SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT is made this 21st day of December 1999, by
and between Citadel Environmental Group, Inc., a Colorado corporation
("Citadel"), and Storage Area Networks, a Nevada corporation ("SAN").
WHEREAS, Citadel desires to acquire all of the issued and outstanding
shares of common stock of SAN in exchange for an aggregate of 3,800,000
authorized but unissued restricted shares of the Series BB Convertible
Preferred Stock of Citadel (the "Preferred Stock") (the "Exchange Offer"); and
WHEREAS, SAN desires to assist Citadel in a business combination which
will result, if SAN's shareholders desire to participate, in the shareholders
of SAN owning approximately 58.7% of the then issued and outstanding shares of
Citadel's Common Stock (assuming the issuance of 2,000,000 shares of Series BB
Convertible Preferred Stock and assuming all shares of Series AA and BB
Convertible Preferred Stock have been converted), and Citadel holding 100% of
the issued and outstanding shares of SAN's common stock; and
WHEREAS, the voluntary share exchange contemplated hereby will result in
the SAN shareholders tendering all of the outstanding common stock of SAN to
Citadel in exchange solely for the Preferred Stock and no other
consideration, which the parties hereto intend to treat as a reorganization
under I.R.C. Section 368(a)(1)(B).
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
representations contained herein, THE PARTIES HERETO AGREE AS FOLLOWS:
ARTICLE 1
EXCHANGE OF SECURITIES
1.1 Issuance of Shares. Subject to all of the terms and conditions of
this Agreement, Citadel agrees to offer 1.2666666 shares of Preferred Stock
for each share of SAN common stock issued and outstanding, or a total of
3,800,000 shares of Citadel's Common Stock if all SAN warrants have been
exercised. The Preferred Stock will be issued directly to the shareholders of
SAN which accept the Exchange Offer. Schedule 1, which is attached hereto and
incorporated herein by reference, is a complete list of the shareholders of
SAN which sets forth the number of shares each person owns in SAN and the
number of shares they will be offered in Citadel.
1.2 Exemption from Registration. The parties hereto intend that the
Preferred Stock to be issued by Citadel to SAN shareholders shall be exempt
from the registration requirements of the Securities Act of 1933, as amended
(the "Act"), pursuant to Section 4(2) of the Act and the rules and regulations
promulgated thereunder.
1.3 Investment Intent. Prior to the consummation of the Exchange Offer,
the shareholders of SAN accepting the Exchange Offer shall execute Letters of
Acceptance and such other documents containing, among other things,
representations and warranties relating to investment intent and investor
status, restrictions on transferability and restrictive legends such that the
counsel for both Citadel and SAN shall be satisfied that the offer and sale of
Citadel shares as contemplated by this Agreement shall be exempt from the
registration requirements of the Act and any applicable state blue sky laws.
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
Citadel that:
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.
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. SAN will
use its best efforts to have all outstanding warrants exercised prior to
Closing.
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 Citadel 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 Citadel or have otherwise been disclosed to Citadel.
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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, Citadel
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 Citadel 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
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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.
2.15 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.
2.16 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.
2.17 Material Contracts and Obligations. Attached hereto on Schedule
2.17 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 Citadel 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.
2.18 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 CITADEL
Except as disclosed in Schedule 3 which is attached hereto and
incorporated herein by reference, Citadel represents and warrants to SAN that:
3.1 Organization. Citadel is a corporation duly organized, valid
existing, and in good standing under the laws of Colorado, has all necessary
corporate powers to own properties and to carry on business, and it is not now
conducting any business, except to the extent to which the effecting of the
transaction contemplated by this Agreement constitutes doing business.
3.2 Capitalization. The authorized capital stock of Citadel consists of
25,000,000 shares of no par value Common Stock of which 19,450,909 shares of
Common Stock are currently issued and outstanding, and 1,199,000 shares of
$.01 par value preferred stock of which 917,500 shares are issued and
outstanding. Citadel has also authorized 2,000,000 shares of Series AA
Convertible Preferred Stock to be issued to investors in a private offering
and 4,000,000 shares of Series BB Convertible Preferred Stock to be issued to
the shareholders of SAN on the Closing. All of the issued and outstanding
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shares of Common Stock and Preferred Stock are duly authorized, validly
issued, fully paid and nonassessable. Except as set forth in Schedule 3,
there are no outstanding subscriptions, options, rights, warrants, convertible
securities, or other agreements or commitments obligating Citadel to issue or
to transfer from treasury any additional shares of its capital stock of any
class.
