AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization ("the Agreement"), dated as of
the 10th day of October, 2002, by and between FullCircle Registry, Inc., a
Nevada corporation ("FullCircle") and Paradigm Solutions Group, LLC, a Delaware
limited liability company ("Paradigm") and the shareholders of Paradigm
("Shareholders") who join this agreement by execution of Exhibit A attached
hereto and incorporated by this reference, and is entered into in light of the
following recitals which are a material part hereof:
a) FullCircle is a Nevada corporation licensed to transact business in the
Commonwealth of Kentucky. FullCircle has authorized capital stock of
50,000,000 common shares and 5,000,000 preferred shares, $.001 par value,
of which 14,100,000 common shares are issued and outstanding and 200,000
preferred shares are issued and outstanding.
b) Paradigm is a privately held limited liability company organized under the
laws of the State of Delaware and licensed to transact business in the
State of Indiana. Paradigm has authorized capital stock of 3,000 common
shares, no par value, of which 3,000 shares are issued and outstanding.
c) The respective Boards of Directors of FullCircle and Paradigm have deemed
it advisable and in the best interests of FullCircle and Paradigm that
Paradigm be acquired by FullCircle, pursuant to the terms and conditions
set forth in this Agreement.
d) FullCircle and Paradigm propose to enter into this Agreement which provides
among other things that all of the outstanding shares of Paradigm be
acquired by FullCircle, in exchange for 6,000,000 shares of FullCircle and
such additional consideration as more fully described in the Agreement.
e) FullCircle and Paradigm have entered into a Memorandum of Understanding
dated as of the 8th day of October 2002 whereby the parties agreed to enter
into a transaction substantially similar to that set forth below.
f) The parties desire the transaction to qualify as a tax-free reorganization
under Section 368 (a)(1)(B) of the Internal Revenue Code of 1986, as
amended.
g) FullCircle and Paradigm have each entered into this Agreement, after
reviewing same with counsel of their choosing, and understand, accept and
agree to be bound by, unless waived in writing or terminated only as
permitted hereunder, all of the provisions of this Agreement.
NOW, THEREFORE, in consideration of, and in reliance on, the mutual
representations and warranties and agreements contained in this Agreement, one
dollar and/or other good and valuable consideration in hand paid, the receipt
and sufficiency of which is acknowledged by each of the parties hereto, each
party intending to be legally bound hereby, the parties hereto agree as follows:
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ARTICLE I
AGREEMENT MADE IN LIGHT OF RECITALS
AND BEST EFFORTS REQUIRED
1.1 AGREEMENT MADE IN LIGHT OF RECITALS. This Agreement is made and entered
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into in light of the foregoing recitals which are a material part hereof
and each of the parties hereto agrees and covenants to pursue the
"Transaction" contemplated herein so as to most fully realize the intents
and aims set forth therein. The parties further agree to execute,
subsequent to the execution hereof, and from time to time thereafter, such
other documents and instruments and take such other action as any of the
parties may request in order to more effectively fulfill the intended
Transaction described herein.
1.2 BEST EFFORTS REQUIRED. FullCircle and Paradigm agree and covenant that each
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of them shall use its best efforts to consummate the Transaction
contemplated by this Agreement on the Closing Date. In furtherance of this
Transaction, all actions shall be required, whether or not set forth or
contemplated by any provisions herein, if, in accordance with standards in
the trade or pursuant to changes in governmental regulations, such
compliance could reasonably be implied from the intent of the parties set
forth in the foregoing recitals.
ARTICLE II
THE ACQUISITION
2.1 THE TRANSACTION. At the Closing, a total of 3,000 shares, which represents
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all of the outstanding shares of Paradigm shall be acquired by FullCircle
in exchange for 6,000,000 restricted common shares of FullCircle (the
"Shares"). The Shares of FullCircle to be issued in this transaction shall
be issued as set forth in Exhibit A to this Agreement. At the Closing, the
Paradigm shareholders will deliver certificates for the outstanding shares
of Paradigm, duly endorsed so as to make FullCircle the sole holder
thereof, free and clear of all claims and encumbrances and FullCircle shall
deliver a transmittal letter directed to the transfer agent of FullCircle
directing the issuance of the Shares to the shareholders of Paradigm as set
forth on Exhibit A of this Agreement. FullCircle shall also issue to the
shareholders of Paradigm its promissory note in the amount of $500,000
which note shall be due and payable on October 1, 2004 except that the note
shall be paid out of proceeds of any financing or sale of additional common
stock of FullCircle the basis of 50% (1/2) of all net proceeds until
payment in full of the note and which note shall bear interest at the rate
of 9% until paid. Following the reorganization there will be totals of
20,100,000 common shares, $.001 par value, issued and outstanding and
200,000 preferred shares, $.001 par value, issued and outstanding,
respectively, in FullCircle. Following the reorganization, Paradigm will be
a wholly owned subsidiary of FullCircle.
ARTICLE III
THE CLOSING
3.1 THE CLOSING AND CLOSING DATE. The consummation of the transactions
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contemplated by this Agreement (the "Closing") shall take place at the
offices of FullCircle on or before October 16, 2002, (the "Closing Date")
or at such other place or date and time as may be agreed to in writing by
the parties hereto. At the Closing, the parties shall deliver, review,
execute and exchange the documents and assignments required hereunder so as
to effectuate the exchange of the shares of Paradigm for the Consideration.
FullCircle shall deliver its promissory note together with FullCircle
Shares at the Closing or such other irrevocable direction to its transfer
agent requiring issuance in accordance herewith provided such shares are
delivered within 7 days following closing.
3.2 TRANSACTIONS REQUIRED AT THE CLOSING. The transaction contemplated herein
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shall be subject to completion and satisfaction of all conditions precedent
set forth herein and conformity with all representations and warranties of
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all parties. All funds due to be paid at the Closing shall be paid in hand
by cashier's check or certified funds, in hand paid, or by wire transfer
with written confirmation of receipt of good US Funds presented at the
Closing. At the Closing, FullCircle shall issue a letter to the transfer
agent of FullCircle with a copy of the resolution of the Board of Directors
of FullCircle authorizing and directing the issuance of FullCircle shares
as set forth on Exhibit A to this Agreement. Upon consummation of the
Transaction, FullCircle shall own all of the assets now owned by Paradigm.
3.3 APPOINTMENT OF NEW OFFICERS AND DIRECTORS. As of the Closing, the new Board
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of Directors shall be nominated, elected and ratified by the existing Board
of Directors of FullCircle comprised of ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and one
additional member representing the interests of the current Paradigm
shareholders together with 4 of the current 5 members of the full Board (it
being understood that one current board member will resign within 15 days
of the Agreement or the Board shall meet and vote to remove one of the
current members), which Board shall take office with staggered, equal
terms. As of the Closing, new officers shall be appointed by the Board,
including ▇▇▇▇ ▇▇▇▇▇▇ or such other individual chosen by the shareholders
of Paradigm within 15 days after closing, as President and Chief Executive
Officer of the business operations formerly operating as Paradigm and ▇▇▇▇▇
▇. ▇▇▇▇▇▇ as President & Chief Executive Officer of the business operations
formerly operating as FullCircle and such other officers and the parties
hereto shall reasonably agree to prior to the Closing.
3.4 ASSUMPTION OF LIABILITIES. On and after the Closing Date, FullCircle shall
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pay, perform, assume, and discharge, in accordance with their respective
terms, all liabilities and obligations of Paradigm under the contracts,
including, without limitation, all liabilities and obligations incurred in
carrying out the business of Paradigm, provided, however, that FullCircle
shall not pay, perform, assume, or discharge any liability or obligation of
Paradigm incurred by it in connection with the negotiation, execution, and
performance of this Agreement, including, without limitation, Paradigm's
liability for any legal, accounting, actuarial, brokerage, finder's, and
other professional fees and expenses or otherwise excluded pursuant to this
Agreement. FullCircle agrees to execute and/or join in such documents or
instruments of assumption reasonably necessary to evidence FullCircle's
assumption of the liabilities to be assumed in accordance with this
Agreement.
