AGREEMENT
THIS AGREEMENT is made the 21st day of December 1999, by and between
Storage Area Networks, a Nevada corporation ("SAN"), Citadel Environmental
Group, Inc. ("Citadel") and Xxxxx Xxxxx, an individual ("Xxxxx").
WHEREAS, Citadel desires to acquire all of the issued and outstanding
shares of common stock of CoComp, Inc., a Colorado corporation ("CoComp") from
the three CoComp shareholders, and concurrently with the closing of that
transaction Citadel desires to compensate Xxxxx for his work in connection
with the transaction; and
WHEREAS, SAN desires to make certain representations, warranties,
covenants and agreements in connection with the transaction.
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
representations contained herein, THE PARTIES HERETO AGREE AS FOLLOWS:
ARTICLE 1
COMPENSATION
1.1 Closing of CoComp Transaction. On the Closing of Citadel's purchase
of all of the issued and outstanding shares of common stock of CoComp, Citadel
agrees to pay to Xxxxx $125,000 in cash and to deliver to Xxxxx a Promissory
Note in the form attached hereto as Exhibit 1.1, in the amount of $125,000
which is due on June 30, 2000.
1.2 Stock of Citadel Environmental Group, Inc. ("Citadel"). Within 15
days following the effective date of the proposed reverse split of Citadel
(which acquired SAN on January 7, 2000), SAN shall cause Citadel to issue to
Xxxxx shares of Citadel's common stock having a value of $500,000 based on the
lower of the closing price on January 21, 2000, or the average closing price
for the ten trading days prior to the date of issuance. Citadel agrees to use
its best efforts to complete the proposed reverse split as soon as practicable
following the Closing. In the event that the reverse split is not effective
by July 21, 2000, Xxxxx will have the option to receive, in lieu of the
shares, a promissory note signed by Citadel and SAN and payable to Xxxxx in
the principal amount of $500,000. The note will bear interest at the rate of
12% per annum commencing January 21, 2000, and in the event of default, the
note will bear interest at the rate of 18%, similar to the default provisions
of Exhibit A. One-half of the principal plus accrued interest will be due on
January 21, 2001, and the other one-half plus accrued interest will be due on
January 21, 2002. The note will be convertible into common stock at a price
equal to the lower of the closing price on January 21, 2000, or the average
closing price for the twenty trading days prior to the date the note holder
notifies the Company of his intention to convert.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SAN
Except as disclosed in Schedule 2 which is attached hereto and
incorporated herein by reference, SAN hereby represents and warrants to Xxxxx:
2.1 Organization. SAN is a corporation duly organized, validly
existing, and in good standing under the laws of Nevada, has all necessary
corporate powers to own its properties and to carry on its business as now
owned and operated by it, and is duly qualified to do business and is in good
standing in each of the jurisdictions where its business requires
qualification. SAN has entered into a binding agreement with Citadel
Environmental Group, Inc. pursuant to which SAN will become a wholly owned
subsidiary of Citadel in a transaction scheduled to close on or about January
7, 2000. A copy of the Agreement is attached as Exhibit 2.1.
2.2 Capital. The authorized capital stock of SAN consists of 20,000,000
shares of Common Stock, $.005 par value, of which 2,400,000 are currently
issued and outstanding and 5,000,000 shares of Preferred Xxxxx, x.0000 par
value, of which no shares are issued and outstanding. All of the issued and
outstanding shares of SAN are duly authorized, validly issued, fully paid, and
nonassessable. Except for common stock purchase warrants to purchase a total
of 600,000 shares of Common Stock, there are no outstanding subscriptions,
options, rights, warrants, debentures, instruments, convertible securities, or
other agreements or commitments obligating SAN to issue or to transfer from
treasury any additional shares of its capital stock of any class.
2.3 Subsidiaries. SAN does not have any subsidiaries or own any
interest in any other enterprise (whether or not such enterprise is a
corporation) except as disclosed in Schedule 2.
2.4 Directors and Officers. Schedule 2 contains the names and titles of
all directors and officers of SAN as of the date of this Agreement.
2.5 Financial Statements. SAN has delivered to CoComp unaudited balance
sheets and statements of operations for the year ended November 30, 1999 (the
"Financial Statements"). The Financial Statements are complete and correct in
all material respects and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated. The Financial Statements accurately set out and describe
the financial condition of SAN as of November 30, 1999.
