Citadel Environmental Group, Inc., form 10K-SB, Exhibit 10.2
PURCHASE AND SALES AGREEMENT
This Purchase and Sales Agreement (the "Agreement") is entered
into on September 22, 1997, by and between Citadel Environmental
Group, Inc., a Colorado Corporation ("Citadel") and, Xxxxxx X.
Xxxxxx ("Xxxxxx").
R E C I T A L S
X.Xxxxxxx owns all of the outstanding
shares of Tonopah Resources International capital stock and Tonopah
has had various interest in GEC Construction, Arizona Hazardous
Waste, Xxxxx Xxxxx Diversified and Medical Waste of New Mexico
(hereinafter "Tonopah Affiliate Companies").
X.Xx of October 15, 1996, Citadel had
determined to discontinue Tonopah's operations and to liquidate
and/or sell it's assets as of the period ending September 30, 1996.
C.All Officers and Directors of
Tonopah and Tonopah Affiliate Companies resigned, effective
September 30, 1996.
D.Xxxxxx X. Xxxxxx became the only
Director and Officer of Tonopah, effective September 30, 1996, and
was charged with the orderly liquidation of Tonopah's assets and
discharge of its liabilities.
X.Xxxxxx has maintained all books,
records, contracts, bank accounts, etc., since on or about November
1, 1996.
F.Most of the assets and liabilities
of Tonopah have been sold and/or discharged with only a few major
assets remaining, those being two uncertain receivables totaling
over $400,000 and the residual value of permit drawings,
engineering reports and other necessary items for the proposed
medical waste facility in Roswell, New Mexico.
G.There is undetermined value of the
assets of Tonopah ranging from several hundred thousand dollars to
zero and Citadel is unable to spend the time or money necessary to
attempt to recover said value.
X.Xxxxxx is familiar with the assets
and liabilities of Tonopah and has worked diligently for over ten
months to define said liabilities and assets.
I.The parties hereto desire to enter
into this Agreement to provide for the acquisition of Tonopah by
Xxxxxx.
J. Citadel agrees to sell any and all remaining
assets and liabilities, evidenced by the shares of Tonopah, held by
Citadel, to Xxxxxx for consideration of Nine Thousand Two Hundred
Fifty Dollars ($9,250) in cash and a contingent note of 50% of the
recovery of Medical Waste of New Mexico, up to $100,000.
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A G R E E M E N T
NOW THEREFORE, in consideration of the mutual agreements,
provision and covenants herein contained, the parties hereby agree
as follows:
ARTICLE 1
DEFINITIONS/PURCHASE/CLOSING
1.1 Definitions.
For all purpose of this Agreement,
except as otherwise expressly provided unless the context otherwise
requires,
(a)The terms defined in this
Article 1 have the meaning assigned to them in this Article 1 and
include the plural as well as the singular,
(b)All accounting terms not
otherwise defined herein have the meanings assigned under generally
accepted accounting principals,
(c)All references in this
Agreement to designated "Articles", "Sections" and other
subdivisions
are to the designated Articles, Sections and the other subdivisions
of the body of this Agreement,
(d)Pronouns of either gender or
neuter shall include, as appropriate, the other pronoun forms, and
(e)The words, "herein", "hereof"
and "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular Article, Section or
other subdivision.
1.2 Purchase of the Tonopah Shares by
Xxxxxx.
Subject to the terms and conditions
of this Agreement, Xxxxxx agrees to acquire the Tonopah Shares from
Citadel and Citadel agrees to convey, transfer and deliver all
outstanding capital stock of Tonopah to Xxxxxx.
1.3 The Closing.
The Closing will take place at the
offices of Citadel, at 10:00 a.m. on October 1,, 1997.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF CITADEL
Citadel represents, warrants and agrees as follows:
2.1 Organization and Related Matters.
Citadel is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Colorado. Citadel has all necessary corporate power
and authority to carry on its business as now being conducted.
Citadel has the necessary corporate power and authority to execute,
deliver and perform this Agreement and any related agreements to
which it is a party.
2.2 Authorization.
The execution, delivery and
performance of this Agreement and any related agreements, by
Citadel has been duly and validly authorized by the Board of
Directors of Citadel and by all other necessary corporate action on
the part of Citadel. This Agreement constitutes the legal, valid
and binding obligation of Citadel, enforceable against Citadel in
accordance with its respective terms except as such enforceability
may be limited to bankruptcy, insolvency, reorganization,
moratorium and other similar laws and equitable principles relating
to or limiting creditors' rights generally.
