SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
[Amendment No. _________]
Filed by the Registrant _X_
Filed by a Party other than the Registrant ___
Check the appropriate box:
___ Preliminary Proxy Statement
___ Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
___ Definitive Proxy Statement
_X_ Definitive Additional Materials
___ Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
CITADEL ENVIRONMENTAL GROUP, INC.
(Name of Registrant as Specified in Its Charter)
CITADEL ENVIRONMENTAL GROUP, INC.
(Name of Person(s) Filing Proxy Statement)
CITADEL ENVIRONMENTAL GROUP, INC.
900 West Castleton Road, Suite 100
Castle Rock, Colorado 80104
________________________________________________
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 1, 2000
_________________________________________________
Notice is hereby given that a Special Meeting of Stockholders of Citadel
Environmental Group, Inc. will be held on Wednesday, March 1, 2000, at 10:00
a.m., Mountain Time, at the offices of Krys Boyle Freedman & Sawyer, P.C., 600
17th Street, Suite 2700 South Tower, Denver, Colorado 80202, and at any and
all adjournments thereof, to consider the following matters:
1. A proposed one for thirty-six (1 for 36) reverse split of the
outstanding shares of the Company's common stock.
2. An amendment to the Company's Articles of Incorporation to change the
name of the Corporation to SAN Holdings, Inc.
3. The approval of the Company's 2000 Stock Option Plan.
4. The transaction of such other business as may properly come before
the meeting or at any adjournment or adjournments thereof.
Said meeting may be adjourned from time to time without notice other than
by announcement at said meeting, or at any adjournment thereof, and any and
all business for which said meeting is hereby noticed may be transacted at any
such adjournment.
Only holders of the Company's no par value common stock, Series AA
Convertible Preferred Stock, and Series BB Convertible Preferred Stock of
record at the close of business on February 14, 2000, will be entitled to
notice of and to vote at the meeting and at any adjournment or adjournments
thereof. The proxies are being solicited by the Board of Directors of the
Company.
All Shareholders, whether or not they expect to attend the Special
Meeting of Shareholders in person, are urged to sign and date the enclosed
Proxy and return it promptly in the enclosed postage-paid envelope which
requires no additional postage if mailed in the United States. The giving of
a proxy will not affect your right to vote in person if you attend the
Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
L. W. Buxton, President
Castle Rock, Colorado
February 14, 2000
CITADEL ENVIRONMENTAL GROUP, INC.
900 West Castleton Road, Suite 100
Castle Rock, Colorado 80104
__________________________________________________
PROXY STATEMENT
__________________________________________________
SPECIAL MEETING OF SHAREHOLDERS
MARCH 1, 2000
GENERAL INFORMATION
The enclosed Proxy is solicited by and on behalf of the Board of
Directors of Citadel Environmental Group, Inc., a Colorado corporation (the
"Company"), for use at the Company's Special Meeting of Shareholders to be
held at the offices of Krys Boyle Freedman & Sawyer, P.C., 600 17th Street,
Suite 2700 South Tower, Denver, Colorado, on Wednesday, March 1, 2000, at
10:00 a.m., Mountain Time, and at any and all adjournments thereof. It is
anticipated that this Proxy Statement and the accompanying Proxy will be
mailed to the Company's Shareholders on or about February 16, 2000.
Any person signing and returning the enclosed Proxy may revoke it at any
time before it is voted by giving written notice of such revocation to the
Company, or by voting in person at the Meeting. The expense of soliciting
proxies, including the cost of preparing, assembling and mailing this proxy
material to Shareholders, will be borne by the Company. It is anticipated
that solicitations of proxies for the Meeting will be made only by use of the
mails; however, the Company may use the services of its Directors, Officers
and employees to solicit proxies personally or by telephone, without
additional salary or compensation to them. Brokerage houses, custodians,
nominees and fiduciaries will be requested to forward the proxy soliciting
materials to the beneficial owners of the Company's shares held of record by
such persons, and the Company will reimburse such persons for their reasonable
out-of-pocket expenses incurred by them in that connection.
All shares represented by valid proxies will be voted in accordance
therewith at the Meeting.
SHARES OUTSTANDING AND VOTING RIGHTS
The securities entitled to vote at the Special Meeting consist of all of
the issued and outstanding shares of the Company's no par value common stock
(the "Common Stock"), and all of the issued and outstanding shares of the
Company's Series AA and Series BB Convertible Preferred Stock (the "Preferred
Stock"). The close of business on February 14, 2000, has been fixed by the
Board of Directors of the Company as the record date. Only Shareholders of
record as of the record date may vote at the Special Meeting. As of the
record date, there were 24,038,409 shares of Common Stock issued and
outstanding, 2,700,000 shares of Series AA Convertible Preferred Stock issued
and outstanding, and 3,800,000 shares of Series BB Convertible Preferred Stock
issued and outstanding.
