U.S. 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: April 23, 1998
SILVER QUEST, INC.
------------------
(Exact name of registrant as specified in its charter)
Idaho
-----
(State or other jurisdiction of incorporation)
0-23535 82-0391094
------- ----------
(Commission File No.) (IRS Employer
Identification No.)
15304 E. Monmouth Place
Aurora, Colorado 80015
---------------- -----
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (303) 693-0603
<PAGE>
Item 2. Acquisition and Disposition of Assets.
Effective April 15, 1998, Silver Quest, Inc. (the "Company")
entered into a letter of intent with Pact Communication Group,
Inc., a Florida corporation ("PACT"), whereby the Company has
agreed in principle to acquire all of the issued and outstanding
shares of PACT, in exchange for issuance by the Company of
previously unissued "restricted" common stock. The relevant terms
of the proposed transaction require the Company to (i) undertake a
"forward split" of its common stock, whereby 1.45 shares of common
stock will be issued in exchange for one share of common stock, in
order to establish the number of issued and outstanding common
shares of the Company at 500,000 immediately prior to the
transaction described herein; (ii) issue to the PACT shareholders
an aggregate of 4,500,000 "restricted" common shares (post split),
representing 90% of the Company's then outstanding common stock, in
exchange for all of the issued and outstanding shares of PACT.
The proposed share exchange is subject to satisfaction of
certain conditions, including completion of due diligence
activities, the approval of the transaction by all of the PACT
shareholders and the approval of the proposed transaction by the
shareholders of the Company. If the proposed transaction with PACT
is consummated, the present officers and directors of the Company
are expected to resign their respective positions with the Company,
to be replaced by the present management of PACT. If these
conditions are met, it is expected that the proposed transaction
with PACT will close In late April or early May 1998. A copy of
the letter of intent between the Company and PACT is attached
hereto as Exhibit 2.0 and incorporated herein as if set forth.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(c) Exhibits.
2.0 Letter of Intent between the Company and Pact
Communication Group, Inc.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934 the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
SILVER QUEST, INC.
By:/s/ Lowell Miller
---------------------------
Lowell Miller,
President
Dated: April 23, 1998
3
<PAGE>
SILVER QUEST, INC.
----------------------
EXHIBIT 2.0
----------------------
LETTER OF INTENT BETWEEN
THE COMPANY AND
PACT COMMUNICATION GROUP, INC.
----------------------
4
<PAGE>
SILVER QUEST, INC.
15304 E. Monmouth Place
Aurora, Colorado 80015
April 15, 1998
Board of Directors
Pact Communication Group, Inc.
2740 E. Oakland Park Blvd., Suite 206/8
Fort Lauderdale, FL 33306
Attention: Mr. Camilo Pereira, President
Re: Plan of Merger Between Silver Quest, Inc. and Pact
Communication Group, Inc.
Dear Mr. Pereira:
This letter is intended to express the general terms of the Plan of
Merger to be formalized between Silver Quest, Inc., an Idaho
corporation ("SQI") and Pact Communication Group, Inc., a Florida
corporation ("PACT"). The objective of our discussions has been
the execution and consummation of applicable, formal Agreement(s)
between SQI and PACT (the "Exchange Agreements") which, among other
things, would provide for the various matters set forth below.
1. Plan of Merger and Reorganization of the Companies. The
board of directors of SQI and PACT have completed an initial
evaluation of the business plan, financial statements and other
relevant corporate documents of the other and have concluded that
a merger of PACT and SQI, whereby SQI would issue shares of its
common stock equal to ownership of approximately 90% of its
outstanding shares, in exchange for 100% of the then outstanding
securities of PACT, would be in the best interest of both
companies. It is the intent of the parties hereto that the proposed
merger of PACT and SQI be effected as a tax-free reverse merger
pursuant to Section 368 of the Internal Revenue Code of 1986, as
amended.
2. Terms of Merger.
(A) SQI Capitalization. SQI's total authorized capital
stock consists of 50,000,000 shares of Common Stock, par value
$0.01 per share. As of the date hereof there are 345,000 common
shares issued and outstanding. As of the Closing of the
transaction proposed herein, there will be 500,000 common shares of
SQI issued and outstanding, as a result of a forward split to be
adopted by SQI immediately prior to the Closing.