3.3 Subsidiaries. Except as set forth in Schedule 3, Citadel does not
presently have any subsidiaries or own any interest in any other enterprise
(whether or not such enterprise is a corporation).
3.4 Directors and Officers. Schedule 3 contains the names and titles of
all directors and officers of Citadel as of the date of this Agreement.
3.5 Financial Statements. Citadel has delivered to SAN its audited
balance sheet and statements of operations and cash flows as of and for the
period ended December 31, 1998, and its unaudited balance sheet and statements
of operations and cash flows as of and for the period ended September 30, 1999
(collectively 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 and operating results
of the Company as of the dates, and for the periods, indicated therein.
3.6 Absence of Changes. Since September 30, 1999, except for changes in
the ordinary course of business which have not in the aggregate been
materially adverse, to the best of Citadel's knowledge, Citadel has not
experienced or suffered any material adverse change in its condition
(financial or otherwise), results of operations, properties, business or
prospects or waived or surrendered any claim or right of material value.
3.7 Absence of Undisclosed Liabilities. Neither Citadel nor any of its
properties or assets are subject to any 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
SAN.
3.8 Tax Returns. Within the times and in the manner prescribed by law,
Citadel has filed all federal, state and local tax returns required by law and
has paid all taxes, assessments and penalties due and payable.
3.9 Investigation of Financial Condition. Without in any manner
reducing or otherwise mitigating the representations contained herein, SAN
shall have the opportunity to meet with Citadel's accountants and attorneys to
discuss the financial condition of Citadel. Citadel shall make available to
SAN all books and records of Citadel.
3.10 Trade Names and Rights. Citadel 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, copy
rights, copyright registrations or applications.
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3.11 Compliance with Laws. To the best of Citadel's knowledge, Citadel
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 or with which it is otherwise
required to comply.
3.12 Litigation. Citadel 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 Citadel, threatened against
or affecting Citadel or its business, assets, or financial condition. Citadel
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. Citadel is not engaged in any legal action to recover moneys
due to it.
3.13 No Pending Investigation. Citadel is not aware of any pending
investigations or legal proceedings by the SEC, any state securities
regulatory agency, or any other governmental agency regarding Citadel or any
officers or directors of Citadel or any shareholders or controlling persons of
such shareholders.
3.14 Authority. Citadel has full corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated by this
Agreement. The Board of Directors of Citadel has taken all action required to
authorize the execution and delivery of this Agreement by or on behalf of
Citadel, the performance of the obligations of Citadel under this Agreement
and the consummation by Citadel of the transactions contemplated under this
Agreement. No other corporate proceedings on the part of Citadel are
necessary to authorize the execution and delivery of this Agreement by Citadel
in the performance of its obligations under this Agreement. This Agreement
is, and when executed and delivered by Citadel, will be a valid and binding
agreement of Citadel, enforceable against Citadel 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.
3.15 Ability to Carry Out Obligations. Neither the execution and
delivery of this Agreement, the performance by Citadel of its obligations
under this Agreement, nor the consummation of the transactions contemplated
under this Agreement will, to the best of Citadel's knowledge: (a) violate
any provision of Citadel'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 default under, or cause or permit the
termination or the acceleration of the maturity of, any debt, contract,
agreement or obligation of Citadel, 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 Citadel is bound; (d)
result in the creation or imposition of any security interest, lien or other
encumbrance upon any property or assets of Citadel; or (e) violate any
statute or law or any judgment, decree, order, regulation or rule of any court
or governmental authority to which Citadel is bound or subject.
3.16 Validity of Citadel Shares. The shares of Citadel Preferred 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.
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3.17 Full Disclosure. None of the representations and warranties made
by Citadel herein, or in any exhibit, certificate or memorandum furnished or
to be furnished by Citadel, or on its behalf, contains or will contain any
untrue statement of material fact, or omit any material fact the omission of
which would be misleading.