3.5 SHARES OF FULLCIRCLE FOR INVESTMENT ONLY. The FullCircle Shares are being
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delivered for investment only and any individual recipient of shares shall
be deemed to consent, by acceptance of shares assigned pursuant to this
Agreement, and shall further represent and covenant that he or she is
acquiring the unregistered and restricted common shares of FullCircle
delivered to him or her under this Agreement for investment purposes only
and not with a view to the subsequent sale or distribution thereof. In
connection therewith, any recipient of such shares shall, upon and as a
condition of acceptance, deliver an investment letter confirming same in
form and content satisfactory to counsel for FullCircle. Due to the fact
that Paradigm will receive shares of FullCircle common stock in connection
with the acquisition which have not been registered under the 1933 Act by
virtue of the exemption provided in Section 4(2) of such Act, those shares
of FullCircle will contain the following legend:
The shares represented by this certificate have not been registered
under the Securities Act of 1933. The shares have been acquired for
investment and may not be sold or offered for sale in the absence of
an effective Registration Statement for the shares under the
Securities Act of 1933 or an opinion of counsel to the Corporation
that such registration is not required.
Notwithstanding the foregoing, it is agreed that the recipients of the
shares issued pursuant to this Agreement shall have demand registration
rights for all or part of the shares as well as piggyback registration
rights relative to any other shares issued by FullCircle. Paradigm and its
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shareholders agree that such a demand for registration shall be conditioned
upon their agreement to execute and deliver to FullCircle a "lock-up"
letter providing a covenant not to sell any stock so registered for a
period of one year following the issuance of the stock.
3.6 OTHER ITEMS. In addition to the documents indicated hereinabove, Paradigm
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and FullCircle shall have received such further documents, certifications
or instruments relating to the transactions contemplated hereby from the
other party or others as each of Paradigm or FullCircle may have reasonably
and timely requested.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARADIGM
4.1 REPRESENTATIONS AND WARRANTIES OF PARADIGM. Paradigm represents and
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warrants to, and covenants with FullCircle and acknowledges that FullCircle
relies on such representations and warranties in entering into and
proceeding under this Agreement, which representations, warranties and
covenants of Paradigm shall be true and correct on and as of the Closing
Date as if made on and as of the Closing Date, except for changes resulting
from the ordinary course of Paradigm's business or as contemplated by this
Agreement, for which Paradigm shall certify and deliver its certification
attesting to same, as of the Closing Date, that:
a) Corporate standing. Paradigm is a corporation, duly organized, validly
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existing, and in good standing under the laws of its jurisdiction of
incorporation and under the laws of Kentucky with full corporate power and
authority to enter into this Agreement, own or hold the Assets, and/or
assets employed in the business, to carry on the business presently being
conducted by it, to enter into this Agreement and all other agreements
contemplated by this Agreement, and to consummate the transactions
contemplated hereunder and thereunder. It is duly authorized, qualified,
franchised, and licensed under all applicable laws, regulations,
ordinances, and orders of public authorities to own all of its properties
and assets and to carry on its business on all material respects as it is
now being conducted, and there is no jurisdiction in which the character
and location of the assets owned by it, or the nature of the business
transacted by it, requires further or other qualification.
b) Authorization, execution, and delivery of this Agreement. This Agreement
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has been duly authorized by all necessary corporate action of Paradigm and
has been duly executed and delivered by Paradigm and Paradigm has taken all
action required by law, its Articles of Incorporation, its Bylaws, or
otherwise approved by its Board of Directors and binding on its directors,
officers and shareholders, to authorize the execution and delivery of this
Agreement. The execution and delivery by Paradigm of this Agreement and the
consummation by Paradigm of the transactions contemplated hereby will not
conflict with or constitute a violation of the Articles of Incorporation or
Bylaws of Paradigm or conflict with or constitute a violation, breach, or
default under any material contract, trust agreement, mortgage, indenture,
or other agreement or instrument to which Paradigm is or was a party or by
which it is bound or to which any of its assets are bound or to which
Paradigm or any of its assets is subject. Those shareholders of Paradigm
affected by the transaction contemplated herein are the beneficial and
record owners, free and clear of any liens and encumbrances, of whatever
kind or nature, of all the shares of Paradigm of whatever class or series,
and may freely vote or commit corporate acts in conformity herewith. The
Board of Directors and shareholders of Paradigm have authorized the
execution and delivery of this Agreement by Paradigm and have approved the
Agreement and the transactions contemplated hereby. Paradigm has full
power, authority, and legal right to enter into this Agreement and to
consummate the transactions contemplated hereby.
c) Governmental Authorizations, Permits and Compliance with Laws and
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Regulations. Paradigm has all licenses, franchises, permits and other
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government authorizations that are legally required to enable it to conduct
4
its business in all material respects as conducted on the date hereof and
it has complied with the requirements under such authorizations and all
other applicable statutes and regulations of any federal, state, or other
applicable jurisdiction or agency thereof, except to the extent that
noncompliance would not materially and adversely effect the business,
operations, properties, assets, or condition of Paradigm or except to the
extent that noncompliance would not result in the occurrence of any
material liability, not otherwise disclosed to FullCircle. Except for
compliance with federal and state security laws, no authorization,
approval, consent in connection with the execution and delivery by Paradigm
of this Agreement and the consummation of the Transaction by Paradigm or
the Closing contemplated hereby.
d) Capitalization. The authorized capital stock of Paradigm as of the date of
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this Agreement consists only of fully paid, non-assessable shares and that
there are no outstanding options, warrants, stock appreciation rights, or
other obligations convertible into shares of stock, or calls or any
understanding, agreements, commitments, contracts or promises with respect
to the issuance of common stock or with regard to any options, warrants or
other contractual rights to acquire any of authorized but unissued common
shares which would materially impact the fulfillment of this Agreement.
e) Consents. No provision of the Articles of Incorporation or Bylaws of
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Paradigm or of any material contract, trust agreement, mortgage, indenture,
or other agreement or instrument to which Paradigm is a party or by which
it is bound or to which Paradigm or any of its properties is subject
requires the consent or authorization of any other person or entity as a
condition precedent to the consummation of the transactions contemplated by
this Agreement and the consummation of the Transaction will not result in
the breach of any such term or provision of, or constitute a default under
any indenture, mortgage, deed of trust, or other material agreement or
instrument to which Paradigm was or is a party, or to which any of its
assets or operations are subject, and will not conflict with any provision
of the Articles of Incorporation or Bylaws of Paradigm.
f) Brokers. No person or entity is entitled to any brokerage or finder's fee
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or commission or other like payment in connection with the negotiations
relating to or the transactions contemplated by this Agreement, based on
any agreement, arrangement, or understanding with Paradigm, or any of
Paradigm's respective officers, directors, agents, or employees.
g) Financial Statements and Other Information. The financial statements
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identified on Schedule A for the periods indicated on said schedule fairly
and accurately represent the financial condition of Paradigm for the period
indicated thereon and that no material change has occurred in the financial
condition of Paradigm except as noted within said statements and that such
statements are the same as heretofore submitted to FullCircle for
examination and review. Schedules and all other information concerning
Paradigm set forth in this Agreement and the Schedules attached hereto, are
true, complete and accurate in all material respects and do not contain, or
will not contain, when delivered, any untrue statement of a material fact
or omit to state a material fact, the omission of which would be misleading
to Paradigm in connection with this Agreement.
h) Conduct of Business. Paradigm will use its best effort to maintain and
----------------------
preserve its business organization, employee relationships and goodwill
intact, and will not, without the prior written consent of FullCircle,
enter into any material commitments except in the ordinary course of
business.
i) Title to Property. Paradigm has good and marketable title to all of its
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properties and assets, interests in properties, real and personal,
proprietary or otherwise, as are or will be reflected in the balance sheets
of Paradigm, and the properties and assets of Paradigm are subject to no
mortgage, pledge, lien or encumbrance, unless as otherwise disclosed in its
financial statements.
