... 30
3.4 Litigation............................................. 30
3.5 Finders' Fees.......................................... 30
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ARTICLE IV. COVENANTS OF TREASURY AND SILVER............................ 31
4.1 Preserve Accuracy of Representations;
Other Action......................................... 31
4.2 Schedules.............................................. 31
4.3 Further Action......................................... 31
4.4 Expenses............................................... 31
4.5 Public Announcements................................... 31
4.6 Consents and Approvals................................. 31
ARTICLE V. COVENANTS OF SILVER.......................................... 32
5.1 Access to Information ................................. 32
5.2 Conduct of Silver Pending the Closing.................. 33
5.3 Other Offers........................................... 37
5.4 Notices of Certain Events.............................. 38
5.5 FIRPTA................................................. 39
5.6 Consents............................................... 39
5.7 Maintenance of Business................................ 39
5.8 Release of Guarantees.................................. 40
ARTICLE VI. COVENANTS OF TREASURY....................................... 40
6.1 Notices of Certain Events.............................. 40
ARTICLE VII. CONDITIONS TO THE ACQUISITION.............................. 40
7.1 Conditions Precedent to Obligations of Treasury........ 40
7.2 Conditions Precedent to Obligations of Silver.......... 44
ARTICLE VIII. CLOSING................................................... 45
8.1 Time and Place of Closing.............................. 45
8.2 Documents to be Delivered by Silver.................... 46
8.3 Documents to be Delivered by Treasury.................. 47
ARTICLE IX. SURVIVAL OF REPRESENTATIONS AND INDEMNITY .................. 47
9.1 Survival............................................... 48
9.2 Indemnification........................................ 48
ARTICLE X. TERMINATION.................................................. 48
10.1 Grounds for Termination................................ 48
10.2 Continuing Liability................................... 49
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ARTICLE XI. MISCELLANEOUS............................................... 49
11.1 Further Assurances..................................... 49
11.2 Notices................................................ 49
11.3 No Assignment.......................................... 50
11.4 Entire Agreement....................................... 50
11.5 Governing Law.......................................... 51
11.6 Interpretation......................................... 51
11.7 Counterparts........................................... 51
11.8 Parties in Interest.................................... 51
11.9 Severability........................................... 51
EXHIBITS AND SCHEDULES
Exhibit 1.2 Form of Treasury Promissory Note ..........................
Schedule 2.1 Subsidiaries of Silver - states of
incorporation ...........................................
Schedule 2.4 Outstanding options, warrants and rights to
purchase Silver stock; Silver ownership of stock in
other companies .........................................
Schedule 2.5 List of Silver's record and beneficial
stockholders ............................................
Schedule 2.6 Subsidiaries and joint ventures of Silver .................
Schedule 2.10 Encumbrances affecting the property of
Silver and its subsidiaries .............................
Schedule 2.14 List of all inventions, patents and licenses ..............
Schedule 2.15 List of non-public offerings ..............................
Schedule 2.17 Tax exceptions ............................................
Schedule 2.18 List of all material agreements ...........................
Schedule 2.19 Agreements affecting employees ............................
Schedule 2.22 Environmental disclosure ..................................
Schedule 2.23 Litigation ................................................
Schedule 2.24 Notices of violations .....................................
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AGREEMENT dated as of June 18, 1996 (the "Agreement") by and between
TREASURY INTERNATIONAL, INC., a Delaware corporation ("Treasury"), SILVER 925,
INC., a Florida corporation ("Silver"), MOCHE BENDAYAN, SALOMON BENDAYAN and
EDWARD KOZIAL, (each of such individuals being hereinafter referred to as a
"Stockholder" and all of such individuals being hereinafter collectively
referred to as the "Stockholders").
WHEREAS, (i) Treasury is a corporation organized and existing under the
laws of the State of Delaware; (ii) Silver is a corporation organized and
existing under the laws of the State of Florida; and (iii) the Stockholders are
the owners of all of the issued and outstanding shares of capital stock of
Silver; and
WHEREAS, Stockholders wish to sell to Treasury and Treasury wishes to
purchase from Stockholders all of the issued and outstanding capital stock of
Silver upon the terms and conditions hereinafter set forth; and
WHEREAS, the boards of directors of Treasury and Silver (each hereinafter
referred as a "Board of Directors") deem it advisable and in the best interests
of their stockholders to engage in the transactions contemplated hereby pursuant
to which Treasury will acquire all of the issued and outstanding capital stock
of Silver (the "Acquisition"); and
WHEREAS, the respective parties desire to make certain representations,
warranties and agreements in connection with the Acquisition.
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NOW, THEREFORE, in consideration of the foregoing, the representations,
warranties, covenants and agreements set forth herein and such other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound hereby, agree as
follows:
Article I. Sale and Purchase of Shares.
1.1 Purchase Price. Stockholders do hereby agree to sell and deliver
to Treasury, and Treasury does hereby agree to purchase from Stockholders, the
issued and outstanding capital stock of Silver, aggregating 70.77 shares of
common stock (an additional 29.33 shares being held by Silver as treasury
stock), for a total consideration of $4,200,000.00 (the "Purchase Price").
1.2 Payment of Purchase Price. The Purchase Price shall be paid as
follows: on the Closing Date (as hereinafter defined) Treasury shall deliver to
each Stockholder, against receipt from each Stockholder of stock certificates
representing the number of shares of Silver set forth below opposite his name,
endorsed to Treasury or accompanied by a signed stock power transferring such
shares to Treasury, together with all applicable stock transfer tax stamps
relative to said certificates, if any, the amount of cash set forth below
opposite his name and a duly executed promissory note in the principal amount
set forth below opposite his name, each note in substantially the form attached
hereto as Exhibit 1.2, which note shall require payments of principal in the
amounts set forth below opposite his name:
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Capital Stock Amount of
of Silver to Cash to Promissory
be delivered be received Note
------------ ----------- ----------
Moche Bendayan 45 $1,350,000 $ 600,000
Edward Kozial 20.77 $ 300,000 $ -0-
Salomon Bendayan 5 $1,350,000 $ 600,000
Payments of Principal Amount of Promissory Notes
1st 2nd 3rd
anniversary anniversary anniversary
of of of
Payable to Closing Date Closing Date Closing Date
- ---------- ------------ ------------ ------------
Moche Bendayan $ 200,000 $ 200,000 $ 200,000
Salomon Bendayan $ 200,000 $ 200,000 $ 200,000
Article II. Representations and Warranties of Silver and Stockholders.
Silver and each Stockholder jointly and severally represent and warrant to
Treasury that:
2.1 Corporate Organization. Silver is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida and
is duly authorized to carry on its business where and as now conducted and to
own, lease and operate properties as it now does. Silver is qualified to do
business, and is in good standing, in Florida, which is the only jurisdiction in
which the nature of the business conducted by it or the properties owned or
leased by it requires qualification. Schedule 2.1 is a true and complete list of
each of Silver's subsidiaries (each hereinafter referred to as a "Subsidiary"
and all collectively
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hereinafter referred to as the "Subsidiaries"). Each Subsidiary is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, is duly authorized to carry on its business where
and as now conducted and to own, lease and operate properties as it now does,
and is qualified to do business and is in good standing in the jurisdictions set
forth on Schedule 2.1 (which are the only jurisdictions in which the nature of
the business conducted by each Subsidiary or the properties owned or leased by
it requires qualification). The copies of the certificate of incorporation and
by-laws of Silver and of each of the Subsidiaries that have been delivered to
Treasury are complete and correct as of the date of this Agreement, and the
minute books of Silver and of each of its Subsidiaries which have been exhibited
to Treasury are complete in all material respects and accurately reflect all
material action taken prior to the date of this Agreement by the Board of
Directors and stockholders of Silver and of each Subsidiary.
2.2 Authorization. (a) Silver has full power and authority to enter
into this Agreement and to perform this Agreement in accordance with its terms;
the execution, delivery and performance of this Agreement by Silver have been
duly authorized by Silver's Board of Directors; neither Silver nor any
Stockholder is bound by any contractual or other obligation that would be
violated by its or his execution or performance of this Agreement; and this
Agreement is a valid and binding obligation of Silver and each Stockholder
enforceable in accordance with its terms.
(b) Neither the execution and delivery of this
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Agreement nor the consummation by Silver or any Stockholder of any of the
transactions contemplated herein nor compliance by Silver or any Stockholder
with the terms, conditions and provisions hereof or of any agreement or
instrument contemplated hereby will (i) conflict with, result in a breach of, or
constitute an event of default under the certificate of incorporation or by-laws
of Silver or any of its Subsidiaries, or any instrument, agreement, lease,
license, franchise, permit, judgment, order, award, decree or other
authorization, right, or obligation to which Silver, any Subsidiary or any
Stockholder is a party or any of their properties is subject or by which they
are bound, or any statute, ordinance, rule or regulation applicable to Silver,
any Subsidiary or any Stockholder, or (ii) require the approval, consent or
authorization of, or the making of any declaration, filing or registration with,
any third party or any foreign, federal, state or local court, governmental
authority or regulatory body.
2.3 Governmental Consents and Approvals. The execution, delivery and
performance of this Agreement by Silver and each Stockholder require no action
by or in respect of, or filing with, any governmental body, agency, official or
authority, except as set forth on Schedule 2.3.
2.4 Capitalization. Silver's authorized capitalization is 100 shares
of capital stock, consisting of 100 shares of common stock, $1.00 par value, of
which 70.77 shares are issued and outstanding. An additional 29.33 shares of
common stock are held by Silver as treasury stock. All the outstanding shares of
Silver were duly authorized for issuance and are validly issued, fully-
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paid and non-assessable. There are no outstanding options, warrants, calls,
commitments or rights of any kind relating to the issued or unissued capital
stock or other securities or equity interests of Silver (collectively, "Silver
Securities"), except as set forth in Schedule 2.4. There are no existing
arrangements that require or permit any shares of Silver to be voted by or at
the discretion of anyone other than the record stockholders. Silver does not own
any capital stock or other interest in any corporation or other business entity
except as set forth in Schedule 2.4. Except as disclosed on Schedule 2.4,
neither Silver nor any of its Subsidiaries is obligated to purchase, redeem or
otherwise acquire any securities of Silver, its Subsidiaries or of any other
party.
