AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of August 18, 1999 is among
FUSION NETWORKS, INC., a Delaware corporation (the "Fusion"), IDM ENVIRONMENTAL
CORP., a New Jersey corporation ("IDM"), IDM/FUSION HOLDINGS, INC. ("Parent"),
and IDM/FNI ACQUISITION CORPORATION, a Delaware corporation and a direct wholly
owned subsidiary of Parent (the "Merger Subsidiary").
WHEREAS, Fusion is a newly formed corporation, formed and capitalized
pursuant to a business plan, a copy of which has been provided to IDM and Parent
(the "Business Plan");
WHEREAS, IDM is a diversified services and project development company;
WHEREAS, management of IDM and Fusion have entered into negotiations and
agreed in principle as to the terms on which IDM would form Parent and Merger
Subsidiary for the purpose of forming a holding company structure under which
IDM would become a wholly-owned subsidiary of Parent and Merger Subsidiary would
merge with and into Fusion causing Fusion to become a wholly-owned subsidiary of
Parent;
WHEREAS, it is contemplated that on or prior to the Effective Time of the
Merger pursuant to this Merger Agreement, the following will have occurred:
Pursuant to a Plan of Reorganization and Merger (the "IDM Reorganization") dated
August 18, 1999, among IDM, Parent and IDM Merger Subsidiary, Inc., IDM will
have been restructured into a holding company structure pursuant to which Parent
will be the sole owner of all outstanding IDM capital stock and the holders of
IDM stock will be stockholders of Parent (for purposes hereof, the IDM
Reorganization shall be assumed to have been consummated prior to the Effective
Time and all representations and undertakings of Parent hereunder shall be
deemed to be representations and undertakings of IDM for periods prior to
consummation of the IDM Reorganization);
WHEREAS, the respective Boards of Directors of the Fusion, Parent and the
Merger Subsidiary, and Parent as the sole stockholder of the Merger Subsidiary,
each have, in light of and subject to the terms and conditions set forth herein,
resolved to deem this Agreement and the transactions contemplated hereby,
including the Merger (as defined in Section 1.1), taken together, advisable and
fair to, and in the best interests of, their respective stockholders; and
WHEREAS, for federal income Tax (as defined in Section 3.16) purposes, it
is intended that the Merger shall qualify as a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained, and intending to be
legally bound hereby, the Fusion, Parent and the Merger Subsidiary hereby agree
as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. At the Effective Time (as defined in Section 1.2),
upon the terms and subject to the conditions of this Agreement and in accordance
with the Delaware General Corporation Law (the "DGCL"), the Merger Subsidiary
shall be merged with and into the Fusion ("Merger"). Following the Merger, the
Fusion shall continue as the surviving corporation (the "Surviving Corporation")
and shall continue its corporate existence under the DGCL, and the separate
corporate existence of the Merger Subsidiary shall cease.
SECTION 1.2 Effective Time. Subject to the provisions of this Agreement,
Parent, the Merger Subsidiary and the Fusion shall cause the Merger to be
consummated by (i) filing a certificate of merger complying with the DGCL with
the Secretary of State of the State of Delaware (the "Certificate of Merger") as
soon as practicable on or after the Closing Date (as defined in Section 1.3).
The Merger shall become effective upon the later of such filing or at such time
thereafter as is provided in the Certificate of Merger (the "Effective Time").
SECTION 1.3 Closing of the Merger. The closing of the Merger (the "Closing")
will take place at a time and on a date (the "Closing Date") to be specified by
the parties, which shall be no later than the fifteenth business day after
satisfaction or waiver of the conditions set forth in Article VII (other than
those conditions that by their nature are to be satisfied at the Closing, but
subject to the fulfillment or waiver of those conditions), at the offices of
Xxxxx X. Xxxxxx, Esq., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, unless
another time, date or place is agreed to in writing by the parties hereto.