3.18 Assets. Citadel has good and marketable title to all of its
tangible properties and such tangible properties are not subject to any liens
or encumbrances.
3.19 Material Contracts and Obligations. Attached hereto on Schedule 3
is a list of all agreements, contracts, indebtedness, liabilities and other
obligations to which Citadel 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 Citadel in excess of $25,000; or which involve
transactions or proposed transactions between Citadel 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 SAN 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.
3.20 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 Citadel in connection with:
(a) the execution and delivery by Citadel of its obligations under this
Agreement; (b) the performance by Citadel of its obligations under this
Agreement; or (c) the consummation by Citadel of the transactions contemplated
by this Agreement.
3.21 Real Property. Citadel does not own, use or claim any interest in
any real property, including without limitation any license, leasehold or any
similar interest in real property.
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.
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4.2 Conduct of Business. Prior to the Closing, Citadel and SAN shall
each conduct its business in the normal course, and shall not sell, pledge, or
assign any assets, without the prior written approval of the other party,
except in the regular course of business or as contemplated in previously
disclosed contractual obligations. Neither Citadel nor SAN shall amend its
Articles of Incorporation or Bylaws, declare dividends, redeem or sell stock
or other securities, incur additional or newly-funded liabilities, acquire or
dispose of fixed assets, change employment terms, enter into any material or
long-term contract, guarantee obligations of any third party, settle or
discharge any balance sheet receivable for less than its stated amount, pay
more on any liability than its stated amount, or enter into any other
transaction other than in the regular course of business except as otherwise
contemplated herein.
ARTICLE 5
CONDITIONS PRECEDENT TO CITADEL'S PERFORMANCE
5.1 Conditions. The obligations of Citadel 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 other rights or remedies, at law or in equity, if SAN shall
be in default of any of their representations, warranties, or covenants under
this Agreement.
5.2 Accuracy of Representations. Except as otherwise permitted by this
Agreement, all representations and warranties by SAN in this Agreement or in
any written statement that shall be delivered to Citadel by SAN under this
Agreement shall be true and accurate on and as of the Closing Date as though
made at that time.
5.3 Performance. SAN shall have performed, satisfied, and complied with
all covenants, agreements, and conditions required by this Agreement to be
performed or complied with by it, on or before the Closing Date.
5.4 Acceptance by SAN Shareholders. The holders of not less than 95% of
the issued and outstanding shares of common stock of SAN shall have agreed to
exchange their shares for shares of Citadel Common Stock.
5.5 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 SAN on or before the Closing Date.
5.6 Agreement with CoComp. Prior to the Closing Date, SAN shall have
entered into a binding agreement for the acquisition of CoComp.
5.7 Officer's Certificate. SAN shall have delivered to Citadel a
certificate, dated the Closing Date, and signed by the Chief Executive Officer
of SAN, certifying that each of the conditions specified in Sections 5.2
through 5.5 hereof have been fulfilled.
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ARTICLE 6
CONDITIONS PRECEDENT TO SAN'S PERFORMANCE
6.1 Conditions. SAN's obligations hereunder shall be subject to the
satisfaction, at or before the Closing, of all the conditions set forth in
this Article 6. SAN 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 SAN of any other condition of or any of
SAN's rights or remedies, at law or in equity, if Citadel shall be in default
of any of its representations, warranties, or covenants under this Agreement.
6.2 Accuracy of Representations. Except as otherwise permitted by this
Agreement, all representations and warranties by Citadel in this Agreement or
in any written statement that shall be delivered to SAN by Citadel under this
Agreement shall be true and accurate on and as of the Closing Date as though
made at that time.
6.3 Performance. Citadel shall have performed, satisfied, and complied
with all covenants, agreements, and conditions required by this Agreement to
be performed or complied with by them, on or before the Closing Date.
6.4 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 Citadel on or before the Closing Date.