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j) Litigation and Liabilities. There are no material actions, litigation,
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investigation, claim, demand or inquiry, suits, or proceedings, pending,
or, to the best knowledge of Paradigm, threatened by or against or
affecting Paradigm at law or in equity, or before any governmental agency
or instrumentality, domestic or foreign, or before any arbitrator of any
kind which might result in an action to enjoin or prevent the consummation
of the transactions contemplated by this Transaction or which might result
in any material adverse change in the assets, properties, business, or
operations of Paradigm and no present injunction, decree, or order issued
by any court, governmental agency, or authority, or any litigation
instituted by any governmental agency or authority, challenging or seeking
to prohibit or enjoin any of the transactions contemplated by this
Agreement; Paradigm does not have any knowledge of any default on its part
with respect to any judgment, order, writ, injunction, decree, warrant,
rule, or regulation of any court, arbitrator, or governmental agency or
instrumentality. Paradigm hereby represents and warrants that it has no
undisclosed or contingent liabilities of a material nature which have not
been disclosed to FullCircle in writing or in this Agreement or in any
Schedule attached hereto. Paradigm further represents, warrants and
covenants that all debts, obligations, or other commitments made by or on
behalf of Paradigm in favor of any of its shareholders or other associated
entities have been acknowledged and agreed to in writing by Paradigm such
that the terms of which can and will be fully disclosed to FullCircle and
shall be retired or satisfied in full and none shall encumber or limit its
ability to deliver free and clear title to the Assets.
k) Books and Records. From the date hereof, and for any reasonable period
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subsequent thereto, Paradigm and its present management will give to
FullCircle or its duly authorized representatives, full access, during
normal business hours, to all of its books, records, contracts and other
corporate documents and properties so that FullCircle or its duly
authorized representatives, may inspect them; and furnish such information
concerning the properties and affairs of Paradigm as FullCircle or its duly
authorized representatives, may reasonably request. Any such request to
inspect any books, records of corporate documents of Paradigm shall be
directed to the responsible party indicated for receipt of notices.
l) Contracts or Agreements; Defaults under Contracts. Paradigm is not bound by
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any material contracts, agreements, corporate restrictions or obligations
or subject to any judgment, order, writ, injunction, decree, or award,
which materially and adversely effect the business, operations, properties,
assets, or conditions of Paradigm which it has not already disclosed to
FullCircle in writing or in this Agreement or in any Schedule attached
hereto, including but not limited to any contract for employment or any
offer which is not terminable on 30 days (or less) notice; profit sharing,
bonus, deferred compensation, stock option, severance, or any other
retirement plan of arrangement covered by Title IV of the Employment
Retirement Income Security Act, as amended, or otherwise covered; any
agreement providing for the sale, assignment or transfer of any of its
rights, assets or properties, whether tangible or intangible, except sales
of its property in the ordinary course of business with a value of less
than $2,000; or waiver of any right of any value which in the aggregate is
extraordinary or material concerning the assets or properties scheduled by
Paradigm, except for adequate value and pursuant to contract. Paradigm is
not aware of any outstanding obligations to any of its employees or
consultants as of the Closing. Paradigm shall disclose, as of the Closing
Date, descriptions of all material contracts, written or oral, and all
agreements, franchises, licenses, or other commitments to which Paradigm is
a party or by which Paradigm or its properties are bound. Paradigm is not
in default in any material respect under the terms of any contract,
agreement, lease or other commitment which is material to the business,
operations, properties or assets, or condition of Paradigm, and there is no
event of default or event which, with notice or lapse of time or both,
would constitute a default in any material respect under any such contract,
agreement, lease, or other commitment in respect of which Paradigm has not
taken adequate steps to prevent such default from occurring, or otherwise
compromised, reached a satisfaction of, or provided for extensions of time
in which to perform under any one or more contract obligations, among
others.
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m) Unregistered Shares and Access to Information. Paradigm for itself, and
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each of its shareholders confirms, accepts and understands that the
FullCircle Shares to be issued have not been registered with or reviewed by
the Securities and Exchange Commission under the Securities Act of 1933, as
amended, or with or by any state securities law administrator, and no
federal or state securities law administrator has reviewed or approved any
disclosure or other material facts concerning FullCircle or FullCircle
Shares. The consummation of this Transactions includes the issuance of the
FullCircle Shares and assignment of same to the shareholders of Paradigm,
which constitutes an offer and sale of securities under the Securities Act
of 1933, as amended, and applicable states' securities laws. Such
transaction shall be consummated in reliance on exemptions from the
registration and prospectus requirements of such statutes which depend,
inter alia, on the circumstances under which such shareholders acquire such
securities and Paradigm, for itself, its successors and assigns and its
shareholders, shall confirm the acquisition of such securities in the
manner and for intents and purposes so exempt and FullCircle shall be
entitled to rely on such confirmation in delivering the securities pursuant
to exemptions from the registration and prospectus delivery requirements
for such transactions. Paradigm and its shareholders have been provided
with and will have reviewed all information; made appropriate investigation
as to the merits and risks of their acquisition; have had the opportunity
to ask questions of, and have received satisfactory answers from, the
officers and directors of FullCircle; and have had an opportunity to obtain
additional information necessary to verify the accuracy of such information
and to evaluate the merits and risks of the proposed acquisition of the
FullCircle Shares all concerning FullCircle and FullCircle Shares, as they
alone have deemed necessary or appropriate as prudent and knowledgeable
investors to enable them to make informed investment decisions concerning
the FullCircle Shares. In order for FullCircle to rely on the exemption of
the registration provisions, including exemption for "transactions not
involving a public offering," among others, each shareholder, upon receipt
of the FullCircle Shares, shall execute and deliver to FullCircle and
Paradigm, a letter of investment intent to indicate, among other
representations, that each shareholder is receiving the FullCircle Shares
for investment purposes only and not with a view to the subsequent
distribution thereof. This limitation shall not apply to shares once
registered pursuant to this Agreement but such registration shall be
limited to shares for which a lock-up letter setting forth a covenant not
to sell for the agreed-upon period has been delivered.
n) Bulk Sales Law. Paradigm and FullCircle agree that the sale and transfer of
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the Assets to FullCircle does not constitute a bulk transfer within the
meaning of Article 6 of the Uniform Commercial Code of Kentucky, and that
Paradigm is not required to comply with the provisions of such statute
applicable to bulk transfers.
o) Effect of Material Misstatement. All of the information furnished
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heretofore or hereinafter shall be true and correct in all material
respects and no material fact, the omission of which would render any such
information misleading, shall be withheld, omitted or misstated. The
current officers and directors of Paradigm agree to indemnify and hold
FullCircle harmless, including each of its shareholders, and each person,
if any, who controls such party, under any applicable law from and against
any and all losses, claims, damages, expenses or liabilities to which any
of them may become subject under applicable law, or reimburse them for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such actions, whether or not resulting in
liability, insofar as such losses, claims, damages, expenses, liabilities
or actions arising solely out of or are based on any untrue statement,
alleged untrue statement, or omission of a material fact contained in such
information delivered hereunder.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF FULLCIRCLE
5.1 REPRESENTATIONS AND WARRANTIES OF FULLCIRCLE. FullCircle represents and
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warrants to, and covenants with Paradigm and acknowledges that Paradigm
relies on such representations and warranties in entering into and
proceeding under this Agreement, which representations, warranties and
covenants of FullCircle shall be true and correct on and as of the Closing
Date as if made on and as of the Closing Date, except for changes resulting
from the ordinary course of FullCircle's business or as contemplated by
this Agreement, for which FullCircle shall certify and deliver its
certification attesting to same, as of the Closing Date, that:
a) Corporate standing. FullCircle is a corporation, duly organized, validly
-------------------
existing, and in good standing under the laws of its jurisdiction of
incorporation and under the laws of Kentucky with full corporate power and
authority to enter into this Agreement, own or hold the Assets, and/or
assets employed in the business, to carry on the business presently being
conducted by it, to enter into this Agreement and all other agreements
contemplated by this Agreement, and to consummate the transactions
contemplated hereunder and thereunder. It is duly authorized, qualified,
franchised, and licensed under all applicable laws, regulations,
ordinances, and orders of public authorities to own all of its properties
and assets and to carry on its business on all material respects as it is
now being conducted, and there is no jurisdiction in which the character
and location of the assets owned by it, or the nature of the business
transacted by it, requires further or other qualification.