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SECTION 1.4 Effects of the Merger. The Merger shall have the effects set
forth in the DGCL. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the properties, rights, privileges,
immunities, powers and franchises of the Fusion and the Merger Subsidiary shall
vest in the Surviving Corporation, and all debts, liabilities, obligations and
duties of the Fusion and the Merger Subsidiary shall become the debts,
liabilities, obligations and duties of the Surviving Corporation.
SECTION 1.5 Certificate of Incorporation and Bylaws. The Certificate of
Incorporation of the Fusion in effect immediately prior to the Effective Time
shall be the Certificate of Incorporation of the Surviving Corporation, until
amended in accordance with such Certificate of Incorporation and the DGCL. The
Bylaws of the Fusion in effect immediately prior to the Effective Time shall be
the Bylaws of the Surviving Corporation, until amended in accordance with such
Bylaws, the Certificate of Incorporation and the DGCL.
SECTION 1.6 Directors. The directors of the Merger Subsidiary immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation until such director's
successor is duly elected or appointed and qualified.
SECTION 1.7 Officers. The officers of Fusion at the Effective Time shall be
the initial officers of the Surviving Corporation, each to hold office in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation until such officer's successor is duly elected or appointed and
qualified.
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.1 Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of any of the parties hereto or
any holder of shares of Fusion Common Stock (as defined in Section 2.1(c)):
(a) Securities of the Merger Subsidiary and Parent. The issued and
outstanding securities of Fusion shall remain outstanding and shall be unchanged
as a result of the Merger (except that ownership of the Fusion shares shall pass
to Parent pursuant to Section 2.1(c)). The issued and outstanding securities of
Parent shall remain outstanding and shall be unchanged as a result of the
Merger.
(b) Cancellation of Treasury Shares and Parent-Owned Shares. Each share of
Merger Subsidiary Common Stock issued and outstanding immediately prior to the
Effective Time that is owned by Fusion, or by Parent, the Merger Subsidiary or
any other subsidiary of Parent (other than shares in trust accounts, managed
accounts, custodial accounts and the like that are beneficially owned by third
parties) shall automatically be cancelled and shall cease to exist, and no
consideration shall be delivered or deliverable in exchange therefor.
(c) Conversion of Fusion Common Stock. Each share of common stock of Fusion
("Fusion Common Stock") issued and outstanding immediately prior to the
Effective Time (individually, a "Share" and collectively, the "Shares") shall be
converted into and be exchangeable for the right to receive 17,733.333 fully
paid and non-assessable shares of common stock, par value $.01 per share, of
Parent, or an aggregate of 26,600,000 shares of Parent Common Stock; provided,
however, that the aggregate number of shares of Parent Common Stock issuable
pursuant to the Merger shall be increased proportionately to the extent that
Fusion issues additional shares of common stock as permitted by Section 5.1(b)
hereof.
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(d) Certain Adjustments. If between the date of this Agreement and the
Effective Time the outstanding shares of Parent Common Stock shall have been
changed into a different number of shares or a different class by reason of any
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares or any similar event, the amount of shares of
Parent Common Stock to be issued pursuant to Section 2.1(c) above shall be
correspondingly adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares or
such similar event.
SECTION 2.2 No Fractional Shares of Parent Common Stock. No certificates or
scrip of shares of Parent Common Stock representing fractional shares of Parent
Common Stock or book-entry credit of the same shall be issued upon the surrender
for exchange of certificates representing outstanding Shares and such fractional
share interests will not entitle the owner thereof to vote or to have any rights
of a shareholder of Parent or a holder of shares of Parent Common Stock.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FUSION
Except as set forth in the disclosure schedule delivered by Fusion to
Parent prior to the execution of this Agreement (the "Fusion Disclosure
Schedule") (each Section of which qualifies the correspondingly numbered
representation and warranty or covenant to the extent specified therein), Fusion
hereby represents and warrants to each of Parent, IDM and the Merger Subsidiary
as follows:
SECTION 3.1 Organization and Qualification; Subsidiaries.
(a) Fusion and each of its subsidiaries is a corporation or legal entity
duly organized, validly existing and in good standing under the Laws (as defined
in Section 3.9) of the jurisdiction of its incorporation and has all requisite
corporate, partnership or similar power and authority to own, lease and operate
its properties and to carry on its businesses as now conducted and proposed by
Fusion to be conducted.