2.6 Absence of Changes. Since November 30, 1999, except for changes in
the ordinary course of business which have not in the aggregate been
materially adverse, to the best of SAN's knowledge, SAN has conducted its
business only in the ordinary course and has not experienced or suffered any
material adverse change in the condition (financial or otherwise), results of
operations, properties, business or prospects of SAN or waived or surrendered
any claim or right of material value.
2.7 Absence of Undisclosed Liabilities. Neither SAN nor any of its
properties or assets are subject to any material liabilities or obligations of
any nature, whether absolute, accrued, contingent or otherwise and whether due
or to become due, that are not reflected in the financial statements presented
to CoComp or have otherwise been disclosed to CoComp.
2.8 Tax Returns. Within the times and in the manner prescribed by law,
SAN has filed all federal, state and local tax returns required by law, or has
filed extensions which have not yet expired, and has paid all taxes,
assessments and penalties due and payable.
2.9 Investigation of Financial Condition. Without in any manner
reducing or otherwise mitigating the representations contained herein, CoComp
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and/or its attorneys shall have the opportunity to meet with accountants and
attorneys to discuss the financial condition of SAN. SAN shall make available
to CoComp and/or its attorneys all books and records of SAN.
2.10 Trade Names and Rights. SAN does not use any trademark, service
xxxx, trade name, or copyright in its business, or own any trademarks,
trademark registrations or applications, trade names, service marks,
copyrights, copyright registrations or applications.
2.11 Compliance with Laws. To the best of SAN's knowledge, SAN has
complied with, and is not in violation of, applicable federal, state or local
statutes, laws and regulations (including, without limitation, any applicable
building, zoning or other law, ordinance or regulation) affecting its
properties or the operation of its business, except for matters which would
not have a material affect on SAN or its properties.
2.12 Litigation. SAN is not a party to any suit, action, arbitration or
legal, administrative or other proceeding, or governmental investigation
pending or, to the best knowledge of SAN, threatened against or affecting SAN
or its business, assets or financial condition, except for matters which would
not have a material affect on SAN or its properties. SAN is not in default
with respect to any order, writ, injunction or decree of any federal, state,
local or foreign court, department, agency or instrumentality applicable to
it. Except as set forth on Schedule 2, SAN is not engaged in any lawsuit to
recover any material amount of monies due to it.
2.13 Authority. SAN has full corporate power and authority to enter
into this Agreement. The board of directors of SAN has taken all action
required to authorize the execution and delivery of this Agreement by or on
behalf of SAN and the performance of the obligations of SAN under this
Agreement. No other corporate proceedings on the part of SAN are necessary to
authorize the execution and delivery of this Agreement by SAN in the
performance of its obligations under this Agreement. This Agreement is, when
executed and delivered by SAN, and will be a valid and binding agreement of
SAN, enforceable against SAN in accordance with its terms, except as such
enforceability may be limited by general principles of equity, bankruptcy,
insolvency, moratorium and similar laws relating to creditors' rights
generally.
2.14 Ability to Carry Out Obligations. Neither the execution and
delivery of this Agreement, the performance by SAN of its obligations under
this Agreement, nor the consummation of the transactions contemplated under
this Agreement will to the best of SAN's knowledge: (a) materially violate
any provision of SAN's articles of incorporation or bylaws; (b) with or
without the giving of notice or the passage of time, or both, violate, or be
in conflict with, or constitute a material default under, or cause or permit
the termination or the acceleration of the maturity of, any debt, contract,
agreement or obligation of SAN, or require the payment of any prepayment or
other penalties; (c) require notice to, or the consent of, any party to any
agreement or commitment, lease or license, to which SAN is bound; (d) result
in the creation or imposition of any security interest, lien, or other
encumbrance upon any material property or assets of SAN; or (e) violate any
material statute or law or any judgment, decree, order, regulation or rule of
any court or governmental authority to which SAN is bound or subject.
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2.15 Validity of SAN Shares. The shares Citadel Common Stock to be
delivered pursuant to this Agreement, when issued in accordance with the
provisions of this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable.
2.16 Full Disclosure. None of the representations and warranties made
by SAN herein, or in any schedule, exhibit or certificate furnished or to be
furnished in connection with this Agreement by SAN, or on its behalf, contains
or will contain any untrue statement of material fact.
2.17 Assets. SAN has good and marketable title to all of its tangible
properties and such tangible properties are not subject to any material liens
or encumbrances.
