EXHIBIT 99.1
AGREEMENT
This Agreement (this "Agreement") is dated April 22, 1997, by and between
Citadel Computer Systems Incorporated, a Delaware corporation ("Citadel"), Xxx
Xxxxxxx ("Xxxxxxx") and Xxxxxx Xxxxx ("Xxxxx" and together with Xxxxxxx, the
"Purchasers").
WHEREAS, Citadel desires to sell to the Purchasers, and the Purchasers
desire to purchase from Citadel, the assets consisting of certain accounts
receivable of Citadel listed on Exhibit A attached to this Agreement (the
"Assets"), subject to a participation interest retained by Citadel, in
accordance with the terms and conditions set forth in this Agreement;
WHEREAS, the Purchasers desire to assume certain office and equipment
leases from Citadel in accordance with the terms and conditions set forth in
this Agreement;
WHEREAS, Citadel and the Purchasers desire to terminate an employment
agreement between Citadel and Sharp in accordance with the terms and conditions
set forth in this Agreement;
WHEREAS, the Purchasers desire to make a loan to Citadel in accordance with
the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
representations, warranties, covenants and agreements herein contained and other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
1. Agreement to Purchase and Sell Assets
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(a) At the Closing (as defined in Section 8 of this Agreement),
Citadel shall convey, transfer, assign, and deliver to the Purchasers, and
the Purchasers agree to purchase the Assets, including all right, title,
and beneficial interest thereto; provided, however, that Citadel shall
retain a profits participation interest in the Assets on the following
terms: (i) in the event the Purchasers collect in excess of $2,250,000 of
the accounts receivable (after expenses of collection), the Purchasers
shall pay to Citadel fifty percent (50%) of such amounts collected in
excess of $2,250,000. Prior to the Closing and for a one year period,
Citadel and the Purchasers agree that the Purchasers shall commence
collection efforts with respect to the Assets and shall hold for the
benefit of Citadel seventy-five percent (75%) of the amounts collected
(after expenses of collection). In the event the conditions precedent
contained in this Agreement are satisfied, the proceeds shall be retained
by the Purchasers. In the event the conditions precedent contained in this
Agreement are not satisfied, the proceeds shall be paid to Citadel.
(b) The Purchasers agree that the Assets listed on Exhibit A conveyed
pursuant to this Agreement are conveyed "as is," and Citadel makes no
representation or warranty with respect to the collectibility, condition or
fitness of the Assets; provided, that Citadel represents and warrants that
no more than $75,000 of the Assets have been compromised or extinguished in
writing by Citadel in any form whatsoever including but not limited to
donations, payments, or forgiveness.
(c) Any amounts payable to Citadel pursuant to section 1(a) above will
be paid monthly supported by a certificate of the Purchasers. Citadel will
have the right to audit the Purchasers' books regarding the calculations,
at Citadel's expense. The Purchasers will promptly pay to Citadel any
amounts determined to be owed as a result of such audit, and Citadel will
promptly repay to the Purchasers any amounts determined by such audit to be
in excess of amounts owed to Citadel. If such audit determines that the
amount due has been underpaid by an amount greater than ten percent, the
Purchasers shall bear the expense of such audit.
2. Consideration. Within five days after Closing, the Purchasers shall
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deliver to Citadel an aggregate of 3,900,000 shares of Common Stock, par value
$0.01 per share, of the Company (the "Shares"). Within five days after execution
of this Agreement, the Purchasers shall deliver to Citadel a list of certificate
numbers and denominations of the certificates representing the Shares.
Purchasers shall deliver certificates representing the Shares to Citadel
together with stock powers duly executed in blank or other transfer documents
acceptable to Citadel.
3. Assumption of Leases and Indebtedness. The Purchasers shall (i) use
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their best efforts to assume all obligations and liabilities under that certain
office lease dated March 9, 1996 between Citadel and Lehndorff from Citadel,
(ii) assume any and all obligations and liabilities under those certain
equipment leases between Citadel and Monex from Citadel, and (iii) assume the
indebtedness of Citadel to Worldwide PetroMoly, Inc. and obtain a full release
of Citadel from such indebtedness and the return of any collateral pledged
pursuant to such indebtedness. Citadel shall be responsible for payments through
June 30, 1997 with respect to the office lease and through April 15, 1997 with
respect to the Monex leases.
4. Termination of Employment Agreement. Citadel and Sharp hereby agree to
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terminate the Employment Agreement dated December 1, 1995 between Citadel and
Sharp, effective as of April 15, 1997, and agree that such Employment Agreement
shall be of no further force or effect and neither party shall have any further
obligation or liability with respect to such Employment Agreement.
5. Board Approval. The obligations of the Company pursuant to this
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Agreement shall be subject to the Company's receipt of the consent of the
Company's Board of Directors to authorize the Company to consummate the
transactions contemplated hereby.
6. Forgiveness of Indebtedness. Citadel and the Purchasers hereby agree
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that Citadel shall forgive all indebtedness owed by the Purchasers to Citadel
except for $150,000 and the
Purchasers shall have no further obligation or liability with respect to such
indebtedness other than the remaining $150,000.