2.5 Ownership of Silver's Shares. (a) Schedule 2.5 is a true and
complete list of the record owners and the beneficial owners of Silver's issued
and outstanding capital stock as of June 1, 1996, and Silver knows of no
material changes therein as of the date hereof.
(b) Stockholders own all of the stock listed on Schedule 2.5 free
and clear of all liens and encumbrances, and Stockholders have the full and
complete right and power to dispose of said stock in accordance with the terms
of this Agreement.
2.6 Subsidiaries; Joint Ventures.
(a) Each Subsidiary has all corporate powers and all governmental
authorizations required to carry on its business as now conducted. For purposes
of this Agreement, "Joint Ventures" means entities in which Silver or any
Subsidiary is, directly or indirectly, the beneficial owner of 40% or more of
any class of
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equity securities or equivalent profit participation interest. All Joint
Ventures, their respective jurisdictions of organization and the interests of
Silver or any Subsidiary therein are identified on Schedule 2.6.
(b) All of the outstanding capital stock of, or other ownership
interests, in, each Subsidiary that is owned by Silver, directly or indirectly,
is free and clear of any material lien and free of any other material limitation
or restriction on Silver's rights as owner thereof (including any restriction on
the right to vote, sell or otherwise dispose of such capital stock or other
ownership interests, other than those imposed by applicable law). Except as set
forth in Schedule 2.4, there are no outstanding options, warrants, calls,
commitments or rights of any kind relating to the issued or unissued capital
stock or other securities or equity interests (collectively, "Silver Subsidiary
Securities") of any Subsidiary. The ownership interests of Silver or its
Subsidiaries in the Joint Ventures are owned by Silver or its Subsidiaries free
and clear of any liens, limitations, restrictions, options, calls or
commitments, other than those that are immaterial or those that are imposed
under the terms of such Joint Ventures.
2.7 Financial Statements. The following financial statements of
Silver, copies of which have been delivered to Treasury, have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis and present fairly the consolidated financial condition of Silver and its
Subsidiaries at the dates indicated and the consolidated results of
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their operations for the periods indicated:
(a) unaudited consolidated balance sheet of Silver and its
Subsidiaries as of July 31, 1993, 1994 and 1995, together with the related
consolidated statements of operations, stockholders' equity and cash flows for
each twelve month period then ended.
2.8 Absence of Undisclosed Liabilities; Books of Account. Except to
the extent fully reflected or allowed against in its July 31, 1995 balance sheet
and as reflected in Schedule 2.17, Silver and its Subsidiaries have no
liabilities of any nature, whether accrued, absolute, contingent or otherwise,
including, but not limited to, any tax or other liabilities of any nature that
were unknown or undetermined as of that date but that, if then known or
determined, would have been required to be reflected in a balance sheet prepared
in accordance with generally accepted accounting principles applied on a
consistent basis. Silver does not know or have reasonable grounds to know of any
basis for the assertion against Silver or any Subsidiary of any liability of any
nature (and in any amount) not fully reflected or allowed against in the July
31, 1995 balance sheet or not incurred in the ordinary course of business
thereafter. All the books of account of Silver and the Subsidiaries have been
exhibited or made available to Treasury and accurately record all transactions
of Silver and the Subsidiaries during the respective periods covered by them.
2.9 Absence of Certain Changes. Since July 31, 1995, each of Silver
and its Subsidiaries has operated its business in
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the ordinary course and consistent with past practices and there has not been
any material adverse change in the consolidated financial condition of Silver
and its Subsidiaries, results of operations or businesses of Silver and its
Subsidiaries, and each of them has not:
(a) entered into any transaction or incurred any liability or
obligation other than a change in its loan banking relationship and other than
in the ordinary course of its business;
(b) made any declaration, set aside or paid any dividend or other
distribution in respect of any shares of capital stock of Silver, nor has Silver
repurchased, redeemed or otherwise acquired any outstanding shares of capital
stock or other securities of, or other ownership interests in, Silver or any
such Subsidiary, except as set forth in Schedule 2.4;
(c) paid any dividends or made any other distributions on, or
acquired, any shares of its capital stock or, directly or indirectly, made any
other payments or loans of any kind to any of Silver's stockholders, except
compensation for services rendered and reimbursement for expenses in amounts
consistent with past practices, except as set forth in Schedule 2.4;
(d) incurred any indebtedness for borrowed money, other than
short term borrowing in the ordinary course of business, except as set forth in
Schedule 2.4;
(e) issued any Silver Securities (except upon exercise after the
date hereof of any options), granted any options for Silver Securities or agreed
to any amendment of any material
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term of any outstanding Silver Securities or any Silver Subsidiary Securities;
(f) sustained any material damage, destruction or other casualty
loss (whether or not covered by insurance) affecting the business or assets of
Silver or any of its Subsidiaries or Joint Ventures;
(g) made any material change in any method of accounting or
accounting practice by Silver or any of its Subsidiaries or Joint Ventures,
except for a change required by reason of a concurrent change in generally
accepted accounting principles;
(h) other than in the ordinary course of business, (i) granted
any severance or termination pay to, or increased any compensation, bonus or
other benefits payable to, or entered into any written employment, deferred
compensation or other similar agreement (or any amendment to any such existing
agreement) with, any director of Silver or any Subsidiary, or any officer or
employee of Silver or any Subsidiary whose 1995 base annual salary exceeded
$50,000, or (ii) increased any benefit payable under any existing severance or
termination pay policies or employment agreements; or
(i) granted or agreed to grant any general increase in any rate
or rates of salaries or compensation to its employees or any specific increase
in the salary or compensation to any employee or agent, or paid or agreed to pay
any bonus to any employee of Silver or any of its Subsidiaries, other than in
the ordinary course of business.
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2.10 Ownership of Properties. Except as set forth in Schedule 2.10,
Silver and each of its Subsidiaries has good and marketable title, free and
clear of any claim, lien, mortgage, security interest, pledge, restriction,
charge or encumbrance, to all its property and assets (by ownership outright)
including its property and assets reflected on the July 31, 1995 balance sheet,
except for tangible personal property sold or otherwise disposed of since that
date in the ordinary course of business. Except as set forth in Schedule 2.10,
Silver and each of its Subsidiaries owns outright, free and clear of any claim,
lien, security interest, pledge, restriction, charge or encumbrance, all
leasehold improvements, equipment, inventory and other personal property used in
its business or presently located in any of its premises, except for leased
property listed on Schedule 2.10 and for the lien, if any, of current taxes not
yet due and payable. Neither Silver nor any of its Subsidiaries uses or leases
any property that is owned by any officer, director or affiliate of Silver or
any Subsidiary, or any relative of any thereof.
2.11 Real Property and Other Leases. All leases of real property
and/or other property, and amendments and modifications thereof, are, to
Silver's best knowledge, in full force and effect and have not been modified or
amended in any material respect, all rents and additional rents due to date
under each such lease have been paid, the lessee has been in peaceable
possession since the commencement of the original term of such lease, and there
exists no default under such leases by Silver or any of its Subsidiaries or by
the lessor under any of such leases, nor any event which with
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notice or lapse of time or both would constitute a default thereunder by Silver
or any of its Subsidiaries.
2.12 Inventory. All of the inventory of Silver and of each of its
Subsidiaries consists of items that are currently usable or salable in the
ordinary course of its business and are carried on its books at the lower of
cost (on a LIFO basis) or market value.
2.13 Machinery and Equipment. All machinery and equipment owned or
leased by Silver or any of its Subsidiaries is in good operating condition and
in good condition of maintenance and repair, normal wear and tear excepted, and
the use thereof is in conformance with all applicable ordinances and
regulations, and all building, zoning and other laws. All such machinery and
equipment is suitable for the uses to which it is currently employed, has been
regularly and properly maintained and is not in need of repair or replacement.
2.14 Intellectual Property.
(a) There is no infringement by Silver or any Subsidiary upon the
patents, trademarks, trade names, service marks, trade secrets, copyrights or
other intellectual property rights of others ("Intellectual Property Rights").
(b) Set forth on Schedule 2.14 is a true and complete list of all
inventions which are the subject of issued letters patent or an application
therefor, which are owned and used or licensed for use by Silver or any of its
Subsidiaries (collectively, the "Silver Intellectual Property Rights").
(c) Since July 31, 1995, neither Silver nor of its
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Subsidiaries or Joint Ventures has been notified, orally or in a writing
received by Silver or any representative of Silver of, or has been a defendant
or plaintiff in any claim, suit, action or proceeding which involves, a claim of
infringement of any Intellectual Property Rights, and to the knowledge of Silver
(i) there are no claims by any other person of infringement of Intellectual
Property Rights by Silver or any of its Subsidiaries or Joint Ventures, and (ii)
there are no continuing infringements by any other person or persons of any
Silver Intellectual Property Rights.
(d) Silver has delivered to Treasury a true and complete list of
any proceedings (including pending applications for reissue or reexamination of
a patent) before any patent or trademark authority to which Silver is a party, a
description of the subject matter of each proceeding, and the current status of
each proceeding, including, without limitation, interferences, priority
contests, oppositions and protests.
(e) Silver and its Subsidiaries have taken adequate measures to
maintain the confidentiality of the process and formulae, research and
development results and other know-how of Silver and its Subsidiaries, the value
of which to Silver or its Subsidiaries is contingent upon maintenance of the
confidentiality thereof.