2.18 Material Contracts and Obligations. Attached hereto on Schedule 2
is a list of all agreements, contracts, indebtedness, liabilities and other
obligations to which SAN is a party or by which it is bound that are material
to the conduct and operations of its business and properties, which provide
for payments to or by SAN in excess of $25,000; or which involve transactions
or proposed transactions between SAN and its officers, directors, affiliates
or any affiliate thereof. Copies of such agreements and contracts and
documentation evidencing such liabilities and other obligations have been made
available for inspection by CoComp and its counsel. All of such agreements
and contracts are valid, binding and in full force and effect in all material
respects, assuming due execution by the other parties to such agreements and
contracts.
2.19 Consents and Approvals. No consent, approval or authorization of,
or declaration, filing or registration with, any governmental or regulatory
authority is required to be made or obtained by SAN in connection with: (a)
the execution and delivery by SAN of this Agreement; (b) the performance by
SAN of its obligations under this Agreement; or (c) the consummation by SAN of
the transactions contemplated under this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF XXXXX
3.1 Investment Intent. Xxxxx understands and acknowledges that the
shares of Citadel Common Stock (the "Citadel Shares") are being offered in
reliance upon the exemption provided in Section 4(2) of the Securities Act of
1933 (the "Securities Act") for non-public offerings; and Xxxxx makes the
following representations and warranties with the intent that the same may be
relied upon in determining the suitability of Shareholder as a purchaser of
securities:
(a) The Citadel Shares are being acquired solely for the account of
Xxxxx, for investment purposes only, and not with a view to, or for sale in
connection with, any distribution thereof and with no intention of
distributing or reselling any part of the Citadel Shares.
(b) Xxxxx agrees not to dispose of its Citadel Shares or any
portion thereof unless and until counsel for Citadel shall have determined
that the intended disposition is permissible and does not violate the
Securities Act or any applicable state securities laws, or the rules and
regulations thereunder.
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(c) Xxxxx acknowledges that Citadel has made all documentation
pertaining to all aspects of this transaction available to him, and has
offered him an opportunity to discuss this transaction with the officers of
Citadel.
(d) Xxxxx has relied solely upon independent investigations made by
Xxxxx.
ARTICLE 4
COVENANTS
4.1 Investigative Rights. From the date of this Agreement until the
Closing Date, each party shall provide to the other party, and such other
party's counsels, accountants, auditors, and other authorized representatives,
full access during normal business hours and upon reasonable advance written
notice to all of each party's properties, books, contracts, commitments, and
records for the purpose of examining the same. Each party shall furnish the
other party with all information concerning each party's affairs as the other
party may reasonably request. If the transaction contemplated hereby is not
completed, all documents received by each party and/or its attorneys and
accountants, auditors or other authorized representatives shall be returned to
the other party who provided same upon request. The parties hereto, their
directors, employees, agents and representatives shall not disclose any of the
information described above unless such information is already disclosed to
the public, without the prior written consent of the party to which the
confidential information pertains. Each party shall take such steps as are
necessary to prevent disclosure of such information to unauthorized third
parties.
4.2 Employment Agreement with Xxxxx. Commencing on the Closing, SAN
agrees to enter into an executive employment agreement with Xxxxx which
agreement will contain terms and conditions mutually agreeable to the parties.
ARTICLE 5
CONDITIONS PRECEDENT TO CITADEL'S PERFORMANCE
5.1 Conditions. Citadel's obligations hereunder shall be subject to the
satisfaction, at or before the Closing, of all the conditions set forth in
this Article 5. Citadel may waive any or all of these conditions in whole or
in part without prior notice; provided, however, that no such waiver of a
condition shall constitute a waiver by Citadel of any other condition of or
any of Citadel's rights or remedies, at law or in equity.
5.2 Accuracy of Representations. Except as otherwise permitted by this
Agreement, all representations and warranties by Xxxxx in this Agreement or in
any written statement that shall be delivered to Citadel by Xxxxx under this
Agreement shall be true and accurate on and as of the Closing Date as though
made at that time.
5.3 Performance. Xxxxx shall have performed, satisfied, and complied
with all covenants, agreements, and conditions required by this Agreement to
be performed or complied with by him, on or before the Closing Date.
5.4 Absence of Litigation. No action, suit or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened against any party hereto on or before the Closing
Date.
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5.5 Closing of CoComp Transaction. The transaction in which Citadel is
purchasing all of the issued and outstanding common stock of CoComp shall have
closed.