(b) Section 3.1 of the Fusion Disclosure Schedule sets forth a list of all
subsidiaries of Fusion. Except as listed in Section 3.1 of the Fusion Disclosure
Schedule, Fusion does not own, directly or indirectly, beneficially or of
record, any shares of capital stock or other security of any other entity or any
other investment in any other entity.
(c) Each of Fusion and its subsidiaries is duly qualified or licensed and
in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except where the failure to be
so duly qualified or licensed and in good standing does not and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Fusion.
(d) Fusion has heretofore delivered to Parent accurate and complete copies
of the articles or certificate of incorporation and codes of regulations, bylaws
or other similar organizational documents, as currently in effect, of each of
Fusion and each of its subsidiaries.
SECTION 3.2 Capitalization of Fusion and Its Subsidiaries.
(a) The authorized capital stock of Fusion consists of 3,000 shares of
Fusion Common Stock. As of August 18, 1999, 1,500 shares of Fusion Common Stock
were issued and outstanding; and (ii) no shares of Fusion Common Stock were
issued and held in the treasury of Fusion. All the outstanding shares of Fusion
Common Stock are duly authorized, validly issued, fully paid and non-assessable.
Except as set forth above or in Section 3.2(a) of the Fusion Disclosure Schedule
(1) there are no shares of capital stock or other voting securities of Fusion
authorized, issued or outstanding, (2) there are no outstanding options,
warrants, calls, preemptive rights, subscriptions or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock or other voting securities of Fusion or any of its subsidiaries,
obligating Fusion or any of its subsidiaries to issue, transfer or sell or cause
to be issued, transferred or sold any shares of capital stock, voting securities
or other equity interest in Fusion or any of its subsidiaries or securities
convertible into or exchangeable for such shares or equity interests, or
obligating Fusion or any of its subsidiaries to grant, extend or enter into any
such option, warrant, call, subscription or other right, agreement, arrangement
or commitment, or (3) there are no outstanding contractual obligations of Fusion
or any of its subsidiaries to repurchase, redeem or otherwise acquire any Shares
or other capital stock of Fusion or any subsidiary or to provide funds to make
any investment (in the form of a loan, capital contribution or otherwise) in any
subsidiary or any other entity other than loans to Subsidiaries in the ordinary
course of business. There are no stockholder agreements, voting trusts or other
agreements or understandings to which Fusion or any of its subsidiaries is a
party or by which it is bound relating to the voting of any shares of capital
stock of Fusion.
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(b) All of the outstanding capital stock of Fusion's subsidiaries is owned
by Fusion, directly or indirectly, free and clear of any Lien (as hereinafter
defined) or any other limitation or restriction (including any restriction on
the right to vote, transfer or sell the same, except as may be provided as a
matter of Law). There are no securities of Fusion or its subsidiaries
convertible into or exchangeable for, no options or other rights to acquire from
Fusion or its subsidiaries, and no other contract, understanding, arrangement or
obligation (whether or not contingent) providing for the issuance or sale,
directly or indirectly of, any capital stock or other ownership interests in, or
any other securities of, any subsidiary of Fusion. There are no outstanding
contractual obligations of Fusion or its subsidiaries to repurchase, redeem or
otherwise acquire any outstanding shares of capital stock or other ownership
interests in any subsidiary of Fusion. For purposes of this Agreement, "Lien"
means, with respect to any asset (including, without limitation, any security)
any mortgage, lien, pledge, charge, security interest or encumbrance of any kind
in respect of such asset.
SECTION 3.3 Authority Relative to This Agreement; Consents and Approvals.
(a) Fusion has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby
and no other corporate proceedings on the part of Fusion are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby
(other than, with respect to the Merger and this Agreement, the Fusion Requisite
Vote (as hereinafter defined)). This Agreement has been duly and validly
executed and delivered by Fusion and, assuming the due authorization, execution
and delivery hereof by each of Parent and the Merger Subsidiary, constitutes a
valid, legal and binding agreement of Fusion, enforceable against Fusion in
accordance with its terms.