(f) Silver has heretofore made available to Treasury copies of
all correspondence, applications and approvals with, to or from any United
States regulatory agencies concerning all applications for approval to market
its products in the United
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States.
(g) With respect to Silver Intellectual Property Rights, Schedule
2.14 sets forth the following information with respect to each patent and patent
application as of the date hereof, as applicable:
(i) the title of the patent or patent application
constituting such Silver Intellectual Property Right;
(ii) the jurisdictions by or in which such Silver
Intellectual Property Right has been issued or registered or in which an
application for such issuance or registration has been filed, including the
respective registration or application numbers; and
(iii) licenses, sublicenses, collaboration, joint
development and similar agreements as to which Silver or any of its
Subsidiaries is a party, true and complete copies of which have been
delivered to Treasury.
(h) All Silver Intellectual Property Rights are free of any
unresolved ownership disputes with respect to any third party.
2.15 Securities Matters.
(a) Neither Silver nor any of its Subsidiaries has made any
filings with the United States Securities and Exchange Commission ("SEC").
(b) Set forth on Schedule 2.15 is a true and complete list of all
non-public offerings made since July 31, 1995 by Silver and each Subsidiary.
Silver has delivered to Treasury
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true and complete copies of all related offering materials (the "Offering
Materials").
(c) As of the date of offering none of the Offering Materials
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
2.16 Accounts Receivable. All of the accounts receivable of Silver and
each of its Subsidiaries arose from bona fide transactions in the ordinary
course of business and, to the best of the Stockholders' knowledge, are
collectible in full net of reserves, and none is subject to any defense, set-off
or counterclaim.
2.17 Taxes.
(a) For the purposes of this Agreement, "Tax" (and, with
correlative meaning, "Taxes" and "Taxable") means, for any entity, (i) any net
income, alternative or add-on minimum tax, gross income, gross receipts, sales,
use, ad valorem, transfer, franchise, profits, license, withholding on amounts
paid to or by such entity or any subsidiary thereof, payroll, employment,
excise, severance, stamp, occupation, property, environmental or windfall profit
tax, or other tax, together with any interest or any penalty, addition to tax or
additional amount imposed by any governmental authority responsible for the
imposition of any such tax (domestic or foreign) (a "Taxing Authority"), and
(ii) liability of such entity or any subsidiary thereof for the payment
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of any amounts of the type described in (i) as a result of being a member of an
affiliated, consolidated, combined or unitary group for any taxable period, and
(iii) liability of such entity or any subsidiary thereof for the payment of any
amounts of the type described in clauses (i) or (ii) as a result of any express
or implied obligation to indemnify any other person.
(b) Except as set forth in Schedule 2.17:
(i) all Tax returns, statements, reports and forms
(including estimated Tax returns and reports and information returns and
reports) required to be filed with any Taxing Authority with respect to any
Taxable period ending on or before the Closing Date by or on behalf of
Silver or any of its Subsidiaries (collectively, the "Silver Tax Returns"),
have been or will be filed when due (subject to any extensions of such due
date) and, to Silver's knowledge, each Silver Tax Return is correct and
complete in all material respects as filed;
(ii) Silver and its Subsidiaries have timely paid, withheld
or made provision on their books for all Taxes shown as due and payable on
the Silver Tax Returns that have been filed;
(iii) all Silver Tax Returns relating to income or franchise
Taxes filed with respect to Taxable years of Silver and its Subsidiaries
ending on or before July 31, 1988, have been examined by appropriate tax
authorities and closed or are Silver Tax Returns with respect to which the
applicable period for assessment under applicable law, after giving effect
to
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extensions or waivers, has expired;
(iv) neither Silver nor any of its Subsidiaries has granted
any extension or waiver of the limitation period applicable to any Silver
Tax Returns;
(v) to Silver's knowledge, there is no claim, audit, action,
suit, proceeding, or investigation now pending or threatened in a writing
received by Silver against or with respect to Silver or any of its
Subsidiaries in respect of any Tax or assessment;
(vi) there are no requests for rulings in respect of any Tax
pending between Silver or any of its Subsidiaries and any Taxing Authority;
(vii) none of the property owned by Silver or any of its
Subsidiaries is "tax-exempt use property" within the meaning of Section
168(h) of the Code;
(viii) neither Silver nor any of its Subsidiaries, nor any
other person on behalf of Silver or any such Subsidiary, has entered into
nor will it enter into any agreement or consent pursuant to Section 341(f)
of the Code;
(ix) there are no liens for Taxes upon the assets of Silver
or any of its Subsidiaries except liens for current Taxes not yet due;
(x) there are, and immediately prior to the Acquisition
there will be, no material limitations on Silver's right to utilize its net
operating loss carryforward for federal income tax purposes;
(xi) to Silver's knowledge, neither it nor any of
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its Subsidiaries will be required to include any adjustment in Taxable
income for any Tax period (or portion thereof) ending after the Closing
Date pursuant to Section 481(c) of the Code (or any similar provision of
the Tax laws of any jurisdiction) as a result of a change in method of
accounting for any Tax period (or portion thereof) ending on or before the
Closing Date or pursuant to the provisions of any agreement entered into
with any Taxing Authority with regard to the Tax liability of Silver or any
such Subsidiary for any Tax period (or portion thereof) ending on or before
the Closing Date;
(xii) neither Silver nor any of its Subsidiaries has been a
member of an affiliated group other than one of which Silver was the common
parent, or filed or been included in a combined, consolidated or unitary
Tax return other than one filed by Silver, or a return for a group
consisting solely of its Subsidiaries or predecessors, or participated in
any other similar arrangement whereby any income, revenues, receipts,
gains, losses, deductions, credits or other Tax items of Silver or any such
Subsidiary was determined or taken into account for Tax purposes with
reference to or in conjunction with any such items of another person other
than Silver or any such Subsidiary or predecessor;
(xiii) neither Silver nor any of its Subsidiaries is
currently under any contractual obligation to pay to a Taxing Authority the
income or franchise tax obligations of, or with respect to transactions
relating to, any other person or to indemnify any other person with respect
to any income or
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franchise tax; and
(xiv) neither Silver nor any of its Subsidiaries has signed
any letter or entered into any agreement or arrangement in writing
consenting to the surrender or sharing of any deductions, credits or other
Tax attributes with any other person or transferred or assigned to any
other person for Tax purposes any such items.
(c) Within the five-year period preceding this Agreement and the
Closing Date, Silver has not been a "United States real property holding
corporation" within the meaning of Section 897(c)(2) of the Code.
2.18 Agreements, etc. Schedule 2.18 contains a true and complete list
of: (a) all agreements and other commitments for the purchase of any materials,
supplies or inventory other than those that do not extend beyond three months;
(b) all notes and agreements relating to any indebtedness of Silver or any of
its Subsidiaries for borrowed money; (c) all leases or other rental agreements
under which Silver or any of its Subsidiaries is either lessor or lessee which
call for annual lease payments in excess of $10,000 individually; (d) all other
agreements (including, but not limited to, employment agreements, commitments
and understandings, written or oral) to which Silver or any of its Subsidiaries
is a party or by which any of them is bound which require payment by Silver or
any of its Subsidiaries of more than $10,000 and which cannot be terminated by
Silver or its Subsidiary, without liability, on notice of thirty days or less;
(e) all patents, trademarks (including service marks), trademarks registrations,
and
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applications for registering patents or trademarks, and all licenses to
Intellectual Property, technologies and/or applications, held or owned by Silver
or any of its Subsidiaries, none of which is subject to a licensing or other
agreement with any other person except as set forth on Schedule 2.18; (f) the
name of each bank in which Silver and each of its Subsidiaries has an account,
credit line or safe deposit box and the name of each person presently authorized
to draw thereon or have access thereto; and (g) all fire, liability and other
insurance carried by Silver and each of its Subsidiaries with respect to its
business and properties. All leases, agreements, commitments and understandings
of Silver and its subsidiaries (including, but not limited to, commitments for
the purchase of inventory) were entered into in the ordinary course of business,
and all of their respective commitments for inventory were entered into on an
arm's-length basis and are at prices believed by Silver to be reasonable and
consistent with current business requirements. True and complete copies of all
leases, agreements, commitments and understandings referred to on Schedule 2.18
have been delivered to Treasury. Except as set forth in Schedule 2.18, there are
no such oral agreements.
2.19 Agreements Regarding Employees. (a) Neither Silver nor any of its
Subsidiaries is a party to or bound by any employment agreement, or any
collective bargaining or other labor agreement, or any pension, retirement,
stock option, stock purchase, savings, profit sharing, deferred compensation,
retainer, consultant, bonus, group insurance or other incentive or welfare
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agreement, plan or arrangement, except as set forth on Schedule 2.19. True and
complete copies of each agreement, plan or arrangement listed on Schedule 2.19
have been delivered to Treasury.
(b) Since April 30, 1996 neither Silver nor any of its
Subsidiaries has granted a salary increase to any officer or key employee,
except as set forth on Schedule 2.19.
(c) Schedule 2.19 contains a true and complete list of all
employee benefit plans (the "Plans") subject to the Employee Retirement Income
Security Act of 1974 ("ERISA") that are maintained by Silver or any of its
Subsidiaries. In addition, Schedule 2.19 also contains a true and complete list
of all multiemployer plans participated in by Silver or any of its Subsidiaries.
(d) Each of the Plans has received a favorable determination
letter from the Internal Revenue Service, and the related trusts have been
determined to be exempt from taxation under Section 501(a) of the Code. A copy
of the most recent determination letter with respect to each of the Plans has
been delivered to Treasury. Nothing has occurred since the date of each such
letter that would cause the loss of such qualification or exemption and no
notice has been received from the Internal Revenue Service or any other
governmental authority asserting the loss or possible loss of such qualification
or exemption.