7. Loan from the Purchasers. The Purchasers hereby agree to use their
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best efforts to loan Citadel the original principal amount of between $200,000
and $500,000.
8. Closing. The closing (the "Closing") will take place within three
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business days following approval by the Company's Board of Directors at the
offices of Citadel at 0000 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx
00000, or at such other time or place as may be agreed by the parties.
9. Representations and Warranties of Citadel. Citadel represents and
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warrants to Purchasers as follows:
(a) Organization. Citadel is a corporation duly organized, validly
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existing, and in good standing under the laws of the State of Delaware.
(b) Authority. Citadel has all requisite power and authority to
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execute and enter into this Agreement and all other agreements and
instruments contemplated hereby to be executed and delivered by Citadel
("Citadel Documents") and to perform its obligations hereunder and
thereunder. This Agreement and the Citadel Documents have been duly executed
and delivered and are valid and binding agreements of Citadel, enforceable
against Citadel in accordance with their respective terms.
(c) Title. The Assets are owned solely by Citadel, and Citadel has
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good and marketable title to the Assets. The execution and delivery of this
Agreement and the Citadel Documents by Citadel are sufficient to convey to
and vest in Purchasers good and marketable title to the Assets, subject to
any defenses that may be asserted by the persons or entities that may owe
the amounts underlying the accounts receivable.
(d) No Violation. The execution and delivery of this Agreement and
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the Citadel Documents and the consummation of the transactions contemplated
hereby or thereby will not (i) conflict with or result in the breach of any
term or provision of, or constitute a default under, or give any third party
the right to accelerate any obligation under, any charter provision,
regulation, agreement, instrument, order, law, or regulation to which
Citadel is a party or by which Citadel or any of its assets are bound, or
(ii) result in the creation of, any lien, security interest, charge or
encumbrance upon the Assets.
(e) No Other Agreements. Citadel has not entered into any agreement,
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commitment, or understanding with any other person or entity with respect to
the sale, transfer, lease, ownership, or disposition of all or any portion
of the Assets other than agreements with the Purchasers.
10. Representations and Warranties of Purchasers. Each Purchaser
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represents and warrants to Citadel as follows:
(a) Authority. Each Purchaser has all requisite power and authority
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to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement has been duly executed and delivered and is a
legal, valid, and binding agreement of each Purchaser, enforceable against
each Purchaser in accordance with its terms.
(b) No Violation. Neither the execution or delivery of this Agreement
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nor the consummation of the transactions contemplated hereby will conflict
with or result in the breach of any term or provision of, or constitute a
default under, or give any third party the right to accelerate any
obligation under, any regulation, agreement, instrument, order, law, or
regulation to which either Purchaser is a party or by which either Purchaser
or any of its respective assets are bound.
11. Conditions Precedent to the Obligations of the Purchasers. The
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obligations of the Purchasers under this Agreement are subject to the
fulfillment on or prior to the Closing Date of the following conditions, any one
or more of which may be waived by Purchasers:
(a) Deliveries. At the Closing, Citadel will deliver to the
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Purchasers the other documents referred to herein.
(b) Compliance. Citadel shall have complied with each of its
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covenants and agreements contained herein and each of the representations
and warranties of Citadel shall be true and correct in all material
respects on and as of the Closing Date with the same force and effect as
though made on and as of the Closing Date, and Citadel shall have delivered
to the Purchasers a certificate, dated the Closing Date, to such effect.
12. Conditions Precedent to the Obligations of Citadel. The obligation of
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Citadel under this Agreement are subject to the receipt of Board approval as set
forth in Section 5 of this Agreement and to the fulfillment on or prior to the
Closing Date of the following conditions, any one or more of which may be waived
by Citadel in Citadel's sole discretion:
(a) Deliveries. At the Closing, the Purchasers will deliver to
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Citadel the consideration required to be delivered at the Closing.
(b) Compliance. Purchasers shall have complied with each of their
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respective covenants and agreements contained herein and each of the
representations and warranties of each Purchaser shall be true and correct
in all respects on and as of the Closing Date with the same force and effect
as though made on and as of the Closing Date, and each Purchaser shall have
delivered to Citadel a certificate, dated the Closing Date, to such effect.
13. Agreements and Covenants. At and after the Closing, and without
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further consideration, Citadel shall execute and deliver to Purchasers such
further instruments of transfer as Purchasers may reasonably request in order
more effectively transfer, assign and deliver to Purchasers any of the Assets,
or for aiding, assisting, collecting and reducing to possession any of the
Assets and exercising rights with respect thereto.
14. Limitations of Liability. In no event shall either party be liable to
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the other for lost contracts or lost profits or any special, indirect,
incidental or consequential damages in any way arising out of the use of the
assets or relating to this agreement however caused under a claim of any type or
nature based on any theory of liability (including contract, tort or warranty)
even if the possibility of such damages has been communicated. In no event shall
the liability of Citadel under this agreement exceed the purchase price paid by
Purchasers.