(b) The Board of Directors of Fusion (the "Fusion Board") has duly and
validly authorized the execution and delivery of this Agreement and approved the
consummation of the transactions contemplated hereby, and taken all corporate
actions required to be taken by the Fusion Board for the consummation of the
transactions, including the Merger, contemplated hereby and has resolved (i) to
deem this Agreement and the transactions contemplated hereby, including the
Merger, taken together, advisable and fair to, and in the best interests of,
Fusion and its stockholders; and (ii) to recommend that the stockholders of
Fusion approve and adopt this Agreement. The Fusion Board has directed that this
Agreement be submitted to the stockholders of Fusion for their approval by
written consent or at a meeting to be held for that purpose. The affirmative
vote of the holders of a majority of the voting stock of Fusion (which is
comprised solely of Fusion Common Stock (the "Voting Shares"))(the "Fusion
Requisite Vote") are the only votes of the holders of any class or series of
capital stock of Fusion necessary to adopt this Agreement and approve the
transactions contemplated hereby, including the Merger. No other vote of the
stockholders of Fusion is required by law, the articles of incorporation or the
code of regulations of Fusion or otherwise in order for Fusion to approve and
adopt this Agreement or to consummate the transactions contemplated hereby.
SECTION 3.4 Business Plan. Fusion has been formed, capitalized and operated
to date, and until the Effective Time will be capitalized and operated,
consistent with the Business Plan.
SECTION 3.5 Financial Statements. Fusion is newly formed and, except as
contemplated in the Business Plan, has no material assets and, through the date
hereof, has had no material operations and has not completed a fiscal quarter
for purposes of preparing financial statements. If requested, by Parent, Fusion
will prepare and deliver to Parent unaudited financial statements and such other
financial statements, whether audited or unaudited, as may be required by Parent
to comply with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Any such financial statements so
delivered by Fusion shall be prepared in conformity with generally accepted
accounting principles applied on a consistent basis ("GAAP").
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SECTION 3.6 No Undisclosed Liabilities. Neither Fusion nor any of its
subsidiaries has any material liabilities or obligations of any nature, whether
or not accrued, contingent or otherwise, and there is no existing condition,
situation or set of circumstances known to Fusion which could be expected to
result in such a liability or obligation, except (a) liabilities or obligations
reflected in Fusion financial statements and (b) liabilities or obligations
incurred in the ordinary course of business which do not and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Fusion.
SECTION 3.7 Absence of Changes. Except as and to the extent disclosed to
Parent, as set forth in Section 3.7 of the Fusion Disclosure Schedule or as
permitted by Section 5.1, since inception Fusion and its subsidiaries have
conducted their business in the ordinary and usual course consistent with
Business Plan and there has not been:
(a) any event, change, occurrence or development which does or would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Fusion;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of Fusion or any
repurchase, redemption or other acquisition by Fusion or any subsidiary of any
Fusion securities;
(c) any amendment of any term of any outstanding security of Fusion or any
subsidiary;
(d) (i) any incurrence or assumption by Fusion or any subsidiary of any
indebtedness for borrowed money (A) other than in the ordinary and usual course
of business consistent with the Business Plan or (B) in connection with any
acquisition or capital expenditure permitted by Section 5.1 or (ii) any
guarantee, endorsement or other incurrence or assumption of liability (whether
directly, contingently or otherwise) by Fusion or any subsidiary for the
obligations of any other person (other than any wholly owned subsidiary of
Fusion), other than in the ordinary and usual course of business consistent with
the Business Plan;
(e) any creation or assumption by Fusion or any subsidiary of any Lien on
any material asset of Fusion or any subsidiary other than in the ordinary and
usual course of business consistent with past practice;
(f) any making of any loan, advance or capital contribution to or
investment in any person by Fusion or any subsidiary other than (i) any
acquisition permitted by Section 5.1, (ii) loans, advances or capital
contributions to or investments in wholly owned subsidiaries of Fusion or (iii)
loans or advances to employees of Fusion or any subsidiary made in the ordinary
and usual course of business consistent with the Business Plan;