2.3 No Brokers, Finders or Financial
Advisors.
No agent, broker, finder or
investment or commercial banker, or other person or firm engaged by
or acting on behalf of Citadel in connection with the negotiation,
execution or performance of this Agreement or the transactions
contemplated by this Agreement, is or will be entitled to any
broker's or finder's or similar fees or other commissions as a
result of this Agreement or such transactions.
2.4 Financial Statement; Changes;
Contingencies.
(a)Financial Statements.
Citadel has delivered to Xxxxxx balance sheets for Tonopah at
September 30, 1996 and at December 31, 1995, and the related
statements of operations (reflecting zero revenues) for the period
then ended. All such financial statements have been prepared
largely in conformity with generally accepted accounting principles
applied on a consistent basis (except for changes, if any disclosed
therein). Such statements of operations present fairly the results
of operations and cash flows of Tonopah for the respective period
covered, and the balance sheets present fairly the financial
condition of Tonopah as of their respective dates. Since October
15, 1996, there has been no change in any of the significant
accounting policies, practices or procedures of Tonopah.
(b)No Material Adverse Changes.
Since September 30, 1996, whether or not in the ordinary course of
business, there has not been, occurred or arisen:
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(i)any change in or event
affecting Tonopah, that has had
or may reasonably be expected to
have a Material Adverse Effect
that is not known to Xxxxxx.
(ii)any agreement (other than
a Material Contract listed on the
Disclosure Schedule);
(iii) any strike or other
labor dispute; or
(iv)any casualty, loss, damage
or destruction whether or not
covered by insurance, of any
material property of Tonopah.
(c)No Other Liabilities or
Contingencies. To the best of Citadel's knowledge, Tonopah does
not have any liabilities of any nature, whether accrued, absolute,
continent or otherwise, and whether due to become due, probable of
assertion or not, that, in accordance with GAAP applied on a
consistent basis, should have been but were not reflected or
disclosed in the financial statements (including the notes thereto)
referred to in subsections (a) and (b) above, except liabilities
which were incurred after September 30, 1996, in the ordinary
course of business or disclosed in the Disclosure Schedule.
2.5 Legal Proceedings.
There is no Order or Action
pending, or, to the best knowledge of Citadel, threatened, against
or affecting Tonopah or any of its properties or assets that
individually or when aggregated with one or more other Orders or
Actions has or might reasonably be expected to have a Material
Adverse Effect, or adversely affect Citadel's ability to perform
this Agreement or any aspect of the transactions contemplated by
this Agreement. There is no matter as to which Citadel has
received any notice, claim or assertion, or to the best knowledge
of Citadel, which otherwise has been threatened against or
affecting any director, officer, employee, agent or representative
of Citadel or any other Person, in connection with which any such
Person has or may reasonably be expected to have any right to be
indemnified by Citadel.
2.6 Minute Books.
The minute books of Tonopah
accurately reflect all actions and proceedings taken to date by its
shareholders, Board of Directors and committees, and such minute
books contain true and complete copies of the charter documents of
Tonopah and all related amendments. The stock record books of
Tonopah reflect accurately all transactions in its capital stock of
all classes.
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2.7 Accounting Records; Internal
Controls.
Accounting Records. Citadel has
records that accurately and validly reflect Tonopah's transactions,
and accounting controls sufficient to insure that such transactions
are executed in accordance with management's general or specific
authorization.
2.8Authorized Capital. The authorized
capital for Tonopah consists of 1,000 shares of common stock, $.01
par value, of which at September 30, 1996, a total of 1,000 shares
1,000 shares of common stock are issued and outstanding. All of
the shares are validly issued, fully paid and non-assessable.
There are no outstanding subscriptions, options, rights, warrants,
convertible securities, or other agreements or commitments
obligating Tonopah to issue or to transfer from treasury any
additional shares of its capital stock of any class. No more than
1,000 shares of Common Stock will be outstanding prior to the
Closing.
2.9Citadel has not declared or paid
any dividends of any kind nor declared or made any other
distribution of any kind whatsoever including, without limitation,
by way of redemption or repurchase or reduction of authorized
capital.