(e) All payments due under or with respect to each of the Plans
for all plan years beginning on or before the date of this Agreement have been
made (or reserved for in Silver's
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financial statements referred to in Section 2.7); no such Plan has incurred any
accumulated funding deficiency (as defined in Section 412 of the Code), whether
or not waived, and neither Silver nor any of its Subsidiaries has incurred any
liability on account of any such accumulated funding deficiency; and the value
of the assets of any Defined Benefit Plan equals or exceeds the present value of
all accrued benefits under that Plan, determined on an ongoing basis in
accordance with the actuarial assumptions used in preparing the most recent
actuarial valuation report for that Plan.
(f) Neither Silver, nor any other disqualified person or party in
interest (as defined in Section 4975 of the Code and Section 3 of ERISA,
respectively) with respect to any of the Plans, has engaged in any prohibited
transaction (as defined in Section 4975 of the Code or Section 406 of ERISA)
that could subject any of the Plans (or any related trust) or Silver or any of
its Subsidiaries, or any trustee, administrator or other fiduciary of any Plan,
to the tax or penalties imposed under Section 4975 of the Code or Section 502 of
ERISA. No reportable event (as defined in Section 4043(b) of ERISA) has occurred
with respect to any Plan; no liability to the Pension Benefit Guaranty
Corporation has been incurred; and none of the Plans is a multiple employer plan
or a multiemployer plan within the meaning of the Code or ERISA or the
regulations promulgated thereunder. Each of the Plans is in compliance in all
material respects with the requirements prescribed by all statutory and
governmental rules or regulations applicable to it, including, but not limited
to, ERISA and the Code.
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<PAGE>
(g) With respect to each of the Plans, a true and complete copy
of each of the following has been delivered to Treasury: (i) the Plan document
and related trust agreement, as amended, (ii) the last filed Form 5500 or 5500-C
(with all schedules thereto), (iii) a summary Plan description and all
modifications thereto, (iv) the most recent annual and periodic accounting of
Plan assets, and (v) the most recent annual actuarial valuation report for each
Plan.
(h) For all Plan years beginning on or before the date of this
Agreement, all payments due from Silver or any of its Subsidiaries under or with
respect to each multiemployer plan participated in by Silver or any of its
Subsidiaries have been made (or reserved for in Silver's financial statements
referred to in Section 2.7). Neither Silver nor any of its Subsidiaries has
completely or partially withdrawn from any multiemployer plan or received, and
there is no reason to believe that any of them should or will receive, a notice
of withdrawal liability as described in Section 4219 of ERISA on the basis of
events resulting from the consummation of the Acquisition. Silver has not been
notified that any multiemployer plan is in reorganization (as defined in Section
4241(a) and 4215 of ERISA) or is insolvent (as defined in Section 4245 of
ERISA).
2.20 Absence of Defaults. There is no existing default by any party
under any lease, agreement, commitment or understanding to which Silver or any
of its Subsidiaries is a party or by which it is bound.
2.21 Compliance with Laws. Neither Silver nor any of
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its Subsidiaries or Joint Ventures is, in any material respect, in violation of,
or has violated, any applicable provisions of any laws, statutes, ordinances or
regulations or any term of any judgment, decree, injunction or order binding
against it.
2.22 Compliance with Laws-Environmental. (a) For purposes of this
Section 2.22:
"Hazardous Material" shall mean any material or substance that,
whether by its nature or use, is now or hereafter defined as hazardous waste,
hazardous substance, pollutant or contaminant under any Environmental Law
(defined below), or which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and which is now or
hereafter regulated under any Environmental Law, or which is or contains
petroleum, gasoline, diesel fuel or another petroleum hydrocarbon product, lead
paint, asbestos, asbestos-containing materials or polychlorinated biphenyls;
"Environmental Laws" means those Federal, state or local laws,
statutes, ordinances, rules, regulations, orders and decrees (including any
amendments thereto) relating to pollution or protection of the environment,
including laws relating to emissions, discharges, releases or threatened
releases of Hazardous Materials, pollutants (as defined under the Federal Water
Pollution Control Act ss.502, 33 U.S.C. ss.1362), wastewater (other than non-
contact cooling or process water), or wastes constituting hazardous substances
(as defined in Section 101(14) of the Comprehensive Environmental Response,
Compensation, and Liability Act ("CERCLA"), 42 U.S.C. ss.9601(14)) in, into,
onto or upon the environment
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<PAGE>
(including, without limitation, ambient air, surface water, groundwater, or
land), or otherwise relating to the processing, distribution, use, treatment,
collection, accumulation, storage, disposal, transport, or handling of Hazardous
Materials, and including but not limited to: CERCLA; the Resource Conservation
and Recovery Act, 42 U.S.C. ss.6901 et. seq.; the Federal Water Pollution
Control Act, 33 U.S.C. ss.1251 et. seq.; the Clean Air Act, 42 U.S.C. ss.1857
et. seq.; and the Toxic Substances Control Act, 15 U.S.C. ss.2601 et. seq.
(b) Except as disclosed in Schedule 2.22, no Hazardous Material
is currently located at, in, on, under or about any of the Premises in a manner
which violates any Environmental Law, or which requires cleanup or corrective
action of any kind under any Environmental Law.
(c) Except as disclosed in Schedule 2.22, Silver has obtained and
now maintains as currently valid and effective all permits, licenses and other
authorizations which are required under Environmental Laws for the operation of
Silver's research, manufacturing and distribution facilities (the "Facilities").
(d) Except as disclosed in Schedule 2.22, Silver and the
operations of the Facilities are in compliance with Environmental Laws and with
all terms and conditions of any applicable and enforceable rules, regulations,
orders, decrees, plans, codes, judgments, injunctions, notice or demand letters,
prohibitions, schedules, timetables, standards, conditions or requirements
issued, entered, approved or promulgated thereunder.
(e) Except as disclosed in Schedule 2.22, (i)
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<PAGE>
Silver has not received (A) any notice of the violation or alleged violation of,
or noncompliance or alleged noncompliance with, any Environmental Law, permit,
license or other authorization; (B) any notice, demand, claim, order or request
for the performance of, or the payment of costs or expenses for, any test,
investigation, assessment, examination, cleanup, removal, remediation,
mitigation, response, treatment or restoration with regard to environmental
conditions at the Facilities (which has not been performed or satisfied); or (C)
any notice of any disposal, emission, discharge, release or threatened release
of any Hazardous Materials at, in, into, onto, upon, by or from any real
property owned, operated or possessed by Silver or with respect to Hazardous
Material shipped by Silver for disposal; and (ii) there is not now and has not
been any disposal, emission, discharge, release or threatened release of any
Hazardous Materials at, in, into, onto, upon, by or from any real property at
any time owned, operated, possessed or used by Silver.
2.23 Litigation. Except as set forth in Schedule 2.23, there is no
litigation, proceeding or governmental investigation pending or, so far as is
known to Silver, threatened, or any order, injunction or decree outstanding,
against or relating to Silver or any of its Subsidiaries or their respective
properties or businesses, and there exists no reasonable basis for the
commencement of any thereof.
2.24 Violations. The improvements located on real estate owned or
leased by Silver and the continuation of the present use, occupancy and
operation of said improvements comply in
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full with all zoning requirements and do not depend on or require to any extent
any further ordinance, variance, special exception or other special governmental
approval for their continuing legality. There is no violation of any recorded
restriction, condition or agreement affecting said real estate and Silver has
not received notice of, and there does not exist any violation of, and
continuation of the present uses, occupancies and operations will not result in
a violation of, building, health, safety, environmental pollution control, fire
or similar law, ordinance, order or regulation respecting said real estate.
Except as set forth on Schedule 2.24, no notice has been received by Silver or
any of its Subsidiaries alleging any such violation.
2.25 Finders' Fees. Silver has not employed or utilized the services
of any broker, finder or other intermediary in connection with this Agreement or
the transaction contemplated by this Agreement.
2.26 Restrictions on Business Activities. There is no agreement,
judgment, injunction, order or decree binding upon Silver or any of its
Subsidiaries which has or could reasonably be expected to have the effect of
prohibiting or materially impairing (a) the ability of Silver or any of its
Subsidiaries to conduct its business in any geographic area or field of use, (b)
any acquisition of property by Silver or any of its Subsidiaries, or (c) the
conduct of business by Silver or any of its Subsidiaries as currently conducted
or as currently proposed to be conducted by Silver.
2.27 Board Approval. The Board of Directors of Silver
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has unanimously determined that the Acquisition is in the best interests of the
stockholders of Silver and is on terms that are fair to such stockholders.
2.28 Questionable Payments. Neither Silver nor any of its
Subsidiaries, nor, to the best knowledge of Silver, any director, officer or
other employee of Silver or any of its Subsidiaries has: (i) made any payments
or provided services or other favors in the United States of America or in any
foreign country in order to obtain preferential treatment or consideration by
any governmental entity with respect to any aspect of the business of Silver or
any of its Subsidiaries; or (ii) made any political contributions which would
not be lawful under the laws of the United States and the foreign country in
which such payments were made. Neither Silver or any of its Subsidiaries nor, to
the best knowledge of Silver, any director, officer or other employee of Silver
or any of its Subsidiaries or any customer or supplier of any of them, has been
the subject of any inquiry or investigation by any governmental entity in
connection with payments or benefits or other favors to or for the benefit of
any governmental or armed services official, agent, representative or employee
with respect to any aspect of the business of Silver or its Subsidiaries or with
respect to any political contribution.
2.29 Accuracy of Representations and Warranties. No representation or
warranty by Silver or any Stockholder in this Agreement and no written statement
made to Treasury or contained in any certificate or instrument delivered or to
be delivered to Treasury pursuant to this Agreement or in connection with the
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transactions contemplated by this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained therein not misleading.
Article III. Representations and Warranties of Treasury. Treasury
represents and warrants to Silver as follows:
3.1 Organization. Treasury is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Treasury
has the corporate power and authority to own or lease its properties and to
carry on its business as now conducted and as proposed to be conducted.