6.5 Directors of Citadel. Effective on the Closing, Citadel shall have
fixed the size of its Board of Directors at five (5) persons, and such Board
of Directors shall include Xxxxx X. Xxxxxxx, Xxxx X. Xxxxxxx, X.X. Xxxxxx,
Xxxxxx Xxxxx and a fifth person to be elected by the other four members. The
current Officers and Directors of Citadel shall have submitted their
resignations as the Officers and Directors of Citadel effective on the Closing
of this transaction.
6.6 Officers of Citadel. Effective on the Closing, Citadel shall have
elected the following new Officers of Citadel:
Xxxxx X. Xxxxxxx - Chairman of the Board
X. X. Xxxxxx - President and Chief Executive Officer
Xxxxxx Xxxxx - Chief Operating Officer and Vice President
Xxxx X. Xxxxxxx - Secretary and Treasurer
6.7 Completion of Private Offering. Citadel shall have completed a
private placement of its Series AA Convertible Preferred at $1.50 per share
and shall have raised a minimum of $1,500,000.
6.8 Spin-off of Alliance. Citadel shall have declared a dividend to its
shareholders of record as of December 31, 1999, consisting of all shares it
holds of Alliance Medical Corporation. The shares will be placed in an escrow
account to be distributed once Alliance is an SEC reporting company. If this
does not occur within two years of the record date, the shares will revert
back to the ownership of Citadel.
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6.9 Conversion of Preferred Stock. Citadel will have notified all
holders of the outstanding Convertible Preferred Stock that their right to
convert each share of preferred stock for five shares of common stock expires
prior to the Closing of this transaction, and Citadel will provide a schedule
showing which shares of Convertible Preferred Stock are outstanding as of the
Closing Date.
6.10 Payment of all Liabilities. Citadel shall have paid off all of its
creditors and obtained releases or other documentation satisfactory to counsel
for SAN indicating that such creditors no longer have any claims against
Citadel. In addition, all creditors who are owed shares of Alliance Medical
Corporation shall have received such shares. A list of such creditors
includes, but is not limited to, the following:
1. Resch, Polster, Xxxxxx & Xxxxxx LLP (Xxxxx Xxxxxxxx)
2. Bar Eleven Profit Sharing Plan
3. Xxxxxx & Xxxxxx Xxx
4. NyCon Resources
5. Xxxxxxx Xxxxx
6. Xxxxxx Xxxx PLC
7. Oriental New Investments
8. Xxxxxx Xxxxxx
6.11 Indemnification from Xxxx XxXxxxx. Citadel shall have received an
indemnification from Xxxx XxXxxxx indemnifying Citadel from and against any
and all claims and liabilities relating to Xxxxxxx Xxxxxxxx.
6.12 Lockups. Citadel shall have received signed lockup letters in a
form satisfactory to SAN from the persons and for the amounts set forth on the
attached Schedule 6.12.
6.13 Officer Certificate. Citadel shall have delivered to SAN a
certificate, dated the Closing Date and signed by the President of Citadel
certifying that each of the conditions specified in Sections 6.2 through 6.12
have been fulfilled.
ARTICLE 7
CLOSING
7.1 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 7, 2000. At
the Closing:
7.2 SAN shall deliver Letters of Acceptance and the certificates
representing the shares of SAN held by the shareholders of SAN accepting the
Exchange Offer ("Accepting Shareholders") to Citadel.
7.3 Each Accepting Shareholder shall receive a certificate or
certificates representing the number of shares of Citadel Preferred Stock for
which the shares of SAN common stock shall have been exchanged.
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7.4 Citadel shall deliver an officer's certificate, as described in
Section 6.13 hereof, dated the Closing Date, that all representations,
warranties, covenants and conditions set forth in this Agreement on behalf of
Citadel are true and correct as of, or have been fully performed and complied
with by, the Closing Date.
7.5 Citadel shall deliver a signed Consent and/or Minutes of the
Directors of Citadel approving this Agreement and each matter to be approved
by the Directors of Citadel under this Agreement.
7.6 SAN shall deliver an officer's certificate, as described in Section
5.6 hereof, dated the Closing Date, that all representations, warranties,
covenants and conditions set forth in this Agreement on behalf of SAN are true
and correct as of, or have been fully performed and complied with by, the
Closing Date.
7.7 SAN shall deliver a signed Consent or Minutes of the Directors of
SAN approving this Agreement and each matter to be approved by the Directors
of SAN under this Agreement.