(g) (i) any contract or agreement entered into by Fusion or any subsidiary
on or prior to the date hereof relating to any material acquisition or
disposition of any assets or business or (ii) any modification, amendment,
assignment, termination or relinquishment by Fusion or any subsidiary of any
contract, license or other right that does or would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Fusion,
other than, in the case of (i) and (ii), transactions, commitments, contracts or
agreements in the ordinary and usual course of business consistent with the
Business Plan and those contemplated by this Agreement;
(h) any material change in any method of accounting or accounting
principles or practice by Fusion or any subsidiary, except for any such change
required by reason of a change in GAAP; or
(i) any (i) grant of any severance or termination pay to any director,
officer or employee of Fusion or any of its subsidiaries; (ii) entering into of
any employment, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any director, officer or employee
of Fusion or any of its subsidiaries (it being acknowledged and agreed that the
hiring of employees in the ordinary course of business on an at-will basis shall
not be deemed the entering into of an employment or similar agreement); (iii)
increase in benefits payable under any existing severance or termination pay
policies or employment agreements; or (iv) increase in compensation, bonus or
other benefits payable to directors, officers or employees of Fusion or any of
its subsidiaries other than, in the case of clause (iv) only, increases in
compensation, bonus or other benefits payable to employees of Fusion or any of
its subsidiaries in the ordinary and usual course of business consistent with
the Business Plan or merit increases in salaries of employees at regularly
scheduled times in customary amounts consistent with past practices. SECTION 3.8
Information Supplied. None of the information supplied or to be supplied by
Fusion for inclusion or incorporation by reference in the proxy statement
relating to the Parent Stockholder Meeting (as defined in Section 6.1) (the
"Proxy Statement"), including but not limited to the Business Plan, will, at the
date mailed to stockholders and at the time of the meeting of stockholders,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. If at any time prior to the Parent Stockholder Meeting any event
with respect to Fusion, its officers and directors or any of its subsidiaries
should occur which is required to be described in an amendment of, or a
supplement to, the Proxy Statement, Fusion shall promptly so advise Parent and
such event shall be so described, and such amendment or supplement shall be
promptly filed with the SEC and, as required by Law, disseminated to the
stockholders of the Parent.
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SECTION 3.9 Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Nasdaq SmallCap Market, the Securities
Act, the Exchange Act, state securities or blue sky Laws, and any other
applicable state regulatory agency, the filing and recordation of the
Certificate of Merger as required by the DGCL and as otherwise set forth in
Section 3.9 to Fusion Disclosure Schedule (collectively, the "Fusion Required
Approvals"), no filing with or notice to, and no permit, authorization, consent
or approval of, any court or tribunal or administrative, governmental or
regulatory body, agency or authority is necessary for the execution and delivery
by Fusion of this Agreement or the consummation by Fusion of the transactions
contemplated hereby, except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings or give such
notice does not and would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on Fusion. Neither the execution,
delivery and performance of this Agreement by Fusion nor the consummation by
Fusion of the transactions contemplated hereby will (i) conflict with or result
in any breach of any provision of the respective articles or certificate of
incorporation or code of regulations or bylaws (or similar governing documents)
of Fusion or any of its subsidiaries, (ii) result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, amendment, cancellation or
acceleration or Lien) under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which Fusion or any of its subsidiaries is a party
or by which any of them or any of their respective properties or assets may be
bound (collectively, the "Fusion Agreements"), or (iii) violate any Law
applicable to Fusion or any of its subsidiaries or any of their respective
properties or assets, except in the case of (ii) or (iii) for violations,
breaches or defaults which do not or would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Fusion. Section
3.9 of the Fusion Disclosure Schedule sets forth a list of all material third
party consents and approvals required to be obtained under the Fusion Agreements
prior to the consummation of the transactions contemplated by this Agreement.