2.10No change will occur in the
Articles of Incorporation, By-Laws or other charter documents of
Tonopah from the date hereof to the Closing Date.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF XXXXXX
Xxxxxx X. Xxxxxx ("Xxxxxx") represents and warrants and agrees
to the best of his knowledge and except as disclosed in writing to
Citadel, as follows:
3.1Xxxxxx as an individual, who since
November, 1996, has been solely responsible for all accounting,
contractual agreements, and maintenance of the books and records of
Tonopah.
3.2Tonopah has remained in good
standing and was incorporated in the State of Nevada in September
of 1995.
3.3Material Contracts.
Since September 30, 1996, Tonopah
has duly performed all its obligations and each of its affiliated
companies has duly performed its obligations to the extent that
such obligations to perform have accrued under any Contract; and no
material breach or default, alleged material breach or default, or
event which would (with the passage of time, notice or both)
constitute a material breach or default thereunder by Xxxxxx, to
the best knowledge of Xxxxxx, by any other party or obligor with
respect thereto, has occurred or as a result of this Agreement or
performance will occur. Consummation of the transactions
contemplated by this Agreement will not give any Person a right to
terminate or modify any rights of, or accelerate or augment any
obligation of Xxxxxx under any Material Contract.
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3.4Tangible Property.
Neither Tonopah nor any of its
affiliate companies owns any real property.
3.5Intangible Property.
Each of Tonopah or any of its
affiliate companies has no Intangible Property, required for use in
connection with the Business.
3.6 Minute Books.
The minute books of Tonopah
accurately reflect all actions and proceedings taken to date by its
shareholders, Board of Directors and committees, and such minute
books contain true and complete copies of the charter documents of
Tonopah and all related amendments. The stock record books of
Tonopah reflect accurately all transactions in its capital stock of
all classes.
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3.7 Accounting Records; Internal
Controls.
Tonopah and is affiliated companies
have records that accurately and validly reflect their
transactions, and accounting controls sufficient to insure that
such transactions are (i) executed in accordance with management's
general or specific authorization and (ii) recorded so as to
maintain accountability for assets.
3.8No Brokers, Finder or Financial
Advisors.
No agent, broker, finder or
investment or commercial banker, or other Person or firm engaged by
or acting on behalf of Xxxxxx, in connection with the negotiation,
execution or performance of this Agreement or the transactions
contemplated by this Agreement, is or will be entitled to any
brokerage or finder's or similar fee or other commission as a
result of this Agreement or such transactions.
ARTICLE 4
CONDITIONS OF PURCHASE
4.1 General Conditions.
The obligations of the parties to
effect the Closing shall be subject to the following conditions
unless waived in writing by all parties:
(a)Approvals. To the extent
required by applicable Law, all Approvals required to be obtained
from any Governmental Entity shall have been received or obtained
on or prior to the Closing Date.
4.2 Conditions to Obligations of
Xxxxxx.
The obligations of Xxxxxx to effect
the Closing shall be subject to the following conditions except to
the extent waived in writing by Xxxxxx:
(a)Representations and
Warranties and Covenants of Xxxxxx. The representations and
warranties of Xxxxxx herein contained shall be true at the Closing
Date with same effect as though made at such time; that Xxxxxx
shall have performed all obligations and complied with all
covenants and conditions required by this Agreement to be performed
or complied with by it or at or prior to the Closing Date.
(b)No Material Adverse Effect.
There shall not have been any Material Adverse Effect relating
to Tonopah or its affiliated companies subsequent to September 30,
1996.
(c)Due Diligence. Xxxxxx shall
not, in the course of his ongoing business investigation, have
discovered information not previously disclosed by Xxxxxx, which
Xxxxxx reasonably believes has or is likely to have a Material
Adverse Effect or is materially inconsistent with information
disclosed to Citadel prior to the date hereof.
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4.3 Conditions to Obligations of
Citadel.
The obligations of Citadel to
effect the Closing shall be subject to the following conditions,
except to the extent waived by Citadel:
(a)Representations and
Warranties and Covenants of Citadel. The representations and
warranties of Citadel herein contained shall be true at the Closing
Date with same effect as though made at such time; Citadel shall
have performed all obligations and completed with all covenants and
conditions required by this Agreement to be performed or complied
with by its at or prior to the Closing Date.
(b)No Material Adverse Effect.
There shall not have been any Material Adverse Effect relating
to Citadel subsequent to September 30, 1996.