15. Indemnification. The Purchasers agree to indemnify and hold harmless
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Citadel and its directors, officers, employees, representatives, agents and
attorneys from, against and in respect of any and all Losses (as defined below)
suffered, sustained, incurred or required to be paid by any of them by reason of
(i) any representation or warranty made the Purchasers in or pursuant to this
Agreement being untrue or incorrect in any respect; and (ii) any failure by the
Purchasers to observe or perform their covenants and agreements set forth in
this Agreement or any other agreement or document executed by them in connection
with the transactions contemplated hereby; and (iii) any actions taken by the
Purchasers in connection with the Assets. This Section is intended to indemnify
Citadel and its directors, officers, employees, representatives, agents and
attorneys from the results of their negligence. "Losses" shall mean all damages
(including, without limitation, amounts paid in settlement), losses,
obligations, liabilities, liens, deficiencies, costs (including, without
limitation, reasonable attorneys' fees), penalties, fines, interest, monetary
sanctions and expenses, including, without limitation, reasonable attorneys'
fees and costs incurred to comply with injunctions and other court and agency
orders, and other costs and expenses incident to any suit, action,
investigation, claim or proceeding or to establish or enforce Citadel's or such
other persons' right to indemnification hereunder.
16. Miscellaneous.
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(a) Notices. All notices that are required or may be given pursuant
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to the terms of this Agreement shall be in writing and shall be sufficient
in all respects if given in writing and delivered personally or by a
recognized courier service or by registered or certified mail, postage
prepaid, to the parties at the following addresses:
If to Citadel, to:
Citadel Computer Systems Incorporated
0000 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
214.520.9293 (facsimile)
Attn: Xx. Xxxxxx X. Xxxxxxx
If to Purchasers, to the address on the books of Citadel.
Any party to this Agreement may change the address for purposes of giving
notice hereunder by giving notice of such change to the other parties hereto
in accordance with this Section.
(b) Attorneys' Fees and Costs. In the event that attorneys' fees
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or other costs are incurred to secure performance of any of the obligations
herein provided for, or to establish damages for the breach thereof or to
obtain any other appropriate relief, whether by way of prosecution or
defense, the prevailing party shall be entitled to recover reasonable
attorneys' fees and costs incurred therein.
(c) Further Assurances. Each party hereto agrees to execute any
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and all documents and to perform such other acts as may be necessary or
expedient to further the purposes of this Agreement and the transactions
contemplated hereby, including the transfer of payments with respect to the
Assets received by the Company after the Closing Date.
(d) Expenses. Each of the parties hereto shall, whether or not
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the transactions contemplated hereby are consummated, bear its own
attorneys', accountants', auditors', or other fees, costs, and expenses
incurred in connection with the negotiation, execution, and performance of
this Agreement or any of the transactions contemplated hereunder.
(e) Counterparts. This Agreement may be executed in one or more
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counterparts for the convenience of the parties hereto, all of which
together shall constitute one and the same instrument.
(f) Assignment. This Agreement and all of the provisions hereof
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shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests, or obligations hereunder shall
be assigned or delegated by either of the parties hereto without the prior
written consent of the other party. This Agreement is not intended to confer
upon any person other than the parties hereto, any rights or remedies
hereunder.
(g) Entire Agreement. This Agreement and the related documents
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contained as Exhibits hereto or expressly contemplated hereby contain the
entire understanding of the parties relating to the subject matter contained
herein and supersede all prior written or oral and all contemporaneous oral
agreements and understandings relating to the subject matter hereof. This
Agreement cannot be modified or amended except in writing signed by the
party against whom enforcement is sought.
(h) Exhibits. All Exhibits to this Agreement are incorporated
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herein by reference and made a part hereof for all purposes.
(i) Press Releases. The parties agree that they may make one or more press
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releases with respect to the acquisition and agree that they will not make
any public announcement regarding the contemplated transactions without the
consent of the other party, unless otherwise required by law.
(j) Governing Law. This Agreement shall be governed by, and
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construed and interpreted in accordance with, the substantive laws of the
State of Texas without giving
effect to any conflict-of-laws rule or principle that might result in the
application of the laws of another jurisdiction.
(k) Arbitration. All claims (other than claims for equitable
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relief), disputes and controversies arising out of or relating to, the
performance, interpretation, application or enforcement of this Agreement,
or any alleged breach, default or misrepresentation in connection with any
of the provisions hereof, shall be referred to mediation or arbitration
before, and as a condition precedent to, the initiation of any action or
proceeding. The mediation or arbitration shall be held in Dallas, Texas
before a mediator that is mutually agreeable to all parties. The parties may
agree on a retired judge from an American Arbitration Association ("AAA")
panel. If they are unable to agree, AAA shall provide a list of three
available judges and each party may strike one. The remaining judge shall
serve as the arbitrator.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
CITADEL:
CITADEL COMPUTER SYSTEMS INCORPORATED
By:___________________________
Xxxxxx X. Xxxxxxx
Chief Operating Officer
PURCHASERS:
______________________________
Xxx Xxxxxxx
______________________________
Xxxxxx Xxxxx
EXHIBIT A
ASSETS
Accounts Receivable on attached list