SECTION 3.10 No Default. Neither Fusion nor any of its subsidiaries is in
violation of any term of (i) its articles or certificate of incorporation, code
of regulations, bylaws or other organizational documents, (ii) any agreement or
instrument related to indebtedness for borrowed money or any other agreement to
which it is a party or by which it is bound, or (iii) any foreign or domestic
law, order, writ, injunction, decree, ordinance, award, stipulation, statute,
judicial or administrative doctrine, rule or regulation entered by a
Governmental Entity ("Law") applicable to Fusion, its subsidiaries or any of
their respective properties or assets, except, in the case of (ii) and (iii),
for violations which do not or would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Fusion or to
prevent or materially delay the performance of this Agreement by Fusion.
SECTION 3.11 Real Property.
(a) Fusion owns no fee interest in any real property.
(b) Section 3.11(b) of the Fusion Disclosure Schedule sets forth all
leases, subleases and other agreements (the "Real Property Leases") under which
Fusion or any of its subsidiaries uses or occupies or has the right to use or
occupy, now or in the future, any real property that is material to the conduct
of the business of Fusion and its subsidiaries, taken as a whole. Fusion has
heretofore delivered to Parent true, correct and complete copies of all Real
Property Leases (and all modifications, amendments and supplements thereto and
all side letters to which Fusion or any of its subsidiaries is a party affecting
the obligations of any party thereunder). Each Real Property Lease constitutes
the valid and legally binding obligation of Fusion or its subsidiaries,
enforceable in accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar Laws of general applicability relating to or
affecting creditors' rights or by general equity principles), and is in full
force and effect. All rent and other sums and charges payable by Fusion and its
subsidiaries as tenants under each Real Property Lease are current, no
termination event or condition or uncured default of a material nature on the
part of Fusion or any such subsidiary or, to Fusion's knowledge, the landlord,
exists under any Real Property Lease. Each of Fusion and its subsidiaries has a
good and valid leasehold interest in each parcel of real property leased by it
free and clear of all Liens, except (i) Taxes and general and special
assessments not in default and payable without penalty and interest, and (ii)
other liens, mortgages, pledges, encumbrances and security interests which do
not materially interfere with Fusion's or any of its subsidiaries' use and
enjoyment of such real property or materially detract from or diminish the value
thereof.
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(c) No party to any such Real Property Leases has given notice to Fusion or
any of its subsidiaries of or made a claim against Fusion or any of its
subsidiaries with respect to any material breach or default thereunder.
SECTION 3.12 Litigation. Except as and to the extent disclosed in Section
3.12 of the Fusion Disclosure Schedule, there is no suit, claim, action,
proceeding or investigation pending or, to Fusion's knowledge, threatened
against Fusion or any of its subsidiaries or any of their respective properties
or assets which (a) does or would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on Fusion or (b) as of the date
hereof, questions the validity of this Agreement or any action to be taken by
Fusion in connection with the consummation of the transactions contemplated
hereby or could otherwise prevent or delay the consummation of the transactions
contemplated by this Agreement. Except as and to the extent publicly disclosed
by Fusion in Section 3.12 of the Fusion Disclosure Schedule, there is no
judgment, order, writ, injunction or decree outstanding against Fusion or its
subsidiaries which does or would reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on Fusion.
SECTION 3.13 Fusion Permits; Compliance with Applicable Laws. Fusion and
its subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "Fusion Permits"), except for failures to hold such
permits, licenses, variances, exemptions, orders and approvals which do not or
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Fusion. Fusion and its subsidiaries are in compliance
in all material aspects with the terms of the Fusion Permits, except where the
failure to so comply does not or would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Fusion. The
businesses of Fusion and its subsidiaries are not being conducted in violation
of any Law applicable to Fusion or its subsidiaries, except for violations or
possible violations which do not and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Fusion. To
Fusion's knowledge, no investigation or review by any Governmental Entity with
respect to Fusion or its subsidiaries is pending or threatened, nor, to Fusion's
knowledge, has any Governmental Entity indicated an intention to conduct the
same.
SECTION 3.14 Employee Plans.