(B) PACT Capitalization. PACT's total authorized
capital consists of 100,000,000 Common Shares, $.0001 par value per
share and 40,000,000 shares of Preferred Stock par value $.0001 per
share. As of the date of Closing, as defined hereinbelow, there
5
<PAGE>
Mr. Camilo Pereira
April 15, 1998
Page 2
will be 7,950,161 Common Shares issued and outstanding and no
shares of Preferred Stock issued or outstanding.
(C) Special Board and Shareholder Meetings.
(i) Prior to Closing, the Board of Directors of SQI will
call a special meeting of the SQI shareholders for the
purposes of: (a) ratifying the transaction proposed
herein; (b) amending the SQI Articles of Incorporation,
to include 20,000,000 shares of Preferred Stock, par
value $.001 per share; (c) providing applicable
dissenter's rights afforded to the SQI Shareholders
pursuant to the laws of the State of Idaho; and (d)
undertaking any additional amendments to the SQI Articles
of Incorporation reasonably requested by the PACT Board
of Directors and acceptable to the SQI Board of
Directors.
(ii) Prior to Closing, the Board of Directors of PACT
will (a) call a special meeting of the PACT shareholders
or otherwise obtain the consent thereof for the purposes
of ratifying the transaction proposed herein, including
providing applicable dissenter's rights afforded to the
PACT Shareholders pursuant to the laws of the State of
Florida; and (b) take all additional action necessary to
cause the intent of this letter to be adopted and
ratified.
(D) Merger. Subject to the approval of the terms and
conditions contained herein by the SQI and PACT shareholders
(hereinafter the "Closing Date"), PACT shall merge with SQI, with
SQI emerging as the surviving entity, by the PACT shareholders
exchanging all of the issued and outstanding PACT Stock owned by
them for 4,500,000 "restricted" Common Shares of SQI (post forward
split).
(E) Officers and Directors. At Closing, the present
officers and directors of SQI shall deliver to PACT their
respective letters of resignation, along with certified minutes of
the SQI Board of Directors accepting such resignation and
appointing to the SQI Board those persons designated by PACT to be
officers and directors of the surviving entity herein.
3. Financial Condition of SQI. Except as provided herein, as
of the Closing Date, SQI balance sheet will reflect no assets or
liabilities.
4. Financial Condition of PACT. PACT hereby represents and
warrants that its audited balance sheet will be consistent with the
financial statements provided to SQI by PACT as of the date of
6
<PAGE>
Mr. Camilo Pereira
April 15, 1998
Page 3
Closing.
5. Conditions to Closing.
(A) Closing. The Closing of the transaction proposed
herein shall take place as soon as practical after the SQI
Definitive Proxy or Information Statement is filed with the SEC and
the respective shareholders of SQI and PACT approve the terms
included herein. The Closing shall take place in Aurora, Colorado
at the offices of legal counsel for SQI, Andrew I. Telsey, P.C.,
2851 S. Parker Road, Suite 720, Aurora, Colorado 80014, or such
other location as the parties may so agree. At the discretion of
the parties hereto, Closing may also occur via telephonic means.
(B) To Be Provided by PACT. At Closing, PACT shall
provide to the present Board of Directors of SQI the following:
i) a financial audit of it's books, which shall be
prepared in accordance with Generally Accepted Accounting
Principles and provided by an independent, SEC Certified
Public Accountant and such audit shall demonstrate
balance sheet information consistent with the financial
information provided to SQI by PACT prior to Closing; and
ii) an investment letter in a form acceptable to counsel
to SQI, duly executed by each PACT shareholder,
acknowledging that each such shareholder is exchanging
their respective securities of PACT for their pro rata
applicable number of SQI common shares, that such shares
to be acquired by each PACT shareholder are solely for
their account and for investment and they have no plan,
intention, contract, understanding, agreement or
arrangement with any person to sell, assign, pledge,
hypothecate or otherwise transfer to any person such
shares, or any portion thereof.