Each Shareholder of record as of the record date will be entitled to one
vote for each share of Common Stock and 36 votes for each share of Preferred
Stock held as of the record date. Cumulative voting is not permitted. The
presence at the Special Meeting of the holders of a majority of the number of
shares of the Common Stock and Preferred Stock outstanding as of the record
date will constitute a quorum for transacting business. The Common Stock and
the Preferred Stock will vote together as a single class.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of February 14, 2000, as to
the shares of the Common Stock beneficially owned by each person who is the
beneficial owner of more than five percent (5%) of the Company's Common Stock,
each of the Company's Directors and by all of the Company's Directors and
Executive Officers as a group. Each person has sole voting and investment
power with respect to the shares shown except as noted.
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
------------------- -------------------- --------
L. W. Buxton 48,336,012 (1) 18.7%
900 West Castleton Road
Suite 145
Castle Rock, CO 80104
Warren Smith 45,600,012 (2) 17.7%
900 West Castleton Road
Suite 145
Castle Rock, CO 80104
Louis F. Coppage 0 --
900 West Castleton Road
Suite 100
Castle Rock, CO 80104
Cory J. Coppage 0 --
900 West Castleton Road
Suite 100
Castle Rock, CO 80104
All Officers and Directors 93,936,024 36.4%
as a Group
______________
(1) Mr. Buxton owns 1,342,667 shares of the Company's Series BB Convertible
Preferred Stock. Each share of Series BB Convertible Preferred Stock is
entitled to 36 votes and is convertible into 36 shares of the Company's
Common Stock before the proposed reverse split.
(2) Mr. Smith owns 1,266,667 shares of the Company's Series BB Convertible
Preferred Stock. Each share of Series BB Convertible Preferred Stock is
entitled to 36 votes and is convertible into 36 shares of the Company's
Common Stock before the proposed reverse split.
REVERSE STOCK SPLIT
The Board of Directors has proposed, subject to Shareholder approval, a 1
for 36 reverse split of the outstanding shares of the Company's Common Stock.
There are presently 24,038,409 shares outstanding, and the reverse split will
therefore reduce this number to approximately 670,000 shares. No fractional
shares will be issued and instead a whole share will be issued to any
Shareholder entitled to a fraction of a share.
The reverse split is being proposed in order to comply with the Company's
agreement with Storage Area Networks. In the acquisition of Storage Area
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Networks, the Company issued 3,800,000 shares of Series B Convertible
Preferred Stock which will be convertible into 3,800,000 shares of Common
Stock after the reverse split. The Company issued Convertible Preferred Stock
in this acquisition because the Company didn't have a sufficient number of
shares of authorized and unissued Common Stock to issue to the owners of
Storage Area Networks. The Company has also raised approximately $3,500,000
in net proceeds from the sale of 2,700,000 shares of Series AA Convertible
Preferred Stock. These shares are convertible into 2,700,000 shares of Common
Stock after the reverse split. Therefore, after the reverse split and the
conversion of all of the Series AA and BB Convertible Preferred Stock there
will be approximately 7,170,000 shares of Common Stock issued and outstanding.
A reverse stock split has no federal income tax consequences in that it
is a non-taxable distribution of the Company's stock under Section 305 of the
Internal Revenue Code. A shareholder's basis in each 36 shares before the
reverse split will become the basis in one share after the reverse split.
VOTING AND BOARD OF DIRECTORS RECOMMENDATION
An affirmative vote of a majority of the shares outstanding will be
required to approve the proposed 1 for 36 reverse split.
The Board of Directors recommends approval of the proposed 1 for 36
reverse split.
AMENDMENT TO THE ARTICLES OF INCORPORATION
CONCERNING THE NAME CHANGE
The Board of Directors is proposing to amend the Company's Articles of
Incorporation by changing Article I of the Company's Articles of Incorporation
to read as follows:
"ARTICLE I
NAME
The name of the Corporation shall be SAN Holdings, Inc."
The change is being proposed in order to better reflect the business
being conducted by the Company's two subsidiaries, Storage Area Networks, Inc.
and CoComp, Inc.
VOTING AND BOARD OF DIRECTORS RECOMMENDATION
An affirmative vote of a majority of the shares outstanding will be
required to approve the proposed amendment to the Company's Articles of
Incorporation.
The Board of Directors recommends approval of this proposed amendment to
the Articles of Incorporation.
APPROVAL OF 2000 STOCK OPTION PLAN
DESCRIPTION OF THE PLAN
In January 2000, the Company's Board of Directors approved the
establishment of a Stock Option Plan (the "2000 Plan") subject to approval of
the Company's shareholders. The Board of Directors believes that the 2000
Plan will advance the interests of the Company by encouraging and providing
for the acquisition of an equity interest in the success of the Company by
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employees, officers, directors and consultants. The Board believes it also
will enable the Company to attract and retain the services of employees,
officers, directors and consultants, and by providing additional incentives
and motivation toward superior Company performance.