3.2 Corporate Authority, Etc.
(a) Treasury has full power and authority to enter into this
Agreement and to perform this Agreement in accordance with its terms; the
execution, delivery and performance of this Agreement by Treasury and the
consummation of the Acquisition have been duly authorized by its Board of
Directors and Treasury is not bound by any contractual or other obligation that
would be violated by the execution or performance of this Agreement; and
(b) Neither the execution and delivery of this Agreement nor the
consummation by Treasury of any of the transactions contemplated herein nor
compliance by Treasury with the terms, conditions and provisions hereof or of
any agreement or instrument contemplated hereby will (i) conflict with, result
in a breach of, or constitute an event of default under the certificate of
incorporation or by-laws of Treasury, or any material instrument, agreement,
lease, license, franchise, permit, judgment,
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order, award, decree or other authorization, right, or obligation to which
Treasury is a party or any of their properties is subject or by which they are
bound, or any statute, ordinance, rule or regulation applicable to Treasury, or
(ii) require the approval, consent or authorization of, or the making of any
declaration, filing or registration with, any third party or any foreign,
federal, state or local court, governmental authority or regulatory body.
3.3 Governmental Consents and Approvals. The execution, delivery and
performance by Treasury of this Agreement and the consummation of the
Acquisition by Treasury requires no action by or in respect of, or filing with,
any governmental body, agency, official or authority.
3.4 Litigation. There are no suits, claims, proceedings or
investigations pending or, to the knowledge of Treasury, threatened against
Treasury which question the legality of the transactions contemplated by this
Agreement.
3.5 Finders' Fee. Treasury has not employed or utilized the services
of any broker, finder or other intermediary in connection with this Agreement or
the transactions contemplated by this Agreement.
Article IV. Covenants of Treasury and Silver.
4.1 Preserve Accuracy of Representations; Other Action. Each party
will use its best efforts to cause the satisfaction of the conditions to the
obligations of the parties set forth in Article VII and to prevent the taking of
any action that would result in any of the representations and warranties of
such party
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not being true as of the Closing Date.
4.2 Schedules. Any information furnished in a schedule to this
Agreement shall be deemed to be furnished under any other schedule which calls
for the furnishing of the same information whether or not that information is
separately stated in such other schedule.
4.3 Further Action. Each party to this Agreement shall take all such
further action, and execute and deliver such further documents, as may be
necessary to carry out the transactions contemplated by this Agreement.
4.4 Expenses. Each party shall bear its own expenses incurred in
connection with the negotiation and preparation of this Agreement and in
connection with all duties and obligations required to be performed by it under
this Agreement. Silver will not incur any such expense which is not reasonable.
4.5 Public Announcements. Treasury and Silver will use their best
efforts to mutually agree on any press release or other public announcement with
respect to this Agreement and the transactions contemplated hereby. No public
announcement about this Agreement shall be made by either party, except as
otherwise required by law, without the prior written approval of the other
party, which approval shall not be withheld unreasonably.
4.6 Consents and Approvals. The parties shall cooperate in using their
best efforts to obtain as promptly as practicable all approvals, consents and
authorizations, governmental, regulatory or otherwise, which may be required in
connection with the consummation of the Acquisition.
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Article V. Covenants of Silver.
5.1 Access to Information. From the date hereof until the Closing
Date, Silver and its Subsidiaries shall permit Treasury and its representatives
to make such investigation of the assets and the businesses of Silver and its
Subsidiaries, if any, as Treasury may desire, and Silver further agrees to give
to Treasury and its legal counsel, accountants and other representatives full
access, upon reasonable notice, during normal business hours throughout the
period to the Closing Date to all of its and its Subsidiaries' offices,
properties, assets, books, agreements, commitments, records and files. Silver
further agrees to furnish to Treasury, upon request, during that period, such
financial and operating data and all other scientific and technical information
as Treasury may reasonably request, and to instruct Silver's employees, counsel
and financial advisors to cooperate with Treasury in its investigation of the
business of Silver. Silver shall also keep Treasury apprised of any material
developments affecting its patents, licenses to patents or patent applications.
(a) From the date hereof until the Closing Date, reasonably
promptly following the end of each month, Silver will deliver to Treasury a copy
of the management reporting package prepared by Silver for such month in the
ordinary course of its business for internal distribution.
5.2 Conduct of Silver Pending the Closing. From the date hereof until
the Closing Date, each of Silver and its Subsidiaries shall in all material
respects operate its business only in the ordinary course. Without limiting the
generality of
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the foregoing, until the Closing Date Silver and its Subsidiaries will:
(a) not pay, discharge, satisfy or accrue any liability for any
claims, liabilities or obligations (whether absolute, accrued, contingent or
otherwise) other than the payment, discharge or satisfaction of liabilities
incurred in the normal course of business;
(b) not make loans or advances or incur any indebtedness for
borrowed money or guarantee or otherwise become responsible for any such
indebtedness, or issue or sell any debt securities or guarantee, endorse or
otherwise as an accommodation become responsible for the obligations of others;
(c) not take any action that would result in any of the
representations or warranties of Silver set forth in this Agreement becoming
untrue or in any of the conditions to the closing set forth in Section 7.1
hereof not being satisfied;
(d) promptly notify Treasury in writing of, and furnish any
information which Treasury may request with respect to, the occurrence of any
event or the existence of any state of facts that would result in any of
Silver's representations and warranties not being true as of the Closing Date,
including, but not limited to, any material litigation, proceeding or
governmental investigation threatened or asserted by or against Silver or any of
its Subsidiaries, any material adverse change in the condition (financial or
otherwise), assets, liabilities or business of Silver or any of its
Subsidiaries, or any other occurrence of any kind which materially and adversely
affects the assets, business or
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prospects of Silver or any of its Subsidiaries;
(e) except as required by existing collective bargaining
agreements or employment agreements, not (i) grant or agree to grant any general
increase in the rates of salaries or compensation of its employees, or any
specific increase to any employee whose total salary or compensation after the
increase would be at any annual rate in excess of $50,000, or increase the
pension, retirement or other employment benefits of its employees, (ii) enter
into any written contract, agreement or plan covering any director, officer,
consultant or employee that provides for the making of payments, the reduction
of any exercise price or the acceleration of vesting of any benefit or right or
any other entitlement contingent upon (A) the Acquisition or (B) the termination
of employment after the Acquisition if such payment, acceleration or entitlement
would not have been provided but for the Acquisition, (iii) adopt or amend any
conditions under any stock option plan, (iv) enter into or amend any employment,
severance or other similar arrangements or agreements or special pay
arrangements with respect to termination of employment with any of its
directors, officers, consultants or employees, or (v) make any offer of
employment to any person or offer any employee or former employee engagement for
consulting services;
(f) not issue or commit itself to issue any shares of its capital
stock or other securities or options or warrants with respect thereto;
(g) not declare, set aside or pay any dividends or other
distribution in respect of its capital stock; redeem,
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purchase or otherwise acquire any of such stock; or make any direct or indirect
payment of any kind to any of its stockholders, to any corporation controlled by
any of its stockholders, or to any relative of any of its stockholders, except
compensation for services rendered in each case consistent with past practice;
(h) not amend its certificate of incorporation or by-laws or
change any of its banking arrangements, or amend any lease, agreement or
commitment set forth in Schedule 2.18;
(i) not acquire or agree to acquire by merging or consolidating
with or by purchasing any material portion of the capital stock or assets of any
business or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or agree to acquire any
assets which are material, individually or in the aggregate, to the business
condition of Silver and its Subsidiaries, taken as a whole;
(j) not waive any of its rights or claims having value, except
rights or claims that individually or in the aggregate are not material in
amount and are waived in the ordinary course of business;
(k) not enter into any lease, agreement or commitment which, if
entered into prior to the date of this Agreement, would have been required to be
included in Schedule 2.18, except with Treasury's advance written approval;
(l) not settle or compromise, or agree to settle or compromise,
any suit or other litigation matter or any matter in an arbitration proceeding;
(m) not commence a lawsuit other than for the
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routine collection or amounts due and owing;
(n) not change the accounting methods or practices followed by
Silver and its Subsidiaries, make any material tax election, file any material
($10,000) tax agreement, or settle any material tax claim or assessment;
(o) not (a) expend cash in excess of $25,000 in any single
transaction or series of related transactions, except in the ordinary course of
business, (b) purchase any item of capital equipment costing in excess or
$25,000 or (c) enter into any capital commitment or long-term obligation equal
to or in excess of $25,000;
(p) use its best efforts to maintain and preserve Silver's and
its Subsidiaries' business organizations intact, to retain their present
employees so that they will be available to Treasury after the Acquisition, and
to maintain their relationships with suppliers, customers and others so that
they will be preserved after the Acquisition;
(q) use its best efforts to keep in full force and effect all of
its existing liability insurance, and will not modify or reduce the coverages
thereunder;
(r) duly comply with (A) all laws, ordinances, orders,
injunctions and decrees applicable to it and to the conduct of its business, and
(B) all material agreements and obligations by which it, its properties or its
assets may be bound;
(s) not amend, willfully violate or terminate any material
agreements, including, without limitation, any agreements pursuant to which
Silver or any of its Subsidiaries have been granted a
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<PAGE>
license or exclusive rights in a geographical area or field of use;
(t) not amend or abandon, or allow to become amended or
abandoned, any pending application for a patent, or fail to maintain any
existing patent owned or licensed to it; and
(u) maintain all of its machinery and equipment in customary
repair, maintenance and condition, except to the extent of normal wear and tear.