ARTICLE 6
CLOSING
6.1 Closing. The Closing of this transaction shall be held at the
offices of Xxxx Xxxxx Xxxxxxxx Xxxxx & Xxxxxx, P.C., 600 Seventeenth Street,
Suite 0000 Xxxxx Xxxxx, Xxxxxx, Xxxxxxxx 00000, or such other place as shall
be mutually agreed upon, on such date as shall be mutually agreed upon by the
parties, but in no event shall the Closing be later than January 31, 2000. At
the Closing:
6.2 Citadel shall deliver a certified or cashier's check payable to
Xxxxx for $125,000.
6.3 Citadel shall deliver a Promissory Note in the amount of $125,000 in
the form attached hereto as Exhibit 1.1 which is due on June 30, 2000.
ARTICLE 7
MISCELLANEOUS
7.1 Captions and Headings. The Article and paragraph headings
throughout this Agreement are for convenience and reference only, and shall in
no way be deemed to define, limit, or add to the meaning of any provision of
this Agreement.
7.2 No Oral Change. This Agreement and any provision hereof, may not be
waived, changed, modified, or discharged orally, but it can be changed by an
agreement in writing signed by the party against whom enforcement of any
waiver, change, modification, or discharge is sought.
7.3 Non-Waiver. Except as otherwise expressly provided herein, no
waiver of any covenant, condition, or provision of this Agreement shall be
deemed to have been made unless expressly in writing and signed by the party
against whom such waiver is charged; and (i) the failure of any party to
insist in any one or more cases upon the performance of any of the provisions,
covenants, or conditions of this Agreement or to exercise any option herein
contained shall not be construed as a waiver or relinquishment for the future
of any such provisions, covenants, or conditions, (ii) the acceptance of
performance of anything required by this Agreement to be performed with
knowledge of the breach or failure of a covenant, condition, or provision
hereof shall not be deemed a waiver of such breach or failure, and (iii) no
waiver by any party of one breach by another party shall be construed as a
waiver with respect to any other or subsequent breach.
7.4 Time of Essence. Time is of the essence of this Agreement and of
each and every provision hereof.
7.5 Entire Agreement. This Agreement contains the entire Agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings.
7.6 Choice of Law. This Agreement and its application shall be governed
by the laws of the State of Colorado, except to the extent its conflict of
laws provisions would apply the laws of another jurisdiction.
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7.7 Notices. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if served personally on the party to whom notice
is to be given, or on the third day after mailing if mailed to the party to
whom notice is to be given, by first class mail, registered or certified,
postage prepaid, and properly addressed as follows:
Xxxxx Xxxxx:
Xxxxx Xxxxx
_________________
_________________
with a copy to:
Xxxxxxx X. Xxxxxx
Xxxxxx and Modang, LLC
0000 X. Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
SAN and Citadel:
Storage Area Networks
000 Xxxx Xxxxxxxxx Xxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
with a copy to:
Xxx X. Xxxxxx
Xxxx Xxxxx Xxxxxxxx & Xxxxxx, P.C.
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
7.8 Binding Effect. This Agreement shall inure to and be binding upon
the heirs, executors, personal representatives, successors and assigns of each
of the parties to this Agreement.
7.9 Mutual Cooperation. The parties hereto shall cooperate with each
other to achieve the purpose of this Agreement, and shall execute such other
and further documents and take such other and further actions as may be
necessary or convenient to effect the transaction described herein.
7.10 Brokers. The parties hereto represent and agree that no broker has
brought about the aforementioned transaction. Each of the parties hereto
shall indemnify and hold the other harmless against any and all claims,
losses, liabilities or expenses which may be asserted against it as a result
of its dealings, arrangements or agreements with any broker or person, except
as described in this paragraph.
7.11 Announcements. SAN and CoComp will consult and cooperate with each
other as to the timing and content of any announcements of the transactions
contemplated hereby to the general public or to employees, customers or
suppliers.
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7.12 Exhibits. As of the execution hereof, the parties hereto have
provided each other with the Exhibits provided for herein above, including any
items referenced therein or required to be attached thereto. Any material
changes to the Exhibits shall be immediately disclosed to the other party.
AGREED TO AND ACCEPTED as of the date first above written.
STORAGE AREA NETWORKS
/s/ Xxxxx Xxxxx By:/s/ X. X. Xxxxxx
Xxxxx Xxxxx X. X. Xxxxxx, President
CITADEL ENVIRONMENTAL GROUP, INC.