b) Authorization, execution, and delivery of this Agreement. This Agreement
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has been duly authorized by all necessary corporate action of FullCircle
and has been duly executed and delivered by FullCircle and FullCircle has
taken all action required by law, its Articles of Incorporation, its
Bylaws, or otherwise approved by its board of directors and binding on its
directors, officers and shareholders, to authorize the execution and
delivery of this Agreement. The execution and delivery by FullCircle of
this Agreement and the consummation by FullCircle of the transactions
contemplated hereby will not conflict with or constitute a violation of the
Articles of Incorporation or Bylaws of FullCircle or conflict with or
constitute a violation, breach, or default under any material contract,
trust agreement, mortgage, indenture, or other agreement or instrument to
which FullCircle is or was a party or by which it is bound or to which any
of its assets are bound or to which FullCircle or any of its assets is
subject. The Board of Directors and shareholders of FullCircle have
authorized the execution and delivery of this Agreement by FullCircle and
have approved the Agreement and the transactions contemplated hereby.
FullCircle has full power, authority, and legal right to enter into this
Agreement and to consummate the transactions contemplated hereby.
c) Governmental Authorizations, Permits and Compliance with Laws and
---------------------------------------------------------------------------
Regulations. FullCircle has all licenses, franchises, permits and other
-----------
government authorizations that are legally required to enable it to conduct
its business in all material respects as conducted on the date hereof and
it has complied with the requirements under such authorizations and all
other applicable statutes and regulations of any federal, state, or other
applicable jurisdiction or agency thereof, except to the extent that
noncompliance would not materially and adversely effect the business,
operations, properties, assets, or condition of FullCircle or except to the
extent that noncompliance would not result in the occurrence of any
material liability, not otherwise disclosed to Paradigm. Except for
compliance with federal and state security laws, no authorization,
approval, consent in connection with the execution and delivery by
FullCircle of this Agreement and the consummation by FullCircle of the
Transaction at the Closing contemplated hereby.
d) Capitalization. The authorized capital stock of FullCircle as of the date
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of this Agreement consists of those shares of common and/or preferred stock
issued and outstanding as described hereinabove and further that all shares
of stock issued and outstanding are fully paid, non-assessable shares and
that the total number of outstanding options, warrants, stock appreciation
rights, or other obligations convertible into shares of stock, or calls or
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any understanding, agreements, commitments, contracts or promises with
respect to the issuance of common stock or with regard to any options,
warrants or other contractual rights to acquire any of authorized but
unissued common shares does not exceed 2,000,000 shares except for any
options, warrants, calls, or commitments, if any, to which FullCircle is
not a party and by which it is not bound.
e) Consents. No provision of the Articles of Incorporation or Bylaws of
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FullCircle or of any material contract, trust agreement, mortgage,
indenture, or other agreement or instrument to which FullCircle is a party
or by which it is bound or to which FullCircle or any of its properties is
subject requires the consent or authorization of any other person or entity
as a condition precedent to the consummation of the transactions
contemplated by this Agreement and the consummation of the Transaction will
not result in the breach of any such term or provision of, or constitute a
default under any indenture, mortgage, deed of trust, or other material
agreement or instrument to which FullCircle was or is a party, or to which
any of its assets or operations are subject, and will not conflict with any
provision of the Articles of Incorporation or Bylaws of FullCircle.
f) Brokers. No person or entity is entitled to any brokerage or finder's fee
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or commission or other like payment in connection with the negotiations
relating to or the transactions contemplated by this Agreement, based on
any agreement, arrangement, or understanding with FullCircle, or any of
FullCircle's respective officers, directors, agents, or employees.
g) Financial Statements and Other Information. The financial statements
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heretofore files with the U.S. Securities and Exchange Commission for the
periods indicated on said filings and that no material change has occurred
in the financial condition of FullCircle except as noted within said
statements and that such statements are the same as heretofore submitted to
Paradigm for examination and review. Schedules and all other information
concerning FullCircle set forth in this Agreement and the Schedules
attached hereto, are true, complete and accurate in all material respects
and do not contain, or will not contain, when delivered, any untrue
statement of a material fact or omit to state a material fact, the omission
of which would be misleading to Paradigm in connection with this Agreement.
h) Conduct of Business. FullCircle will use its best effort to maintain and
---------------------
preserve its business organization, employee relationships and goodwill
intact, and will not, without the prior written consent of Paradigm, enter
into any material commitments except in the ordinary course of business
including, but not limited to changes to its Articles of Incorporation or
Bylaws or make any change in its authorized or issued shares of any class,
declare or pay any dividend or other distribution, or issue, encumber,
purchase or otherwise acquire any of its shares of any class.
i) Litigation and Liabilities. There are no material actions, litigation,
----------------------------
investigation, claim, demand or inquiry, suits, or proceedings, pending,
or, to the best knowledge of FullCircle, threatened by or against or
affecting FullCircle at law or in equity, or before any governmental agency
or instrumentality, domestic or foreign, or before any arbitrator of any
kind which might result in an action to enjoin or prevent the consummation
of the transactions contemplated by this Transaction or which might result
in any material adverse change in the assets, properties, business, or
operations of FullCircle and no present injunction, decree, or order issued
by any court, governmental agency, or authority, or any litigation
instituted by any governmental agency or authority, challenging or seeking
to prohibit or enjoin any of the transactions contemplated by this
Agreement.; FullCircle does not have any knowledge of any default on its
part with respect to any judgment, order, writ, injunction, decree,
warrant, rule, or regulation of any court, arbitrator, or governmental
agency or instrumentality. FullCircle hereby represents and warrants that
it has no undisclosed or contingent liabilities which have not been
disclosed to Paradigm in writing or in this Agreement or in any Schedule
attached hereto. FullCircle further represents, warrants and covenants that
all debts, obligations, or other commitments made by or on behalf of
FullCircle in favor of any of its shareholders or other associated entities
have been acknowledged and agreed to in writing by FullCircle and shall be
retired or satisfied in full and none shall encumber or limit its ability
to deliver free and clear title to the Assets.