(d)Due Diligence. Citadel shall
not, in the course of its ongoing business investigations, have
discovered information not previously disclosed by Citadel which
Citadel reasonably believes has or is likely to have a Material
Adverse Effect or is materially inconsistent with the information
disclosed to Citadel prior to the date hereof.
ARTICLE 5
INDEMNIFICATION
5.1 Obligations of Xxxxxx.
Xxxxxx shall indemnify the hold
harmless Citadel, and their respective directors, officers,
employees, affiliates, agents and assigns from and against any and
all Losses of Tonopah, directly or indirectly, as a result of, or
based upon or arising from:
(a)any inaccuracy in or breach
or nonperformance of any of the representations, warranties,
covenants or agreements made by Xxxxxx in or pursuant to this
Agreement; or
(b)any other matter as to which
Xxxxxx in other provisions of this Agreement has agreed to
indemnify Citadel or (subsequent to Closing) Tonopah.
5.2 Obligations of Citadel.
Citadel agrees to indemnify and
hold harmless Xxxxxx from and against any Losses of Tonopah,
directly or indirectly, as a result of, or based upon or arising
from any inaccuracy in or breach or nonperformance of any of the
representations, warranties, covenants or agreements made by
Citadel in or pursuant to this Agreement.
5.3 Procedure.
(a)Notice. Any party seeking
indemnification with respect to any Loss shall give notice to the
Indemnifying Party.
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5.4 Notice by Xxxxxx.
Xxxxxx agrees to notify Citadel of
any liabilities, claims or misrepresentations, breaches or other
matters covered by this Article V upon discovery or receipt of
notice thereof (other than from Citadel), whether before or after
Closing.
5.5 Limitations on Indemnification.
No party shall be required to
indemnify any other Person under this Article V unless the Loss for
which indemnity would otherwise be payable by such party exceeds
$25,000 individually or $50,000 in the aggregate, and in such
event, the Indemnifying Party shall be responsible for the full
amount of any Loss.
ARTICLE 6
GENERAL
6.1 Amendments; Waivers.
This Agreement and any schedule or
exhibit attached hereto may be amended only by agreement in writing
of all parties. No waiver of any provision nor consent to any
exception to the terms of this Agreement shall be effective unless
in writing and signed by the party to be bound and then only to the
specific purchase, extent and instance so provided.
6.2 Schedules; Exhibit; Integration.
Each schedule and exhibit delivered pursuant to the terms of
this Agreement shall be in writing and shall constitute a part of
this Agreement, although schedules need not be attached to each
copy of this Agreement. This Agreement, together with such
schedules and exhibits, constitutes the entire agreement among the
parties pertaining to the subject matter hereof and supersedes all
prior agreements and understandings of the parties in connection
therewith.
6.3 Best Efforts; Further Assurances.
Except as otherwise expressly
provided herein, each party will use its best efforts to cause all
conditions to its obligations hereunder to be timely satisfied and
to perform and fulfill all obligations on its part to be performed
and fulfilled under this Agreement, to the end that the transaction
contemplated by this Agreement shall be effected substantially in
accordance with its terms as soon as reasonably practicable. The
parties shall cooperate with each other in such actions and in
securing requisite Approvals. Each party shall execute and deliver
both before and after the Closing such further certificates,
agreements and other documents and take such other actions as the
other party may reasonably request to consummate or implement the
transaction contemplated hereby or to evidence such events or
matters.
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6.4 Governing Law.
This Agreement and the legal
relations between the parties shall be governed by and construed in
accordance with the laws of the State of California applicable to
contracts made and performed in such State without regard to
conflicts of law doctrines, except to the extent that certain
matters are preempted by federal law or governed by the law of the
jurisdiction of organization of the respective parties.
6.5 Headings.
The descriptive headings of the
Articles, Sections and subsections of this Agreement are for
convenience only and do not constitute a part of this Agreement.
6.6. Counterparts.
This Agreement any amendment hereto
or any other agreement (or document) delivered pursuant hereto may
be executed in one or more counterparts and by different parties in
separate counterparts. All of such counterparts shall constitute
one and the same agreement (or other document) and shall become
effective (unless otherwise provided therein) when one or more
counterparts have been signed by each party and delivered to the
other party.