By:/s/ X. X. Xxxxxx
X. X. Xxxxxx, President
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SCHEDULE 2
STORAGE AREA NETWORKS
("SAN")
2.4 The Officers and Directors of SAN are as follows:
Name Position
X. X. Xxxxxx President, Treasurer and Director
Xxxxxx Xxxxx Vice President, Secretary, Treasurer and
Director
2.12 Litigation. SAN is involved in a lawsuit filed by SAN against 3SI,
Inc., and the parties have recently reached a tentative settlement
during mediation. a copy of the proposed settlement terms has been
provided to Citadel.
PROMISSORY NOTE
$125,000 January 21, 2000
Storage Area Networks, a Nevada corporation ("Obligor"), for value
received, hereby promises to pay to the order of Xxxxx Xxxxx ("Obligee"), in
lawful money of the United States at a place to be designated in writing by
Obligee, the principal sum of One Hundred Twenty-Five Thousand Dollars
($125,000.00), plus interest at the rate of 12% per annum.
The $125,000 shall be paid on or before June 30, 2000.
All accrued and unpaid interest will be due and payable every three
months with the first payment due April 21, 2000.
This Note may be prepaid, in whole or in part, at any time without
permission or penalty.
If payment on this Note shall become due on a Saturday, Sunday or public
holiday under the laws of the State of Colorado, such payment shall be made on
the next succeeding business day.
Immediately upon the occurrence of an "Event of Default" (as defined
below), Obligee may, at its option, declare immediately due and payable the
entire unpaid principal amount of this Note, together with all interest
thereon, plus any other amounts payable at the time of such declaration
pursuant to this Note. An Event of Default shall be defined as each of the
following: (i) failure of Obligor to make any payment of principal within ten
(10) days after the due date; (ii) Obligor shall admit in writing its
inability to pay its debts as they become due, shall make a general assignment
for the benefit of creditors or shall file any petition for action for relief
under any bankruptcy, reorganization, insolvency or moratorium law, or any
other law or laws for the relief of, or relating to, debtors; or (iii) an
involuntary petition shall be filed against Obligor under any bankruptcy,
reorganization, insolvency or moratorium law, or any other law or laws of for
the relief of, or relating to, debtors unless such petition shall be dismissed
or vacated within thirty (30) days of the date hereof. Upon an Event of
Default, unpaid principal or interest shall bear interest from the date of the
Event of Default until paid in full at the rate of 18% per annum.
If Obligee should institute collection efforts, of any nature whatsoever,
to attempt to collect any and all amounts due hereunder upon the default of
Obligor, Obligor shall be liable to pay to holder immediately and without
demand all reasonable costs and expenses of collection incurred by Obligee,
including, without limitation, reasonable attorney fees, whether or not suit
or other action or proceeding be instituted and specifically including but not
limited to collection efforts that may be made through a bankruptcy court.
This Note shall be construed and governed by the laws of the State of
Colorado without regard to otherwise applicable principles of conflicts of
laws. The provisions of this Note are severable and the invalidity or
unenforceability of any provision shall not alter or impair the remaining
provisions of this Note. No modification hereof shall be binding or
enforceable against Obligee unless approved in writing by Obligee.
Obligor hereby waives protest, notice of protest, presentment, dishonor,
notice of dishonor and demand. To the extent permitted by law, Obligor hereby
waives and releases all errors, defects and imperfections in any proceedings
instituted by Obligee under the terms of this Note. The rights and privileges
of Obligee under this Note shall inure to the benefit of his heirs, personal
representatives, and assigns. All representations, warranties and agreements
of Obligor made in connection with this Note shall bind Obligor's successors
and assigns. The rights and remedies of Obligee under this Note shall be in
addition to any other rights and remedies available to Obligee at law or in
equity, all of which may be exercised singly or concurrently. The parties
agree to the exclusive jurisdiction of the federal and state courts located in
Denver, Colorado in connection with any matter arising hereunder, including
the collection and enforcement hereof, except as the Obligee may otherwise
elect. If any provision in this Note is found by a Court of competent
jurisdiction to be invalid in any respect, such finding shall not effect or
release the absolute obligation to repay the principal sum owed hereunder on
or before the Maturity Date.
IN WITNESS WHEREOF, intending to be legally bound, Obligor has duly
executed this Promissory Note the day and year first above written by its duly
authorized officer.
CITADEL ENVIRONMENTAL STORAGE AREA NETWORKS
GROUP, INC.
By:/s/ Xxxx Xxxxxx By:/s/ Xxxx Xxxxxx
Name: Xxxx Xxxxxx Name: Xxxx Xxxxxx
Title: President Title: President