9
j) Books and Records. From the date hereof, and for any reasonable period
-------------------
subsequent thereto, FullCircle and its present management will give to
Paradigm or its duly authorized representatives, full access, during normal
business hours, to all of its books, records, contracts and other corporate
documents and properties so that Paradigm or its duly authorized
representatives, may inspect them; and furnish such information concerning
the properties and affairs of FullCircle as Paradigm or its duly authorized
representatives, may reasonably request. Any such request to inspect any
books, records of corporate documents of FullCircle shall be directed to
the responsible party indicated for receipt of notices.
k) Contracts or Agreements; Defaults under Contracts. FullCircle is not bound
--------------------------------------------------
by any material contracts, agreements, corporate restrictions or
obligations or subject to any judgment, order, writ, injunction, decree, or
award, which materially and adversely effect the business, operations,
properties, assets, or conditions of FullCircle which it has not already
disclosed to Paradigm in writing or in this Agreement or in any Schedule
attached hereto, including, but not limited to, any contract for employment
or any offer which is not terminable on 30 days (or less) notice; profit
sharing, bonus, deferred compensation, stock option, severance, or any
other retirement plan of arrangement covered by Title IV of the Employment
Retirement Income Security Act, as amended, or otherwise covered; any
agreement providing for the sale, assignment or transfer of any of its
rights, assets or properties, whether tangible or intangible, except sales
of its property in the ordinary course of business with a value of less
than $2,000; or waiver of any right of any value which in the aggregate is
extraordinary or material concerning the assets or properties scheduled by
FullCircle, except for adequate value and pursuant to contract. FullCircle
is not aware of any outstanding obligations to any of its employees or
consultants as of the Closing. FullCircle shall disclose, as of the Closing
Date, descriptions of all material contracts, written or oral, and all
agreements, franchises, licenses, or other commitments to which FullCircle
is a party or by which FullCircle or its properties are bound. FullCircle
is not in default in any material respect under the terms of any contract,
agreement, lease or other commitment which is material to the business,
operations, properties or assets, or condition of FullCircle, and there is
no event of default or event which, with notice of lapse of time or both,
would constitute a default in any material respect under any such contract,
agreement, lease, or other commitment in respect of which FullCircle has
not taken adequate steps to prevent such default from occurring, or
otherwise compromised, reached a satisfaction of, or provided for
extensions of time in which to perform under any one or more contract
obligations, among others.
l) Bulk Sales Law. Paradigm and FullCircle agree that the sale and transfer of
--------------
the Assets to FullCircle does not constitute a bulk transfer within the
meaning of Article 6 of the Uniform Commercial Code of Kentucky, and that
FullCircle is not required to comply with the provisions of such statute
applicable to bulk transfers.
m) Effect of Material Misstatement. All of the information furnished
---------------------------------
heretofore or hereinafter shall be true and correct in all material
respects and no material fact, the omission of which would render any such
information misleading, shall be withheld, omitted or misstated. The
current officers and directors of FullCircle agree to indemnify and hold
Paradigm harmless, including each of its shareholders, and each person, if
any, who controls such party, under any applicable law from and against any
and all losses, claims, damages, expenses or liabilities to which any of
them may become subject under applicable law, or reimburse them for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such actions, whether or not resulting in
liability, insofar as such losses, claims, damages, expenses, liabilities
or actions arising solely out of or are based on any untrue statement,
alleged untrue statement, or omission of a material fact contained in such
information delivered hereunder.
10
ARTICLE VI
CONDITIONS AND OBLIGATIONS PRECEDENT TO CLOSING
6.1 OBLIGATIONS OF PARTIES PRIOR TO CLOSING. From the date of this Agreement
------------------------------------------
until the Closing Date, each party hereto shall use its best efforts to:
a) Afford the other party, its accountants, counsel, technical advisors, and
other representatives, free and reasonable access during normal business
hours to the offices, equipment, facilities, records, files, contracts,
agreements, books of account, and tax returns of Paradigm relating to the
assets and the business and furnish such other party with all information
concerning the assets and the business as such other party shall reasonably
request;
b) Perform all of its obligations under material contracts, leases, insurance
policies and/or documents relating to its assets and business; maintain and
preserve its business organization intact, retain its key employees, and
maintain its relationship with existing potential customers and clients;
c) Fully comply with and perform, in all material respects, all duties and
obligations imposed on it by all federal and state laws and all rules,
regulations, and orders imposed by all federal or state or local or other
governmental authorities.
d) Continue in force policies of insurance which insure the assets and the
business with such amounts of coverage as are reasonably available, and
continue in force all bonds, surety contracts, or guaranties relating to
the business set forth in any schedule to this agreement;
e) Not enter into any employment agreement relating to the business with any
person providing for the payment of $50,000.00 or more per year unless it
has the right to terminate such employment agreement without liability or
enter into or amend any other contract, agreement, or other instrument, the
result of which would be a material change in its rights and obligations,
except that it may enter into or amend any contract or other instrument in
the ordinary course of business involving the sale of goods or services,
provided that such contract does not involve obligations in excess of
$2,000;
f) Make no changes in its Articles of Incorporation or Bylaws or pass
resolutions except as necessary to permit satisfaction or modification of
any obligations to shareholders to be paid from proceeds at the Closing by
its Board of Directors without the express written consent of such other
party.
g) Not knowingly take any action or omit to take any action which will result
in the material violation by it of any law applicable to this transaction
or cause a material breach by it of any of the representations and
warranties of it set forth in this agreement or any lease, agreement,
contract, or commitment to which it is a party or cause a material breach
by such other party of any of the representations and warranties of such
other party set forth in this Agreement;
h) Obtain, prior to the Closing Date, all consents by third parties required
to be obtained by it with respect to its performance of its obligations
under this Agreement and cooperate fully with such other party in
connection with such other party's requests and applications for the
governmental authorizations which are necessary for the ownership and
operation of the business following the Closing Date;
11
i) Give such other party written notification of any material changes taking
place after the delivery of any schedules and other documents which would
have been reflected in such documents had such changes occurred prior to
the time such documents were first delivered.
6.2 CONDITIONS PRECEDENT TO THE CLOSING. The obligations of Paradigm and
--------------------------------------
FullCircle to consummate the Transaction at the Closing are subject to the
satisfaction, on or prior to the Closing Date, except as otherwise provided for
herein, or waived or extended in writing by the parties hereto, of each of the
following conditions:
a) No Material Adverse Change. Prior to the Closing date, there shall have not
--------------------------
occurred or arisen any material adverse change in the financial condition,
business or operations of FullCircle or of Paradigm, nor shall any event
have occurred which, with lapse of time or the giving of notice or both,
may cause or create any material adverse change in the financial condition,
business or operations of either FullCircle or Paradigm, nor shall have any
material claim or loss arisen, or a material portion of the assets shall
not have been damaged or destroyed by fire, flood, or other casualty, which
loss, claim or damage or destruction is not adequately covered by insurance
policies maintained by the party suffering such loss, except as has
otherwise been disclosed to and approved by the other party.
b) Examination of Assets and Records. Paradigm and FullCircle have examined
------------------------------------
and are familiar with the assets and the business of the other party and
its current condition and has received or has examined to the respective
satisfaction of each party of all documents stated in this Agreement as
having been furnished to or having been examined by it or attached as
Schedules to this Agreement and each party shall certify that such
examination of assets and records has been conducted to its satisfaction.
ARTICLE VII
POST-CLOSING MATTERS
7.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS. All
-----------------------------------------------------------
representations, warranties, and covenants contained in this Agreement by
any party to this Agreement and any certificate or other instrument
delivered by or on behalf of any party pursuant to this Agreement shall be
continuous and shall survive the closing for a period of two (2) years
following the closing date, except that the covenant of confidentiality
shall survive in perpetuity if the transactions contemplated by this
Agreement are not consummated.
7.2 FURTHER ASSURANCES. At any time, and from time to time, after the Closing
-------------------
Date, each party will execute such additional instruments and take such
action as may be reasonably requested by the other party to confirm or
perfect title to any property transferred hereunder or otherwise to carry
out the intent and purposes of the Transaction. Either party shall, at the
other party's request, execute and deliver such other instruments of
conveyance and transfer and take such other actions as may be reasonably
requested to effectively carry out the terms and provisions of this
agreement
7.3 RECORDS. After the closing, Paradigm and FullCircle shall each make
-------
available to the other on reasonable request such books and records of that
party as may be appropriate for use in connection with their respective tax
returns, including any review thereof, and for any other reasonable
purpose. Such books and records shall be retained for a period of 10 years;
provided, however, that after 3 years any portion of such books and records
may be destroyed in whole or in part, by the party in possession thereof
upon 30 days' notice to the other party, unless the party to whom such
notice is given shall object, in which event the objecting party shall be
given such records in lieu of destruction thereof.