(a) Except as and to the extent disclosed in Section 3.14(a) of the Fusion
Disclosure Schedule there are no "employee benefit plans," as defined in Section
3(3) of ERISA, employment, executive compensation, consulting or other
compensation agreements, and stock option, stock award, stock purchase or other
equity-based compensation, deferred compensation, severance, salary
continuation, life insurance, bonus or other incentive compensation programs or
arrangements, and directors' benefit, bonus or other incentive compensation
arrangements, for which Fusion or any of its subsidiaries has any obligation to
or liability, contingent or otherwise (each, an "Employee Benefit Plan" and
collectively, the "Employee Benefit Plans")
(f) Except as set forth in Section 3.14(b) of the Fusion Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will by itself or in
combination with any other event (i) result in any payment becoming due, or
increase the amount of compensation due, to any current or former employee of
Fusion or any of its subsidiaries; (ii) increase any benefits otherwise payable
under any Employee Benefit Plan; or (iii) result in the acceleration of the time
of payment or vesting of any such benefits.
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SECTION 3.15 Labor Matters.
(a) Except as set forth in Section 3.15(a) of the Fusion Disclosure, there
are no employment, labor or collective bargaining agreements which pertain to
employees of Fusion or any of its subsidiaries. Fusion has heretofore delivered
to Parent true and complete copies of (i) the employment agreements listed on
Section 3.15(a) of the Fusion Disclosure Schedule and (ii) the labor or
collective bargaining agreements listed on Section 3.15(a) of the Fusion
Disclosure Schedule, together with all material amendments, modifications and
supplements thereto and side letters materially affecting the duties, rights and
obligations of any party thereunder.
(b) Fusion and each of its subsidiaries is in compliance in all material
respects with all Laws relating to the employment of labor, including all such
Laws and orders relating to wages, hours, collective bargaining, discrimination,
civil rights, safety and health workers' compensation and the collection and
payment of withholding and/or Social Security Taxes and similar Taxes.
SECTION 3.16 Environmental Matters. Except as set forth in Section 3.16 of
the Fusion Disclosure Schedule, the operations of Fusion and its subsidiaries
have been and, as of the Closing Date, will be, in compliance with all
applicable environmental Laws, except for noncompliance that does not and would
not reasonably be expected to result in Fusion and its subsidiaries incurring
material environmental costs and liabilities, and Fusion is not aware of any
facts, circumstances or conditions, which without significant capital
expenditures, would prevent material compliance in the future.
SECTION 3.17 Taxes.
(a) As of the date hereof, Fusion has not been required to file any Tax
Returns and has not paid, or been required to pay, any material taxes and is not
subject to, and has not been subject to, any audits, administrative or court
proceedings or claims with respect to Taxes.
(b) In the event the Operating files a Tax Return or pays any material
taxes on or before the Effective Date, Fusion shall provide a true and complete
copy of each such Tax Return to Parent and shall provide prompt written notice
of any Taxes paid.
(c) For purposes of this Agreement:
"Taxes" includes all forms of taxation, whenever created or imposed,
and whether of the United States or elsewhere, and whether imposed by a
local, municipal, governmental, state, foreign, Federal or other
Governmental Entity, or in connection with any agreement with respect to
Taxes including all interest, penalties and additions imposed with respect
to such amounts.
"Tax Returns" means all Federal, state, local, provincial and foreign
Tax returns, declarations, statements, reports, schedules, forms and
information returns and any amended Tax return relating to Taxes.
SECTION 3.18 Absence of Questionable Payments.
(a) Neither Fusion nor any of its subsidiaries nor, to Fusion's knowledge,
any director, officer, agent, employee or other person acting on behalf of
Fusion or any of its subsidiaries, has used any corporate or other funds for
unlawful contributions, payments, gifts, or entertainment, or made any unlawful
expenditures relating to political activity to government officials or others or
established or maintained any unlawful or unrecorded funds in violation of
Section 30A of the Exchange Act. Neither Fusion nor any of its subsidiaries nor,
to Fusion's knowledge, any director, officer, agent, employee or other person
acting on behalf of Fusion or any of its subsidiaries, has accepted or received
any unlawful contributions, payments, gifts, or expenditures.