5.3 Other Offers. Silver agrees (a) that as of January 19, 1996 it
terminated forthwith any existing negotiations contemplating the sale, merger,
or acquisition of Silver or its business, or the possible acquisition of a
material portion of Silver's assets or the issue or sale of authorized capital
stock or other securities of Silver or any affiliate of Silver which would
directly or indirectly constitute a change in control of Silver (a "Sale of
Silver"), and (b) from the date hereof until the Closing Date or the earlier
termination of this Agreement, (i) to refrain, directly and indirectly, from
soliciting or initiating discussions with any person or entity other than
Treasury relating to any offers, negotiations, understandings, letters of
intent, commitments or agreements, written or oral, contemplating the Sale of
Silver, (ii) to conduct its business only in the ordinary course consistent with
its current business strategy, except that Silver will not sell, assign, license
or otherwise diminish or dispose of any of its material assets or properties
except after consultation with Treasury, and (iii) not to participate, directly
or indirectly, in any negotiations regarding, or furnish to any other person
information with respect to, any effort or attempt by any
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<PAGE>
other person to do or seek a Sale of Silver. Silver shall inform Treasury within
one business day of its receipt of any offer, proposal or inquiry relating to
any Sale of Silver.
5.4 Notices of Certain Events. Silver shall, upon obtaining knowledge
of any of the following, promptly notify Treasury of and, if same be in writing,
promptly deliver to Treasury copies of: (i) any notice or communication from any
person alleging that the consent of such person is or may be required in
connection with the transactions contemplated herein; (ii) any notice or other
communication from any governmental or regulatory agency or authority in
connection with the transactions contemplated herein; (iii) any actions, suits,
claims, investigations or other judicial proceedings commenced or threatened
against Silver or any of its Subsidiaries; and (iv) any adverse determination or
recommendation in connection with any governmental proceeding regarding any of
Silver's products.
5.5 FIRPTA. Silver shall deliver to the Internal Revenue Service a
properly executed notice in accordance with the requirements of Treasury
Regulation Section 1.897-2(h)(2) which states that shares of capital stock of
Silver do not constitute "United States real property interests" under Section
897(e) of the Code. Silver shall provide a copy of such statement to Treasury
for purposes of satisfying Treasury's obligations under Treasury Regulation
Section 1.1445-2(c)(3) within the 30 day period immediately preceding the
Closing Date.
5.6 Consents. Silver shall use its best efforts to cause Silver and
its Subsidiaries to obtain at the earliest
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<PAGE>
practicable date, by instruments in form and substance satisfactory to Treasury
and without any conditions materially adverse to Silver or any of its
Subsidiaries or to Treasury, all consents and approvals referred to in Schedule
2.3. Treasury shall cooperate to the extent reasonably required in order to
obtain such consents, but Treasury shall not be obligated to agree to any change
in any lease or agreement or to agree to make any payment or furnish any
guaranty in connection with any such consents.
5.7 Maintenance of Business. Silver will use its best efforts to carry
on its business and preserve its relationships with those customers, suppliers,
licensees, licensors and commercial partners that are material to its business
in substantially the same manner as it has prior to the date hereof. Should
Silver become aware of a material deterioration in any such relationship, it
will promptly bring such information to the attention of Treasury in writing.
5.8 Release of Guarantees. Silver will use its best efforts to obtain
the agreement of Republic National Bank of Miami ("Republic") to accept
Treasury's corporate guarantee in lieu of the personal guarantees of Moche
Bendayan and Salomon Bendayan (the "Line of Credit Guarantees") with respect to
monies drawn under a line of credit agreement dated June __, 1996, between
Silver and Republic (the "Line of Credit Agreement") or to otherwise release
said guarantors from the Line of Credit Guarantees, copies of which Line of
Credit Agreement and Line of Credit Guarantees have been delivered to Treasury
prior to the execution of this Agreement.
Article VI. Covenants of Treasury.
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<PAGE>
6.1 Notices of Certain Events. Treasury shall, upon obtaining
knowledge of any of the following, promptly notify Silver of and, if same be in
writing, promptly deliver to Silver copies of: (i) any notice or communication
from any person alleging that the consent of such person is or may be required
in connection with the transactions contemplated herein; and (ii) any notice or
other communication from any governmental or regulatory agency or authority in
connection with the transactions contemplated herein.
Article VII. Conditions to the Acquisition.
7.1 Conditions Precedent to Obligations of Treasury. The obligations
of Treasury to consummate the Acquisition are subject to the fulfillment, prior
to or at the closing referred to in Article VIII, of each of the following
conditions (any or all of which may be waived by Treasury):
(a) all representations and warranties of Silver and Stockholders
shall be true and accurate at and as of the time of the closing with the same
effect as though made again at and as of that time;
(b) Silver and Stockholders shall have performed and complied
with all obligations and covenants required by this Agreement to be performed or
complied with by it or them prior to or at the closing;
(c) Treasury shall have been furnished with a certificate (dated
the date of the closing and in form and substance reasonably satisfactory to
Treasury) executed by the chief executive officer and chief financial officer of
Silver and by each Stockholder certifying to the fulfillment of the conditions
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<PAGE>
specified in sections 7.1(a) and 7.1(b);
(d) all of the consents and approvals referred to in Schedule 2.3
shall have been obtained by Silver, without any conditions materially adverse to
Treasury or Silver, and Treasury shall have received duly executed copies of all
of the instruments evidencing those consents and approvals;
(e) Silver shall have delivered to Treasury, on or before June
30, 1996, a copy of its unaudited consolidated financial statements as of
January 31, 1996; and the consolidated balance sheet as of January 31, 1996
included therein shall show current assets of not less than $3,900,000, current
liabilities of not more than $3,400,000, and stockholders' equity of not less
than $1,145,000;
(f) no preliminary or permanent injunction or other order or
decree by any federal or state court which prevents the consummation of the
Acquisition shall have been issued and remain in effect (each party agreeing to
use its reasonable efforts to have any such injunction, order or decree lifted);
(g) no action shall have been taken, and no statute, rule or
regulation shall have been enacted, by any state or federal government or
governmental agency in the United States or Canada which would prevent the
consummation of the Acquisition;
(h) since the date hereof, (i) there shall have been no changes
that constitute, and (ii) no event or events shall have occurred which have
resulted in or constitute, a material adverse change in the business,
operations, properties, assets, condition (financial or other), results of
operations or prospects
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<PAGE>
of Silver and its Subsidiaries, taken as a whole (exclusive of changes or events
resulting from regulatory, business or economic conditions of general
applicability);
(i) all governmental consents, orders and approvals legally
required for the consummation of the Acquisition and the transactions
contemplated hereby, including, without limitation, approval (if required) by
the SEC, shall have been obtained and be in effect at the date of the closing,
and no such consent, order or approval shall have any terms which in the
reasonable judgment of Treasury, when taken together with the terms of all such
consents, orders or approvals, would materially impair the value to Treasury of
the Acquisition, and no governmental authority shall have promulgated any
statute, rule or regulation which, when taken together with all such
promulgations, would materially impair the value to Treasury of the Acquisition;
(j) the directors and officers of Silver shall have resigned as
requested by Treasury;
(k) Salomon Bendayan shall have entered into an employment
agreement with Treasury for a five year term commencing on the closing of the
Acquisition providing for (i) an annual salary of US $150,000 payable bi-weekly,
with 6% annual increases, and an annual bonus equal to 2% of Silver's net
after-tax profit in excess of US $1,000,000 and (ii) at Silver's expense,
participation by Salomon Bendayan and his family in the group health insurance
program offered to Treasury's principal officers, provided that Salomon Bendayan
meets the insurer's eligibility requirements, if any, (iii) term life insurance
on Salomon Bendayan's life in the
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<PAGE>
amount of US $1,000,000, naming as beneficiary a person designated by Salomon
Bendayan, and (iv) Treasury's grant to Salomon Bendayan of options to purchase
shares of Treasury's Common Stock, each such option to be at an exercise price
equal to US $0.05 per share, as follows: (1) 5,000 shares on the first
anniversary of the Closing Date; (2) 7,500 shares on the second anniversary of
the Closing Date; (3) 10,000 shares on the third anniversary of the Closing
Date; (4) 12,500 shares on the fourth anniversary of the Closing Date; and (5)
15,000 shares on the fifth anniversary of the Closing Date; and (iv) Salomon
Bendayan's right to "piggyback" on any registration statement filed by Treasury
at any time.
(l) each of Silver's directors, officers and its ten largest
stockholders (determined as of the date hereof and as of the Closing Date), with
the sole exception of Edward Kozial, shall have entered into an agreement with
Treasury not to compete with Treasury or Silver for a period of three years from
the Closing Date;
(m) prior to or at the Closing of the Acquisition, Moche Bendayan
and Salomon Bendayan shall (i) discharge and satisfy the balance then due under
the note payable on account of Silver's purchase of a 44 foot boat, which note
presently has an outstanding principal balance of approximately US $200,000,
(ii) discharge and completely satisfy all remaining obligations under that
certain Contract for Sale of Stock, dated March, 1993, between Edward Kozial
("Kozial") and Silver (the "1993 Contract"), pursuant to which Silver has agreed
to purchase 45 shares of Silver's common stock from Kozial for an aggregate
price of US $470,000 and (iii)
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<PAGE>
discharge and satisfy all remaining monetary and other obligations under the
1993 Contract, including but not limited to the non-competition agreement (US
$180,000 total payment) with Kozial, copies of which note and 1993 Contract have
been delivered to Treasury prior to the execution of this Agreement;
(n) the Stockholders shall have terminated the Shareholders
Agreement dated August 30, 1989; and
(o) the transfer by Salomon Bendayan to Silver of all stock and
other interest in Flitsch & Bendayan, GMBH, owned by Salomon Bendayan.