12
7.4 DEFAULTS AND REMEDIES. If the closing of the Transaction contemplated by
-----------------------
this Agreement does not occur on the Closing Date, each party shall return
all written information, documents, and data furnished to it or to any
person or entity on its behalf and all copies thereof. Notwithstanding
anything else in this Agreement to the contrary, if the Transaction
contemplated by this Agreement is not closed, each party's covenant and
agreement to maintain in confidence all information received by it shall
continue in perpetuity and none of such information shall be used by either
party, its employees, agents, or representatives or its successor or
assigns in the business operations of any such person, except to the extent
that such information is elsewhere available to the public or otherwise
rightfully obtained without violation of covenant of confidentiality
contained in this Agreement. Each party hereby acknowledges that, because
of the unique nature of the business and the assets, failure of either
party to carry out its obligation to perform this agreement on the closing
date would cause irreparable injury and that there may not be an adequate
remedy at law for the breach of this Agreement and that, in addition to any
other remedies available to the aggrieved party, injunctive relief may be
granted for such breach involving failure to honor any obligation created
hereunder and that, in addition to any other remedies available to the
aggrieved party, any such failure by either party to perform this agreement
shall be subject to the remedy of specific performance.
ARTICLE VIII
TAX MATTERS
8.1 TAX TREATMENT. The Transaction contemplated by this Plan is intended to
--------------
qualify as a "tax-free" reorganization under the provisions and subsections
of Section 368(a) of the Internal Revenue Code of 1986, as amended.
Paradigm and FullCircle acknowledge, however, that each are being
represented by their own tax advisors in connection with this transaction,
and neither has made any representations or warranties to the other with
respect to treatment of such transaction or any par or effect thereof under
applicable tax laws, regulations or interpretations; and no attorney's
opinion or tax revenue ruling has been obtained with respect to the tax
consequences of the transactions contemplated by the within Plan.
8.2 TAX RETURNS. Paradigm and FullCircle agree to file all federal, state, and
------------
local tax returns, and to pay all taxes, interest, and penalties in a
manner consistent with the allocation of the purchase price set forth in
this Agreement.
8.3 TAX BENEFITS. If any liability for taxes with respect to which FullCircle
-------------
is entitled to indemnification from Paradigm results from the disallowance
of any claimed deduction or credit, or from the shifting of any item of
income from one taxable period to another taxable period, the amount of
indemnification to which FullCircle is entitled shall be computed after
taking into consideration any resulting tax benefit accruing to FullCircle.
ARTICLE IX
TERMINATION OF AGREEMENT
9.1 TERMINATION FOR NON-COMPLIANCE WITH THIS AGREEMENT. Either party shall have
--------------------------------------------------
the right, but not the obligation, to terminate this Agreement by notice to
the other party in the event such other party shall fail to comply in any
material respect with any of the covenants or agreements set forth herein,
including but not limited to any of such other party's representations and
warranties contained herein shall be inaccurate in any material respect,
except that this right of termination shall not apply to those conditions
which might otherwise constitute a default but which might reasonably be
corrected by payment of a sum certain, passage of time or reasonably
suitably corrective action which can be accomplished on or before the
Closing Date.
13
9.2 TERMINATION BY MUTUAL CONSENT. This Plan may be terminated at any time for
------------------------------
any reason or no reason, by mutual consent of FullCircle and Paradigm,
expressed by action of their respective Boards of Directors, by written
agreement executed prior to the Closing Date.
9.3 TERMINATION OF OBLIGATIONS UPON TERMINATION. If this Agreement is
-----------------------------------------------
terminated pursuant to this Section, it shall be of no further force and
effect and no obligation, right or liability shall arise hereunder except
that those obligations of confidentiality, return of records and other
obligations designated to survive the Closing shall not be terminated or
diminished. Each party shall bear its own costs in connection herewith.
ARTICLE X
INDEMNIFICATION
10.1 INDEMNIFICATION. Paradigm and FullCircle shall each (the party from whom
---------------
indemnification is sought is referred to as "indemnitor" for purposes of
this section) indemnify and hold harmless the other party against and in
respect of:
a) Any damage, deficiency, or costs resulting from any misrepresentation or
breach of warranty or any nonfulfillment of any covenant or agreement on
the part of the indemnitor under this Agreement;
b) Any damage, deficiency, or costs resulting from claims accruing prior to
the closing date by a person, firm, or corporation other than a party to
this agreement; and
c) Any claim, action, suit, proceeding, demand, judgment, assessment, cost,
and expense, including reasonable counsel fees, incident to any of the
foregoing.
10.2 OBLIGATIONS OF INDEMNIFICATION. The indemnitor shall reimburse the other
--------------------------------
party for all liabilities, damages, deficiencies, claims, actions, suits,
proceedings, demands, judgments, assessments, costs, and expenses to which
this section relates only if a claim for indemnification is made by the
other party within one year after the Closing Date, except that (i) these
covenants shall survive in perpetuity if the transactions contemplated by
this Agreement are not consummated in the manner provided herein, and (ii)
the assumption of liabilities by FullCircle under this agreement shall not
be subject to any limitation by this section but shall survive for the term
of such liabilities. The other party seeking indemnification (the
"indemnitee") shall use its best efforts to minimize any liabilities,
damages, deficiencies, claims, judgments, assessments, costs, and expenses
in respect of which indemnity may be sought under this agreement. The
indemnitee shall give prompt written notice (which notice shall describe in
reasonable detail and in good faith the facts and circumstances upon which
the asserted claim for indemnification is based) to the indemnitor of the
assertion of a claim for indemnification, but in no event longer than (a)
10 days after service of process in the event litigation is commenced
against the indemnitee by a third party, or (b) 30 days after the
indemnitee becomes aware of circumstances, not involving the commencement
of litigation by a third party, which may give rise to a claim for
indemnification. The indemnitee shall consult with the indemnitor with
respect to the payment, settlement, or defense of any claim, action, suit,
proceeding, or demand. If any action or proceeding shall be brought in
connection with any liability or claim to be indemnified hereunder, the
indemnitee shall provide the indemnitor a period of 30 days to decide
whether to defend such liability or claim. During such period the
indemnitee shall take all necessary steps to protect the interests of
itself and the indemnitor, including the filing of necessary responsive
pleadings, the seeking of emergency relief, or other action necessary to
maintain the status quo, subject to reimbursement from the indemnitor of
its expenses in doing so. If the indemnitor determines that it shall defend
such action or proceeding, the indemnitor shall defend such action or
14
proceeding at its expense, using counsel selected by any insurance company
insuring against any such claim and undertaking to defend such claim, or by
other counsel selected by it and approved by the indemnitee, which approval
shall not be unreasonably withheld or delayed. The indemnitor shall keep
the indemnitee fully apprised at all times as to the status of the defense
and shall consult with the indemnitee prior to settlement of any
indemnified matter. In the event the indemnitee has a claim or claims
against any third party growing out of or connected with the indemnified
matter, then upon receipt of indemnification, the indemnitee shall fully
assign to the indemnitor the entire claim or claims and the indemnitor
shall thereupon be subrogated with respect to such claim or claims of the
indemnitee. Paradigm agrees to indemnify and hold FullCircle harmless,
including each of its Directors and Officers, and each person, if any, who
controls such party, under any applicable law from and against any and all
losses, claims, damages, expenses or liabilities to which any of them may
become subject under applicable law, or reimburse them for any legal or
other expenses reasonably incurred by them in connection with investigating
or defending any such actions, whether or not resulting in liability,
insofar as such losses, claims, damages, expenses, liabilities or actions
arise out of or based on any untrue statement, alleged untrue statement, or
omission of material fact contained in such information delivered
hereunder.