(C) Non-Delivery. Failure by PACT to provide those items
described hereinabove, or failure of said audit to confirm the
financial condition of PACT as represented herein, shall render
this proposed transaction voidable at the discretion of the present
Board of Directors of SQI. For purposes herein, any deviation in
excess of 10% shall be construed as conforming with the financial
condition of PACT represented herein.
(D) Representations of SQI. SQI hereby represents that,
as of the Closing date, it shall be current in all filings required
to be tendered to the Securities and Exchange Commission ("SEC")
pursuant to the Securities Exchange Act of 1934, as amended,
including but not limited to, filings on Forms 10-K, 10-KSB, 10-Q
7
<PAGE>
Mr. Camilo Pereira
April 15, 1998
Page 4
and/or 10-QSB.
(E) Private Sale of SQI Common Stock. Some of the
current inside shareholders of SQI may sell some or all of their
SQI common shares owned by them, subject to the exemptions,
restrictions, terms and limitations applicable to such sales under
state and federal securities laws.
6. Default. In the event PACT fails to perform pursuant to
Paragraph 5, above, or close the transaction without the fault of
SQI, PACT shall be responsible for payment of all reasonable costs
incurred by SQI, including but not limited to attorneys fees, due
diligence costs, costs related to proxy solicitation and such other
costs as may be incurred directly relating to this proposed
transaction. Otherwise, each party hereto shall be responsible for
payment of their own legal, accounting and any other out-of-pocket
expenses reasonably incurred in connection with this transaction,
whether or not this transaction is consummated.
7. Confidentiality. Upon the signing of this Letter of
Intent, SQI and PACT will provide to each other full access to
their books and records and will furnish financial and operating
data and such other information with respect to their business and
assets as may reasonably be requested from time to time. If the
proposed transaction is not consummated, all parties shall keep
confidential any information (unless ascertainable from public
filings or published information), obtained concerning the other's
operations, assets and business.
8. Retainer of Counsel. The principals of the parties hereto
will assign the SEC counsel who is responsible for the preparation
of all required/desired SEC filings. As a material condition
hereto, upon execution hereof by PACT, PACT shall tender a non-
refundable fee of $25,000 to counsel to SQI, herein referenced, in
order to allow such counsel to commence preparation of all SEC
filings and other related documentation necessary to allow SQI to
comply with the rules and regulations necessary to consummate the
transaction proposed herein. In the event the applicable costs
incurred by SQI herein exceed the aforesaid fee, the remaining
obligation shall remain due and owing by the surviving company.
9. Finders Fees. It is hereby acknowledged that each party
hereto may be responsible for payment of certain finders fees
relating to the transaction proposed herein and that as a further
condition to Closing, as defined herein, each party shall warrant
in such Closing documents that such finders fees have been paid and
further, shall indemnify and hold harmless the other party from
such obligation.
8
<PAGE>
Mr. Camilo Pereira
April 15, 1998
Page 5
10. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same instrument.
11. Jurisdiction. It is the intention of the parties that
the laws of the State of Colorado govern the determination of the
validity of this Agreement, the construction of its terms and the
interpretation of the rights and duties of the parties.
12. Notices. Any notice relevant herein shall be deemed to
have been sufficiently served for all purposes if delivered
personally to the party to whom the same is directed, or, if sent,
by deposit with the United States mail, certified mail, return
receipt requested postage prepaid, at such party's address listed
hereinabove, or to such other address as shall be furnished in
writing by any party to the other. any such notice shall be deemed
to be given three (3) days after deposited in the U.S. mail.
13. Further Action. Each party shall execute and deliver
such papers, documents and instruments, and perform such acts as
are necessary or appropriate to implement the terms hereof and the
intent of the parties hereto.
14. Amendments. This Agreement may only be amended by the
mutual consent of all the parties hereto which Amendment shall be
in writing, duly executed by the parties.
If the foregoing accurately reflects your understanding of the
terms and conditions of our agreement please so indicate by signing
below as designated.
Yours truly,
SILVER QUEST, INC.
By: /s/ Lowell S. Miller
--------------------------------
Lowell S. Miller, President
APPROVED AND ACCEPTED this 15th day of April, 1998.
PACT COMMUNICATION GROUP, INC.
By: /s/ Camilo Pereira
--------------------------------
Camilo Pereira, President
9