6.7 Confidentiality.
All information disclosed in
writing by any party (or its representatives) in connection with
the transactions contemplated by this Agreement to any other party
(or its representatives) shall be kept confidential by such other
party and its representatives and shall not be used by any such
Persons other than as contemplated by this Agreement, except to the
extent that such information or disclosure (i) was known by the
recipient when received, or (ii) is or hereafter becomes lawfully
obtainable from other sources, (iii) is necessary or appropriate to
disclose to a Governmental Entity or stock exchange having
jurisdiction over the parties, or (iv) may otherwise be required by
law. If this Agreement is terminated in accordance with its terms,
each party shall use all reasonable efforts to return upon written
request from the other party all documents (and reproductions
thereof) received by it or its representatives from such other
party (and, in the case of reproduction, all such reproductions
made by the receiving party) that include information not within
the exceptions contained in the first sentence of this Section 6.7,
unless the recipients provide assurances reasonably satisfactory to
the requesting party that such documents have been destroyed.
6.8. Notices.
Any notice or other communication
hereunder must be given in writing and (a) delivered in person, (b)
transmitted by telex, telefax or other telecommunications mechanism
or (c) mailed by certified or registered mail, postage prepaid,
receipt request, as follows:
If to Citadel:
Citadel Environmental Group, Inc.
0000 X. Xxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Attn: Xxxxxxxxx X. Xxxxxx,
Corporate Secretary
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With a copy to its counsel:
Resch, Polster, Xxxxxx & Xxxxxx,
LLP
00000 Xxxxx Xxxxxx Xxxxxxxxx
0xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
If to Xxxxxx:
Xx. Xxxxxx X. Xxxxxx
P.O. Box 2285
28855 Desert Xxxxxxxx Xxx
Xxxxxxxxx Xxxx, XX 00000
6.9 Expenses.
Xxxxxx and Citadel shall each pay
its own expenses incident to the negotiation, preparation and
performance of this Agreement and the transactions contemplated
hereby, include but not limited to the fees, expenses and
disbursements of their respective advisors, accountants and
counsel.
6.10 Knowledge Convention.
Whenever any statement herein or
in any schedule, exhibit, certificate or other documents delivered
to any party pursuant to this Agreement is made "to its knowledge"
or "to its best knowledge" or words of similar intent or effect of
any party or its representative, such person shall be under no duty
to investigate such matter.
6.11 Specific Performance.
Xxxxxx and Citadel each acknowledge
that, in view of the uniqueness of the Business and the
transactions contemplated by this Agreement, each party would not
have an adequate remedy at law for money damages in the event that
his Agreement has not been performed in accordance with its terms,
and therefore agrees that the other party shall be entitled to
specific enforcement of the terms hereof in addition to any other
remedy to which it may be entitled, at law or in equity.
6.12 Arbitration; Waiver of Jury
Trial.
Any controversy, dispute or claim
under, arising out of, in connection with or in relation to this
Agreement shall be settled, a the request of either party, by
arbitration conducted in accordance with the Center for Public
Resources Rules for Non-Administered Arbitration or Business
Disputes, by three arbitrators, of whom Citadel and Xxxxxx each
shall appoint one and the third shall be selected by the other two.
The arbitration shall be governed by the United States Arbitration
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Act (9 U.S.C. §§ 1-16). The arbitration of such issues,
including
the determination of any amount of damages suffered by any party
hereto by reason of the acts or omissions of any other party, shall
be final and binding upon the parties to the maximum extent
permitted by law, except that the arbitrators shall not be
authorized to award punitive damages with respect to any such
claim, dispute or controversy. No party shall seek ( and no
arbitrators shall be authorized to award) any punitive damages
relating to any matters under, arising out of, in connection with
or relating to this Agreement in the proceedings hereunder or in
any other forum. The parties intend that this Section shall be
valid, binding, enforceable and irrevocable and shall survive the
termination of this Agreement. The place of arbitration shall be
selected by the arbitrators in the County of Riverside, California.
Judgment upon the award rendered by the arbitrators may be entered
by any court having jurisdiction thereof. by executing this
Agreement, the parties hereto hereby waive any rights they may
possess to have any controversy, dispute or claim under, arising
out of, in connection with or in relation to this Agreement
litigated in a court or jury trial.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized officers as of the
day and year first above written.
CITADEL ENVIRONMENTAL GROUP,
INC.
a Colorado corporation
By Xxxxx X. Xxxxxxx
Director
XXXXXX X. XXXXXX,
an individual
By Xxxxxx X Xxxxxx
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