ARTICLE XI
MODIFICATION, AMENDMENT AND WAIVER
11.1 BINDING EFFECT; WAIVER OF DEFENSES. This Agreement shall bind each party
-------------------------------------
hereto, its successors and assigns and shall inure to the benefit of each
party and its successors and assigns. Every right and remedy provided
herein shall be cumulative with every other right and remedy, whether
conferred herein, at law or in equity, and may be enforced concurrently or
separately, and no waiver by any party of the performance of any obligation
by the other shall be construed as a waiver of the same or any other
default than, therefore, or thereafter occurring or existing.
11.2 ENTIRE AGREEMENT; AMENDMENT AND WAIVER. This Agreement, including the
------------------------------------------
Exhibits and Schedules hereto, constitutes and contains the entire
agreement between the parties hereto with respect to the transactions
contemplated hereby and supersedes any prior writing by the parties. The
parties may, by mutual agreement in writing, amend this agreement in any
respect, and any party, as to such party, may in writing (1) extend the
time for the performance of any obligations of any other party; (2) waive
any inaccuracies in representations and warranties by any other party; (3)
waive performance of any obligations by any other party; (4) unilaterally
waive or extend the term of compliance of any term or condition of this
Agreement by a writing signed by the party or parties for whose benefit the
provision is intended; and (5) waive the fulfillment of any condition that
is precedent to the performance by such party of any of its obligations
hereunder. No such waiver shall be deemed to constitute the waiver of any
other breach of the same or of any other term or condition of this
agreement. Any such amendment or waiver must be signed by an officer of the
parties or party to such amendment or waiver.
11.3 COURSE OF DEALING. No course of dealing in respect of, nor any omission or
------------------
delay in the exercise of, any right, power, remedy, or privilege vested in
either party hereto by this Agreement shall operate as a waiver thereof,
and any waiver by such party shall only be effective if in writing and
signed by an officer of such party.
11.4 PARTIES IN INTEREST; ASSIGNMENT. Except as may be otherwise expressly
----------------------------------
provided herein, all terms, provisions, covenants and agreements contained
in this Agreement by or on behalf of any of the parties to this agreement
shall be binding upon and inure to the benefit of the parties hereto and of
their respective heirs, executors, beneficiaries, personal and legal
representatives, successors, and assigns, whether so expressed or not. No
party to this Agreement may assign its rights or delegate its obligations
under this Agreement to any other person or entity without the express
15
prior written consent of the other party, except that FullCircle shall
assign its rights and delegate its obligations to a subsidiary or
affiliated entity for purposes of culmination of the non-taxable merger
intended hereunder but such assignment and delegation shall not relieve
FullCircle of its obligations under this Agreement.
11.5 THIRD PARTY RIGHTS. It is the intention of the parties that nothing in this
------------------
Agreement shall be deemed to create any right with respect to any person or
entity not a party to this Agreement.
ARTICLE XII
DISPUTES, DEFAULTS AND REMEDIES
12.1 SIMPLE VALUATION DISPUTES. In the event of any disputes between the parties
-------------------------
as to such prorations and adjustments, the amounts not in dispute shall
nonetheless be paid at the Closing and, if the nature of such dispute
relates only to a determination of a monetary value for items or
allocations, such disputes shall be determined by an independent certified
public accountant mutually acceptable to the parties, and the fees and
expenses of such accountant shall be paid or allocated at the Closing pro
rata (half to each party).
12.2 DISPUTES AND ENFORCEMENT. In the event of any dispute regarding enforcement
------------------------
or interpretation of this Agreement, or the breach thereof, the parties
agree to first endeavor to settle the dispute in an amicable manner by
direct discussions and thereafter by mediation under the Commercial
Mediation Rules of the American Arbitration Association, before resorting
to arbitration.
12.3 MEDIATION ARBITRATION. Any unresolved controversy or claim arising out of
----------------------
or relating this Agreement, or breach or termination thereof, not resolved
by direct discussion, mediation or valuation by a independent accountant
shall be settled by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. Upon such
dispute or claim between the parties to this agreement arising out of or
relating to this Agreement or its breach which has not been resolved within
thirty (30) days after either party shall notify the other in writing of
such controversy (the "Dispute") shall be finally determined by arbitration
in accordance with the Arbitration Rules (the "Rules") of the American
Arbitration Associating ("AAA") in effect on the date of this agreement.
The arbitration shall take place, and the arbitrators' award shall be
rendered in Louisville, Kentucky. The parties agree to be bound by the
decision of the majority of the arbitrators. The award of the arbitrators
shall be the sole and exclusive remedy between the parties regarding the
Dispute and judgment upon the Award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof.
ARTICLE XIII
NOTICES
13.1 NOTICES. All notices, requests, consents, and other communications
-------
permitted or required to be given under this Agreement shall be in writing
and shall be given personally or sent by United States first class mail,
registered or certified, postage prepaid, with proof of receipt requested,
addressed to the recipient at the below address:
If to FullCircle: FullCircle Registry, Inc.
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
16
If to Paradigm: Paradigm Solutions Group, LLC
Attention: ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
or at such other address as shall have been specified by the addressee in a
notice given to the sender in accordance with this section. Notices mailed
in accordance with this section shall be deemed given two days after the
date mailed or on the date received, which ever is earlier. Notices sent
via overnight courier service or facsimile transmission shall be deemed
delivered only upon acknowledgment by the recipient. Each party hereto
hereby irrevocably designate and appoint the above named individual to
whose attention notices are addressed as its agent and attorney-in-fact
with full power and authority until the Closing to execute, deliver and
receive on its behalf, all notices, requests and other communications
hereunder; to fix and alter on its behalf, the date, time and place of the
Closing; to waive, amend or modify any provisions of this Agreement and to
take such other action on its behalf in connection with this Agreement, the
Closing and the transactions contemplated hereby as such agent deems
appropriate but that each party reserves the right to designate a new agent
by notice of resolution of its Board of Directors.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
14.1 ENTIRE AGREEMENT. This Plan represents the entire agreement between the
-----------------
parties hereto relating to the subject matter hereof, including any
previous Memoranda of Understanding, others letters of intent,
understandings, or agreements between the parties hereto with respect to
the subject matter hereof, all of which are hereby merged into this Plan,
which alone fully and completely expresses the agreement of the parties
relating to the subject matter hereof. Excepting the foregoing agreement,
there are no other courses of dealing, understandings, agreements,
representations, or warranties, written or oral, except as set fourth
herein.
14.2 EXPENSES. FullCircle and Paradigm shall each pay any and all fees, costs
--------
and expenses, including any legal and accounting fees in connection with
the negotiation, execution and consummation of the Agreement and the other
transactions contemplated by this Agreement. Notwithstanding the foregoing,
Paradigm shall pay any local and state taxes and fees assessed or due in
connection with the sale of the assets to FullCircle, including any
transfer and sales taxes (other than income taxes).
14.3 TIME OF ESSENCE. Time shall be of the essence in the performance by the
-----------------
parties hereto of each and all of such party's covenants, obligations, and
agreements under this Agreement.
14.4 GOVERNING LAW. This Agreement and the rights, remedies, and duties of the
--------------
parties hereto shall be governed by and construed, interpreted and enforced
in accordance with the laws of the Commonwealth of Kentucky. including such
rules pertaining to conflicts of laws except to the extent preempted by
federal law, including laws pertaining to taxes and securities, in which
event (and to the extent only) federal law shall govern in accordance with
interpretations in the Western District of Kentucky.
14.5 SEVERABILITY. The invalidity or unenforceability of any provision of this
------------
Agreement shall not affect or impair the validity or enforceability of any
other provisions of this Agreement and, in the event, such provision is
declared or deemed unenforceable, the remaining provisions shall remain
binding and enforceable and shall be interpreted in light of the recitals
above but without giving effect to such invalid or unenforceable provision.