7.8 SAN shall deliver the opinion of its counsel, Xxxx Xxxxx Xxxxxxxx &
Xxxxxx, P.C., dated the Closing Date, in form and substance satisfactory to
counsel for Citadel, to the effect that:
(1) SAN is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada.
(2) SAN's authorized capital stock is as set forth in Section 2.2
hereof.
(3) The execution and consummation of this Agreement have been duly
authorized and approved by SAN's Board of Directors and does not require the
approval and authorization of SAN's shareholders. Consummation of this
Agreement will not constitute or result in any breach or default of the
character described in Section 2.14 hereof of which counsel has knowledge.
(4) Counsel has no knowledge of any liabilities or obligations of
the type described in Section 2.7 hereof, any litigation, proceeding or
investigation of the type described in Section 2.12 hereof, or any defects, in
title or mortgages, encumbrances or liens of the type described in Section
2.16 hereof.
(5) The shares of SAN's Common Stock to be exchanged pursuant to
this Agreement, are duly and validly authorized and issued, and are fully paid
and nonassessable.
7.9 Citadel shall deliver the opinion of its counsel, Xxxxxx Xxxxxxx
Xxxxx & Xxxxxxx, P.C., dated the Closing Date, in form and substance
satisfactory to counsel for SAN, to the effect that:
(1) Citadel is a corporation duly organized, validly existing and
in good standing under the laws of the State of Colorado, and is duly
qualified to do business and is in good standing in each state where its
business requires qualification.
(2) Citadel's authorized capital stock is as set forth in Section
3.2 hereof.
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(3) The execution and consummation of this Agreement have been duly
authorized and approved by Citadel's Board of Directors and consummation of
this Agreement will not constitute or result in any breach or default of the
character described in Section 3.15 hereof of which counsel has knowledge.
(4) Counsel has no knowledge of any litigation, proceeding or
investigation of the type described in Section 3.12 hereof.
(5) The shares of Citadel's preferred stock to be issued pursuant
to this Agreement will be duly and validly authorized and issued, and will be
fully paid and nonassessable.
7.10 Citadel shall deliver the lockup letters required by Section 6.13
above.
ARTICLE 8
POST CLOSING
8.1 Form 8-K. Within 15 days after the Closing Date, Citadel will file
a Form 8-K with the SEC reporting this transaction.
8.2 Proxy Materials. Within 30 days after the Closing Date, Citadel
will prepare and file proxy materials (or an Information Statement) with the
SEC for the purpose of calling a special shareholders meeting to be held as
soon as possible to approve (1) a 1 for 36 reverse stock split; (2) a name
change to SAN Holdings Ltd. a such name as shall be determined by the Citadel
board of directors; and (3) any other matters that the board of directors
determine necessary or appropriate.
8.3 Acquisition of CoComp. As soon as practicable following the Closing
Date, Citadel will close on the acquisition of CoComp utilizing $1,349,000
from the proceeds of the private placement offering to pay the cash portion of
the purchase price.
8.4 Payment of Finder's Fee. Immediately after the effective date of
the 1 for 36 reverse stock split, Citadel will issue 220,000 post-split shares
of its common stock to LMU & Company as payment for its finder's fee in
connection with this transaction.
ARTICLE 9
MISCELLANEOUS
9.1 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.
9.2 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.
9.3 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
12
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.
9.4 Time of Essence. Time is of the essence of this Agreement and of
each and every provision hereof.
9.5 Entire Agreement. This Agreement contains the entire Agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings.
9.6 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.
9.7 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:
Citadel:
Citadel Environmental Group, Inc.
000 Xxxx Xxxxxxxxx Xxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
with a copy to:
Xxxxxxx X. Xxxxxxx
Xxxxxx Xxxxxxx Xxxxx & Xxxxxxx PC
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
SAN:
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
9.8 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.
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9.9 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.
9.10 Brokers. The parties hereto represent and agree that, other than
LMU & Company, which is entitled to a finder's fee of 220,000 post-split
shares, 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.
9.11 Announcements. Citadel and SAN 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.
9.12 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.