The 2000 Plan allows the Board to grant stock options from time to time
to employees, officers and directors of the Company and consultants to the
Company. The Board has the power to determine at the time the option is
granted whether the option will be an Incentive Stock Option (an option which
qualifies under Section 422 of the Internal Revenue Code of 1986) or an option
which is not an Incentive Stock Option. However, Incentive Stock Options will
only be granted to persons who are employees of the Company. Vesting
provisions are determined by the Board at the time options are granted. The
total number of shares of Common Stock subject to options under the 2000 Plan
may not exceed 1,500,000, subject to adjustment in the event of certain
recapitalizations, reorganizations and similar transactions. The option price
may be satisfied by the payment of cash, or where approved by the Board of
Directors, in its sole discretion and where permitted by law: (a) by
cancellation of indebtedness of the Company to the holder; (b) by surrender of
shares of Common Stock of the Company having a Fair Market Value equal to the
exercise price of the option that have been owned by holder for more than six
months, or were obtained by the holder in the open public market; (c) by
waiver of compensation due or accrued to the holder for services rendered; (d)
provided that a public market for the Company's stock exists, through a "same
day sale" commitment from the holder and a broker-dealer whereby the holder
irrevocably elects to exercise the option and to sell a portion of the shares
so purchased to pay for the exercise price and the broker-dealer irrevocably
commits upon receipt of such shares to forward the exercise price directly to
the Company; (e) provided that a public market for the Company's stock exists,
through a "margin" commitment from the holder and a broker-dealer whereby the
holder irrevocably elects to exercise the option and to pledge the shares so
purchased to the broker-dealer in a margin account, and the broker-dealer
irrevocably commits upon receipt of such shares to forward the exercise price
directly to the Company; or (f) by any combination of the foregoing.
The Board of Directors may amend the 2000 Plan at any time, provided that
the Board may not amend the 2000 Plan to materially increase the number of
shares available under the 2000 Plan, materially increase the benefits
accruing to Participants under the 2000 Plan, or materially change the
eligible class of employees without shareholder approval.
To date no stock options have been granted under the 2000 Plan.
Approval of the 2000 Plan requires the affirmative vote of a majority of
the shares of Common Stock represented at the meeting. The Board of Directors
recommend a vote FOR approval of the 2000 Plan.
SHAREHOLDER PROPOSALS
The Board of Directors has not yet determined the date on which the next
Annual Meeting of the Shareholders will be held. Any proposal by a
Shareholder intended to be presented at the Company's next Annual Meeting of
Shareholders must be received at the offices of the Company a reasonable
amount of time prior to the date on which the information or proxy statement
for that meeting are mailed to Shareholders in order to be included in the
Company's information or proxy statement relating to that meeting.
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OTHER BUSINESS
As of the date of this Proxy Statement, management of the Company was not
aware of any other matter to be presented at the Meeting other than as set
forth herein. A majority vote of the shares represented at the Meeting is
necessary to approve any such matters.
BY ORDER OF THE BOARD OF DIRECTORS
L.W. Buxton, President
Castle Rock, Colorado
February 14, 2000
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P R O X Y
CITADEL ENVIRONMENTAL GROUP, INC.
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints L.W. Buxton with the power to appoint a
substitute, and hereby authorizes him to represent and to vote as designated
below, all the shares of common stock of Citadel Environmental Group, Inc.
held of record by the undersigned on February 14, 2000, at the Special Meeting
of Shareholders to be held on March 1, 2000, or any adjournment thereof.
1. A proposed one for thirty-six (1 for 36) reverse split of the
outstanding shares of the Company's common stock.
[ ] For [ ] Against [ ] Abstain
2. An amendment to the Company's Articles of Incorporation to change the
name of the Corporation to SAN Holdings, Inc.
[ ] For [ ] Against [ ] Abstain
3. The approval of the Company's 2000 Stock Option Plan.
[ ] For [ ] Against [ ] Abstain
4. The transaction of such other business as may properly come before
the meeting or at any adjournment or adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSAL NOS. 1, 2 AND 3.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING IN
ACCORDANCE WITH THE SHAREHOLDER'S SPECIFICATIONS ABOVE. THIS PROXY CONFERS
DISCRETIONARY AUTHORITY IN RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT THE
TIME OF THE MAILING OF THE NOTICE OF THE SPECIAL MEETING OF SHAREHOLDERS TO
THE UNDERSIGNED.
The undersigned hereby acknowledges receipt of the Notice of Special
Meeting of Shareholders and Proxy Statement.
Dated: _____________, 2000.
________________________________________
Signature(s) of Shareholder(s)
Signature(s) should agree with the name(s) stenciled hereon. Executors,
administrators, trustees, guardians and attorneys should indicate when
signing. Attorneys should submit powers of attorney.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CITADEL
ENVIRONMENTAL GROUP, INC. PLEASE SIGN AND RETURN THIS PROXY IN THE ENCLOSED
PRE-ADDRESSED ENVELOPE. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO
VOTE IN PERSON IF YOU ATTEND THE MEETING.