17
14.6 COUNTERPARTS. This Agreement may be executed in one or more counterparts,
------------
any one of which need not contain the signatures of more than one party but
all of which taken together shall constitute one and the same Agreement.
14.7 CONSTRUCTION. As used in this Agreement, as appropriate, the singular use
------------
includes the plural, the plural includes the singular, and any masculine
pronoun includes the corresponding feminine or neuter pronoun, or vice
versa. The section and subsection headings used in this Agreement are
inserted as a matte of convenience only and shall not affect in any way the
meanings or interpretation of this Agreement.
14.8 SCHEDULES. The schedules and Exhibits, if any, attached to this Agreement
---------
are an integral part hereof and are incorporated herein as though fully set
forth at the point where first mentioned.
14.8 CONFIDENTIALITY AND PRESS RELEASES. Unless and until the closing of the
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transactions contemplated by this Agreement shall have occurred, and except
as may be otherwise required by applicable law, Paradigm and FullCircle
shall each, and each shall cause its employees, agents, and representatives
to, maintain in confidence and not otherwise use information, documents,
and data furnished to it, or to any person or entity on its behalf, by the
other party in connection herewith. Prior to the Closing Date, neither
party and no employees of either party shall, without the prior written
approval of the other party, make any press release or other public
announcement concerning the transactions contemplated by this Agreement,
except that FullCircle may issue a public announcement or press release
regarding the signing of this Agreement upon approval of form, content and
timing by Paradigm, and, to the extent that either party shall be so
obligated by law, in which case the other party shall be so advised and the
parties shall use their best efforts to cause a mutually agreeable release
or announcement or filing to be issued. In the event no closing shall have
occurred on or before 5:00 PM EDT on October 16, 2002, FullCircle may issue
a public announcement or press release deemed appropriate regarding the
unwinding of this Agreement upon approval of form, content and timing by
Paradigm but this requirement of confidentiality shall continue for one
year thereafter. On the Closing Date, or as soon thereafter as practicable,
Paradigm and FullCircle shall issue a press release concerning the
execution and consummation of the Plan, to be released promptly and within
the time required by the laws, rules and regulations as promulgated by the
United States Securities and Exchange Commission, and concomitant therewith
to cause to be prepared a full and complete letter to FullCircle's
shareholders which shall contain information required by Regulation
240.I4f_I as promulgated under Section I4(f) as mandated under the
Securities and Exchange Act of 1934, as amended.
14.9 ATTORNEY FEE. In the event that any party prevails in any action or suit to
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enforce this Plan, or secure relief from any default hereunder or breach
hereof, the nonprevailing party or parties shall reimburse the prevailing
party for all costs, including reasonable attorney fees, incurred in
connection therewith.
IN WITNESS WHEREOF, Paradigm and FullCircle have each caused this Agreement
to be executed by their duly authorized officers and therefore executed and
agreed to be bound by this Agreement in Louisville, Kentucky as of and effective
the date first above written.
Paradigm: FullCircle:
Paradigm Solutions, Group, LLC FullCircle Registry Inc.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------- -----------------------------
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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EXHIBIT A
The undersigned hereby approves the Agreement and Plan of Reorganization with
FullCircle. The undersigned hereby represents and warrants that the undersigned
has read the Agreement and Plan of Reorganization with FullCircle. and
understands its terms and conditions.
Shareholders of Paradigm.
_____________________ Date:_________________ Shares to be Issued_____________
▇▇▇▇ ▇▇▇▇▇▇
_____________________ Date:_________________ Shares to be Issued_____________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇
Schedule A
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Description of Financial Statements of Paradigm
Paradigm has generated internal Profit and Loss and Balance Sheet statements
which statements are prepared by its independent bookkeeper
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EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
PURCHASER: ISSUER: FullCircle Registry,Inc.
SECURITY: Common Stock, par value $.001 QUANTITY: _______________ Shares
In connection with the purchase of the above-listed Securities of the Company,
I, the purchaser represent to the Company the following:
(1) Investment. I am aware of the Company's business affairs and financial
-----------
condition. I am purchasing the Securities for investment for my own account
only and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act of 1933 (as
Amended). These securities have not been registered under the Securities Act by
reason of a specific exemption therefrom, which exemption depends on, among
other things, the bona fide nature of the investment intent as expressed herein.
In this connection I understand that, in view of the Securities and Exchange
Commission ("SEC"), the statutory basis for such exemption may be unavailable if
my representation was predicated solely upon a present intention to hold these
Securities for the minimum capital gains period specified under tax statutes,
for a deferred sale, for or until an increase or decrease in the market price of
the Securities or for the period of one year or any other fixed period in the
future.
(2) Restrictions on Transfer Under Securities Act. I further acknowledge
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and understand that the Securities must be held indefinitely unless they are
subsequently registered under the Securities Act or unless an exemption from
such registration is available. Moreover, I understand that the Company is
under no obligation to register the Securities. In addition, I understand that
the certificate evidencing the Securities will be imprinted with a legend which
prohibits the transfer of the Securities unless they are registered or unless
the Company receives an opinion of counsel reasonably satisfactory to the
Company that such registration is not required.
(3) Sales Under Rule 144. I am aware of the adoption of Rule 144 by the SEC
---------------------
promulgated under the Securities Act, which in substance permits limited public
resale of securities acquired in a non- public offering subject to the
satisfaction of certain conditions, including: (i) the availability of certain
current public information about the Company, (ii) the resale being made through
a broker in an unsolicited "broker's transaction" or in transactions directly
with a " market maker," and (iv) the amount of securities sold during any
three-month period not exceeding specified limitations (generally 1% of the
total shares outstanding).
(4) Limitations on Rule 144. I further acknowledge and understand that the
-------------------------
Company is not now, and at any time I wish to sell the Securities may not be,
satisfying the public information requirement of Rule 144, and, in such case, I
would be precluded from selling the Securities under Rule 144 even if the
minimum holding period had been satisfied.
(5) Sales Not Under Rule 144. I further acknowledge that, if all the
-----------------------------
requirements of Rule 144 are not met, then Regulation A, or some other
registration exemption will be required; and that, although Rule 144 is not
exclusive, the staff of the Commission has expressed its opinion (i) that
persons proposing to sell private placement securities other than in a
registered offering or exemption from registration is available for such offers
or sales, and (ii) that such persons and the brokers who participate in the
transactions do so their own risk.
(6) Stop Transfer Instructions. I further understand that stop transfer
-----------------------------
instructions will be in effect with respect to the transfer of the Securities
consistent with the above.
(7) Additional Representations and Warranties. In addition, I represent and
------------------------------------------
warrant:
(i) That I have had the opportunity to ask questions of, and receive
answers from, the Company ( or any person acting on its behalf) concerning the
Company and my proposed investment in the Securities;
(ii) That I have concluded that I have sufficient information upon which to
base my decision to acquire the Securities;
(iii) That I have made my own determination of the value of the Securities
and have not relied upon any statements, representations or warranties of the
Company regarding the value of the Securities or the business prospects of the
Company;
(iv) That I understand that in acquiring the Securities, I am making a
highly speculative investment with the knowledge that the Company is in the
initial stages of development;
(v) That I am capable of bearing the economic risk and burdens of the
investment, the possibility of complete loss of all of the investment, and the
possible inability to readily liquidate the investment due to the lack of public
market; and
(vi) That I understand that, in selling and transferring the Securities, the
Company had relied upon an exemption from the registration requirements of the
Securities Act and that, in an attempt to effect compliance with all the
conditions of such exemption, the Company is relying in good faith upon all of
my foregoing representations and warranties.
SIGNATURE OF PURCHASER
Date:_______________ Address:_______________________
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