7.2 Conditions Precedent to Obligations of Silver. The obligation of
Silver to consummate the Acquisition are subject to the fulfillment, prior to or
at the closing, of each of the following conditions (any or all of which may be
waived by Silver):
(a) all representations and warranties of Treasury shall be true
at and as of the time of the closing with the same effect as though made again
at and as of that time;
(b) Treasury shall have performed and complied with all
obligations and covenants required by this Agreement to be performed or complied
with by it prior to or at the closing;
(c) Silver shall have been furnished with a certificate (dated
the date of the closing and in form and substance reasonably satisfactory to
Silver) executed by the chief executive officer and chief financial officer of
Treasury certifying to the fulfillment of the conditions specified in Sections
7.2(a) and 7.2(b);
(d) Republic shall have agreed to accept Treasury's
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<PAGE>
corporate guaranty in lieu of the Line of Credit Guarantees with respect to
monies drawn under the Line of Credit Agreement or to otherwise release the
guarantors from liability under the Line of Credit Guarantees; and
(e) Treasury shall have paid all stock transfer stamps and other
customary reasonable expenses (exclusive of attorneys fees and expenses) in
connection with the transfer described in Section 7.1(o).
Article VIII. Closing.
8.1 Time and Place of Closing. The parties shall deliver the documents
referred to in Sections 8.2 and 8.3 at a closing to be held at the offices of
Messrs. Hofheimer Gartlir & Gross, LLP, 633 Third Avenue, New York, New York
10017, or at the offices of the entity which provides financing for Treasury or
at the offices of such entity's attorneys, on August 29, 1996 (or such other
place and time as the parties shall agree).
8.2 Documents To Be Delivered by Silver. At the closing, Silver shall
deliver to Treasury the following:
(a) copies of resolutions of the board of directors of Silver,
authorizing the execution, delivery and performance of this Agreement and the
consummation of the Acquisition by Silver, and a certificate of its secretary or
assistant secretary, dated the date of the closing, that such resolutions were
duly adopted and are in full force and effect;
(b) the certificates referred to in Section 7.1(c);
(c) a true and complete list of Silver stockholders as of three
(3) days prior to the Closing, in accordance with
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<PAGE>
Section 2.5;
(d) the resignations described in Section 7.1(j);
(e) the non-compete agreements described in Section 7.1(l);
(f) a satisfaction piece with respect to the note described in
Section 7.1(m)(i) from the holder thereof;
(g) a general release from Kozial, including but not limited to
the 1993 Contract, the purchase obligation described in Section 7.1(m)(ii) and
the non-competition payments described in Section 7.1(m)(iii);
(h) stock certificates from each Stockholder representing all of
his ownership of shares of Silver, endorsed to Treasury or accompanied by a
signed stock power transferring to Treasury all of such shares, together with
all applicable stock transfer stamps relative to said certificates;
(i) a termination by the Stockholders of the Shareholders
Agreement dated August 30, 1989; and
(j) stock certificates or other evidence of ownership of interest
representing all of Salomon Bendayan's shares and other interests in Flitsch &
Bendayan, GMBH, endorsed to Silver or accompanied by a signed stock power
transferring to Silver all of such shares and interest, together with all
applicable stock transfer stamps relative to said certificates, evidence of
payment of all fees, costs and expenses due in connection with such transfer and
evidence of the acknowledgement and consent to such transfer by Flitsch &
Bendayan, GMBH.
8.3 Documents To Be Delivered by Treasury. At the
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<PAGE>
Closing, (a) Treasury shall deliver to Silver the following:
(i) copies of resolutions of the Board of Directors of
Treasury, authorizing the execution, delivery and performance of this
Agreement and the consummation of the Acquisition by Treasury, and
certificates of the secretary or assistant secretary of Treasury, dated the
date of the Closing, that such resolutions were duly adopted and are in
full force and effect; and
(ii) the certificate referred to in Section 7.2(c);
(b) Treasury shall deliver to each Stockholder the cash and
promissory notes designated for such Stockholder in Section 1.2.
Article IX. Survival of Representations and Indemnity.
9.1 Survival. The representations, warranties, covenants and
agreements by Silver and Stockholders shall survive the Acquisition.
9.2 Indemnification. (a) Silver and Stockholders do hereby agree to
indemnify, defend and hold harmless Treasury of and from any and all claims,
demands, damages, losses, injuries, liabilities, penalties, costs, expenses
(including without limitation reasonable attorneys' fees), suits, actions,
investigations, judgments and fees which may be imposed upon, incurred or
suffered by or asserted against Treasury arising out of or in connection with
any one or more of the following:
(i) any failure to perform or comply with any agreements,
obligations or undertakings on the part of Silver or any Stockholder to be
performed pursuant to this Agreement;
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<PAGE>
and
(ii) any breach of any representation, warranty, covenant or
agreement made by Silver or any Stockholder in this Agreement, or in
respect of the facts associated therewith.
(b) Notwithstanding subparagraph (a) of this Section 9.2, Silver
shall have no liability under this Section 9.2 with respect to any claim for
less than $25,000.
Article X. Termination.
10.1 Grounds for Termination. This Agreement may be terminated by
written notice to the other party:
(a) by Treasury or by Silver, (i) if at any time prior to the
date of the closing any event shall have occurred or any state of facts shall
exist that renders any of the conditions to its obligations as provided in this
Agreement incapable of fulfillment, or (ii) if on the date on which the closing
would otherwise have been held, any condition to its obligations has not been
fulfilled, or (iii) if for any reason other than its own wilful default, the
Acquisition has not been consummated on or before August 29, 1996;
(b) by mutual consent of the Boards of Directors of Treasury and
Silver.
10.2 Continuing Liability. The termination of this Agreement pursuant
to Section 10.1 shall not relieve Treasury, Silver or any Stockholder from any
liability for breach of this Agreement prior to the date of termination.
Article XI. Miscellaneous.
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<PAGE>
11.1 Further Assurances. Each party agrees to cooperate fully with the
other parties and to execute such further instructions, documents and agreements
and to give such further written assurances as may be reasonably requested by
any other party to better evidence and reflect the transactions described herein
and contemplated hereby and to carry into effect the intents and purposes of
this Agreement.
11.2 Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed given when
delivered personally or by reputable overnight courier or mailed by registered
or certified mail, return receipt requested, to the parties at the following
addresses (or to such other address as a party may have specified by notice to
the other parties pursuant to this provision):
(a) if to Silver, Moche Bendayan or Salomon Bendayan: at
168 S. E. 1st Street
Miami, Florida 33131
Attn: Mr. Salomon Bendayan
with a copy to
Delgado Befeler Starkman & Magolnick
Museum Tower, Suite 2701
150 West Flagler Street
Miami, Florida 33130
Attn: George Befeler, Esq.
(b) if to Edward Kozial: at
2200 South Ocean Lane
Fort Lauderdale, Florida 33316
(c) if to Treasury: at
1181 Finch Avenue West, Unit 21
North York, Ontario
CANADA M3J 2V8
Attn: Mr. James Hal
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<PAGE>
with a copy to
Hofheimer Gartlir & Gross, LLP
633 Third Avenue
New York, New York 10017
Attn: Richard G. Klein, Esq.
11.3 No Assignment. This Agreement is personal to each of the parties
and may not be assigned without the written consent of the other parties.
11.4 Entire Agreement.
This Agreement (with its schedules and exhibits) contains, and is
intended as, a complete statement of all the terms of the agreements among the
parties with respect to the matters provided for, supersedes any previous
agreements and understanding among the parties with respect to those matters,
and cannot be changed or terminated except by a writing signed by the parties.
11.5 Governing Law. This Agreement shall be governed by and construed
in accordance with the local laws of the State of New York.
11.6 Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
11.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
11.8 Parties in Interest. This Agreement shall be
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<PAGE>
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors and assigns, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
11.9 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms or provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable.
IN WITNESS WHEREOF, Treasury and Silver have caused this Agreement to be
signed by their respective officers thereunto duly authorized and each
Stockholder has set his hand and seal as of the date first written above.
TREASURY INTERNATIONAL, INC.
By: /S/ James Hal
----------------------------------------
Name: James Hal
Title: Chief Executive Officer
SILVER 925, INC.
By: /S/ Salomon Bendayan
----------------------------------------
Name: Salomon Bendayan
Title: Vice President
/S/ Moche Bendayan
----------------------------------------
MOCHE BENDAYAN
/S/ Salomon Bendayan
----------------------------------------
SALOMON BENDAYAN
/S/ Edward Kozial
----------------------------------------
EDWARD KOZIAL
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EXHIBIT 2(b)
AMENDMENT TO AGREEMENT
THIS AMENDMENT TO AGREEMENT dated as of February 25, 1997 by and among
TREASURY INTERNATIONAL, INC., SILVER 925, INC., MOCHE BENDAYAN, SALOMON BENDAYAN
and EDWARD KOZIAL.
RECITALS:
The parties hereto entered into an Agreement dated as of June 18, 1996 with
respect to the purchase by Treasury of all of the issued and outstanding shares
of Silver.
The parties desire to amend the Agreement upon the terms set forth herein.
NOW, THEREFORE, in consideration of the premises and other mutual
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree that the Agreement is amended as follows:
1. Section 1.1 of the Agreement is hereby modified by deleting
"$4,200,000.00" and adding "$2,000,000.00, payable in five annual installments
of $400,000.00".