9.13 Use of Counterparts. This Agreement may be executed simultaneously
in one or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
AGREED TO AND ACCEPTED as of the date first above written.
CITADEL ENVIRONMENTAL GROUP, STORAGE AREA NETWORKS
INC.
By /s/ Xxxxx X. Xxxxxxx By /s/ X. X. Xxxxxx
Xxxxx X. Xxxxxxx, President X. X. Xxxxxx, President
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SCHEDULE 1
Number of Shares of
Citadel Series BB
Number of Convertible
Name, Address and Shares of Preferred
Social Security Number SAN Stock
L. Xxxxxxx Xxxxxxxxx 115,000 145,667
C. K. C. Partners 115,000 145,667
Moe & Associates, Inc. 135,000 171,000
Xxxxxx Family Partners Ltd. 70,000 88,666
Xxxxxx Xxxxx 15,000 19,000
Xxxxxxxxx Family Partners 90,000 114,000
Xxxxx X. Xxxxx 90,000 114,000
X.X. Xxxxxx and Xxxxx X. Xxxxxx 1,060,000 1,342,667
Xxxxxx Xxxxx 1,000,000 1,266,667
Xxxxx Xxxxxx, Inc. Defined
Benefit Pension Plan 40,000 50,666
Xxxxxx X. Xxxxx 15,000 19,000
Xxxxxx Family Partners Ltd. 15,000 19,000
Xxxx Xxxxx 30,000 38,000
Xxxxxxx X. Xxxxx 135,000 171,000
Xxxx X. Xxxxxx, M.D. 30,000 38,000
Art Xxxxxxx 30,000 38,000
Xxxxxxx X. Xxxxx 15,000 19,000
Total 3,000,000 3,800,000
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.
SCHEDULE 2.17
CUSTOMER CONTRACTS
Contract Description Contract Number Organization Duration
-------------------- --------------- ------------ --------
GSA Schedule for GS-35F-5286H General Services Thru 2/22/99
Storage Products Admin
Blanket Purchase Agree- SP4700-98-A-0018 Defense Logistics Thru 2/22/99
ment for sales of Storage Agency
Products
Computer Maintenance 3000080750 United Space Thru 9/30/02
Contract Alliance
Lease of Equipment 3000083126 United Space Thru 9/30/02
Alliance
Computer Maintenance DASW01-99-F-1070 Single Agency Thru 3/31/00
Contract Mgr for Pentagon
Storage Equipment XXX-000-00-X- XXXX Xxxx Xxxxxxx Xxxx 9/30/99
Maintenance 0615/P0003 Xxxxx
Computer Maintenance DTRA01-99-M-0508 Defense Threat Thru 9/30/99
Reduction Agency
Storage Equipment XXXX00-00-X-0000 Xxxx Xxxxxx Xxxx 6/14/00
Maintenance Arsenal
Storage Equipment 9700481 Federal Home Loan Indefinitely
Maintenance Bank-Indianapolis
Computer Maintenance DAKF11-99-F-0010 Fort XxXxxxxxx 9/30/00
STORAGE AREA NETWORK CONTRACTS
Building Lease D'Gruppe LLC 5/31/04
(2,547 sq ft)
Building Lease D'Gruppe LLC 5/31/04
(1,373 sq ft)
SCHEDULE 3
CITADEL ENVIRONMENTAL GROUP, INC.
("Citadel")
3.2 Capitalization - See attached schedule regarding settlement of
liabilities.
3.3 Subsidiaries.
a) Citadel owns 578,190 shares of Alliance Medical Corporation,
which represents approximately 3% of the Alliance shares outstand-
ing. These shares are being spun-off to the shareholders of
Citadel as of December 31, 1999. The shares will be placed in
an escrow account to be distributed once Alliance Medical Corpora-
tion is an SEC reporting company. If this does not occur within
two years, the shares will revert back to being an asset of Citadel,
unless extended by the Board of Directors.
3.4 Directors and Officers of Citadel:
Name Position
Xxxxx X. Xxxxxxx President and Director
Xxxxxx Xxxxxx Director
Xxxx X. Xxxxxxx Secretary and Treasurer
3.19 Material Contracts of Citadel:
None