2. Section 1.2 of the Agreement is hereby deleted in its entirety and
replaced by the following:
"1.2 Payment of Purchase Price. (a) Each annual installment of the
Purchase Price shall be paid 90% in shares of common stock of Treasury (the
"Share Portion") and 10% in cash (the "Cash Portion"). Each of the second
through fifth $40,000 installments of the Cash Portion shall be paid to the
Stockholders not later than sixty (60) days following the anniversary of
the Closing Date
<PAGE>
in 1998, 1999, 2000 and 2001, in the following amounts:
Moche Bendayan - $ 18,000
Edward Kozial - $ 4,000
Salmon Bendayan - $ 18,000
Notwithstanding the foregoing or anything to the contrary contained herein, (i)
the first installment of the Cash Portion shall be deemed paid to all
Stockholders upon the payment by Silver to Salomon Bendayan of United States
Customs duty drawbacks received by Silver in the approximate amount of $80,000
(the "Customs Reimbursement"), and (ii) the second installment of the Cash
Portion shall be deemed paid to all Stockholders to the extent the Customs
Reimbursement paid to Salomon exceeds $80,000. Each installment of the Share
Portion shall be payable in twelve (12) equal monthly issuances, the first such
issuance of the first annual installment being due on the Closing Date and each
remaining monthly issuance of each annual installment being due on the first
business day of each month beginning with March, 1997. The number of shares of
the first annual installment of the Share Portion shall be 900,000. The number
of shares of each of the four subsequent annual installments of the Share
Portion shall be determined by dividing $360,000 by the average of the closing
bid price of shares of Treasury common stock over the five (5) trading days
preceding each March 1 of 1998, 1999, 2000 and 2001, respectively, as reported
by Bloomberg, L.P. (or, in the absence of a quote from Bloomberg, L.P., as
reported by a service of equivalent reputation).
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<PAGE>
(b) The first monthly installment of the Share Portion shall be paid
as follows:
within ten (10) days following the Closing Date (as hereinafter
defined) Treasury shall deliver to each Stockholder, against receipt
from each Stockholder on the Closing Date of stock certificates
representing the number of shares of Silver set forth below opposite
his name, endorsed to Treasury or accompanied by a signed stock power
transferring such shares to Treasury, together with all applicable
stock transfer tax stamps relative to said certificates, if any, stock
certificates evidencing each Stockholder's ownership of the number of
common shares of stock of Treasury set forth below opposite his name:
Capital Stock Amount of
of Silver to Common
be delivered Shares
------------ ------
Moche Bendayan 45 33,750
Edward Kozial 20.77 7,500
Salomon Bendayan 5 33,750
(c) Prior to the first anniversary of the Closing Date, a Stockholder
may assign to a custodial account his right to receive further installments
of the Share Portion by delivery to Treasury of a fully-executed copy of an
assignment in form and substance reasonably satisfactory to Treasury."
3. The last sentence of Section 2.10 of the Agreement is hereby modified by
adding the following at the end thereof:
", except for the Lease Agreement between 12th Floor
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<PAGE>
Properties, Inc. and Silver, dated November 1, 1996, for the occupancy of
the 12th floor at 168 Southeast 1st Street, Miami, Florida".
4. Section 5.8 of the Agreement is hereby modified by adding the following
after "corporate guarantee" on the third line thereof: "and, if requested by
Republic, the personal guaranty of James Hal,".
5. Section 7.1(e) of the Agreement is hereby deleted and the following is
added in lieu thereof:
"(e) Silver shall have (i) delivered to Treasury (1) its unaudited
consolidated financial statement as of July 31, 1996, including a
consolidated balance sheet as of July 31, 1996 showing current assets of
not less than $3,900,000, current liabilities of not more than $3,750,000,
and stockholders' equity of not less than $1,030,000; and (2) its unaudited
consolidated financial statement as of October 31, 1996, including a
consolidated balance sheet as of October 31, 1996 showing current assets of
not less than $3,900,000, current liabilities of not more than $3,905,000,
and stockholders' equity of not less than $1,040,000, and (ii) directed its
accountants to prepare and deliver to Silver within thirty (30) days
following the Closing Date an audited consolidated financial statement as
of October 31, 1996, including a consolidated balance sheet for the one
year period ending October 31, 1996 and profit and loss statements for the
two year period ending October
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<PAGE>
31, 1996. Treasury hereby waives the right to offset the Purchase Price or
make any claim against the Stockholders based upon any discrepancy between
the aforementioned or other unaudited financial statements and the
afore-mentioned audited financial statement or proposed audited financial
statements for prior years."
6. Section 7.1(k) of the Agreement is hereby modified by deleting
"$150,000" in subdivision (i) and adding "$125,000" in lieu thereof.
7. Section 7.1(l) of the Agreement is hereby modified by adding at the end
thereof: "except that Salomon Bendayan's employment agreement shall prohibit
competition with Treasury and Silver during the term of his employment agreement
and continuing for a period ending on the third anniversary of the expiration or
earlier termination of his employment agreement".
8. Section 7.1 of the Agreement is hereby modified by deleting subsection
(o).
9. Section 7.2(d) of the Agreement is hereby deleted.
10. Section 7.2 of the Agreement is hereby modified by adding the following
as subsection (f):
"(f) Treasury, as the sole stockholder of Silver following the
Acquisition, shall have delivered to Salomon Bendayan ("Salomon") its
agreement to elect a two-member Board of Directors of Silver, one of which
directors shall be Salomon, which agreement shall terminate on the date
Republic National Bank of Miami ("Republic") releases Salomon and Moche
Bendayan as
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<PAGE>
guarantors of the debt owed by Silver to Republic pursuant to the Line of
Credit Agreement".
11. Section 8.1(d) of the Agreement is hereby modified by adding the
following after "corporate guaranty" on the second line thereof: "and, if
requested by Republic, the personal guaranty of James Hal,".
12. Section 8.1 of the Agreement is hereby modified by (a) deleting "on
August 29, 1996" and adding "no later than February 27, 1997" in lieu thereof.
13. Section 8.2(j) of the Agreement is hereby deleted and the following is
added in lieu thereof:
"(j) the non-compete agreement described in Section 11.10".
14. Section 8.3(b) of the Agreement is hereby deleted and the following is
added in lieu thereof:
"(b) Treasury shall deliver to the Stockholders the following:
(i) the non-compete agreement described in Section 11.10";
(ii) a security interest in the assets of Silver, as evidenced by
a UCC-1 filing statement and a security agreement provided by Silver
in the form annexed hereto as Exhibit 8.3(b)(ii), and
(iii) a security interest in the shares of Silver owned by
Treasury, as evidenced by a UCC-1 filing statement and a security
agreement provided by Treasury in the form annexed hereto as Exhibit
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<PAGE>
8.3(b)(iii)".
15. The following is added as subsection (c) of Section 8.3:
"(c) Treasury shall deliver to Salomon Bendayan the following:
(i) the employment agreement described in Sections 7.1(k) and
7.1(l); and
(ii) a certificate of the secretary of Silver attesting to the
election of Salomon Bendayan as a director of Silver as described in
Section 7.2(f)."
16. The following is added as Section 8.4:
"8.4 Post-Closing Obligations. (a) Following the Closing, the parties
shall use their reasonable good faith efforts to obtain a release by
Republic of Salomon and Moche Bendayan as guarantors of Silver's debt to
Republic pursuant to the Line of Credit Agreement.
(b) Treasury shall use reasonable good faith efforts to file with the
Securities and Exchange Commission (the "SEC") by May 31, 1997 an
appropriate form of registration statement to register under the Securities
Act of 1933, as amended, the shares which constitute the Share Portion and
to use reasonable good faith efforts to cause such statement to become
effective within ninety (90) days from the date of filing and to keep such
statement effective until all such shares constituting the Share Portion
shall have been sold by the Stockholders or until such earlier time as such
shares may be sold without such registration pursuant to Rule 144(k) or
other applicable exemption under such Act."
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<PAGE>
17. Section 10.1(a)(iii) of the Agreement is hereby modified by deleting
"August 29, 1996" and adding "February 27, 1997" in lieu thereof.
18. Section 11.2 of the Agreement is hereby modified by deleting the
address for notices to Treasury and adding the following in lieu thereof:
"7040 Tranmere Drive
Mississauga, Ontario
Canada L5S 1L9".
19. The following is added as Section 11.10 of the Agreement:
"11.10 Flitsch & Bendayan Gmbh. The stock of Flitsch & Bendayan Gmbh.,
a German corporation ("Flitsch"), and the business of Flitsch shall be
excluded from the transaction contemplated under this Agreement. Salomon
Bendayan shall be entitled to retain ownership of the stock of Flitsch and
his ownership shall not be affected in any manner under this Agreement
except as set forth in this paragraph. At the Closing, Salomon Bendayan
shall cause Flitsch to execute a covenant not to compete with the business
of Silver in the United States and Silver shall execute a covenant not to
compete with the business of Flitsch in Europe. Furthermore, the employment
agreement of Salomon Bendayan shall provide that his ownership of stock of
Flitsch and his employment with Flitsch shall not be deemed a violation of
the non-compete provisions therein".
20. Schedule 2.17 of the Agreement is modified by adding the following as
subdivisions 5 and 6:
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<PAGE>
"5. Silver has not filed its federal or state income tax returns for
the fiscal years ended July 31, 1995 and July 31, 1996, and no federal or
state income tax for said periods has been paid.
6. the Internal Revenue Service is auditing Silver's federal income
tax return for the fiscal year ended July 31, 1994, which audit may result
in additional income tax liability and may expand to include the fiscal
years ended July 31, 1995 and July 31, 1996."
21. To the extent any provision of the Agreement requires the taking of any
act following the Closing, said provision shall survive the Closing.
22. All prior amendments to the Agreement, if any, are hereby revoked ab
initio and shall be considered of no further force or effect.
23. In consideration of the extension of the Closing Date to February 27,
1997, Treasury shall issue to Salomon 25,000 shares of common stock of Treasury
within ten (10) days following the Closing Date.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused their hands and seals to be
affixed as of the date first above written.
TREASURY INTERNATIONAL, INC.
By: /S/ James Hal
----------------------------------------
Name: James Hal
Title: Chief Executive Officer
SILVER 925, INC.
By: /S/ Salomon Bendayan
----------------------------------------
Name: Salomon Bendayan
Title: Vice President
/S/ Moche Bendayan
----------------------------------------
MOCHE BENDAYAN
/S/ Salomon Bendayan
----------------------------------------
SALOMON BENDAYAN
/S/ Edward Kozial
----------------------------------------
EDWARD KOZIAL
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