8
SECTION 3.19 Material Contracts.
(a) Section 3.19 of the Fusion Disclosure Schedule sets forth a list of all
Material Contracts (as hereinafter defined). Fusion has heretofore made
available to Parent true, correct and complete copies of all written or oral
contracts and agreements (and all material amendments, modifications and
supplements thereto and all side letters to which Fusion or any of its
subsidiaries is a party materially affecting the obligations of any party
thereunder) to which Fusion or any of its subsidiaries is a party or by which
any of its properties or assets are bound that are material to the business,
properties or assets of Fusion and its subsidiaries taken as a whole, including,
without limitation, all: (i) employment, severance, personal services or
consulting contracts (other than any such contracts that are terminable without
penalty upon not more than 90 days notice), and all non-competition or
indemnification contracts with current or former directors, officers or
employees of Fusion or any of its subsidiaries (including, without limitation,
any contract to which Fusion or any of its subsidiaries is a party involving
employees of Fusion); (ii) material license agreements relating to Intellectual
Property (as defined in Section 3.21) granting to Fusion a license to practice
technology used in the conduct of its current or planned operations; (iii)
contracts granting a right of first refusal or first negotiation for essential
properties, services or supplies, or material sales not in the ordinary course;
(iv) partnership or joint venture agreements; (v) agreements for the
acquisition, sale or lease (including leases in connection with financing
transactions) of any properties or assets of Fusion with a value in excess of
$5,000 (by merger, purchase or sale of assets or stock or otherwise) entered
into since inception; (vi) material contracts or agreements with any
Governmental Entity; (vii) loan or credit agreements, mortgages, indentures or
other agreements or instruments evidencing (A) indebtedness for borrowed money
by Fusion or any of its subsidiaries or any such agreement pursuant to which
indebtedness for borrowed money may be incurred (including guaranties) or (B)
Liens securing any such indebtedness; (viii) agreements that purport to limit,
curtail or restrict the ability of Fusion or any of its subsidiaries, or would
restrict the ability of Parent or any of its subsidiaries, to compete in any
geographic area or line of business; (ix) agreements or arrangements, including
but not limited to xxxxxx, options, swaps, caps and collars, designed to protect
Fusion or any of its subsidiaries against fluctuations in interest rates,
currency exchange rates or the prices of certain commodities and raw materials;
(x) to the extent not otherwise required to be disclosed pursuant to any other
clause of this Section 3.19(a), contracts or agreements that would be required
to be filed as an exhibit to a Form 10-K filed by the Parent with the SEC; and
(xi) commitments and agreements to enter into any of the foregoing
(collectively, together with any such contracts entered into in accordance with
Section 5.1 hereof, the "Material Contracts"). Except as set forth in Section
3.19 of the Fusion Disclosure Schedule, neither Fusion nor any of its
subsidiaries is a party to or bound by any severance or other agreement with any
employee or consultant pursuant to which such person would be entitled to
receive any additional compensation or an accelerated payment of compensation as
a result of (x) the consummation of the transactions contemplated hereby or (y)
the termination of such employment or consulting following such consummation.
(b) Each of the Material Contracts is in full force and effect. There is no
breach or default under any Material Contract either by Fusion or, to Fusion's
knowledge, by any other party thereto, and no event has occurred that with the
lapse of time or the giving of notice or both would constitute a breach or
default thereunder by Fusion or, to Fusion's knowledge, any other party, except
for any such breach or default as does not or would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on Fusion.
(c) No party to any such Material Contract has given notice to Fusion of or
made a claim against Fusion with respect to any breach or default thereunder,
except for any such breach or default as does not or would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
Fusion.
SECTION 3.20 Insurance. Section 3.20 of the Fusion Disclosure Schedule sets
forth a list of insurance policies (including information on the scope and
amount of the coverage and deductibles provided thereunder) maintained by Fusion
or any of its subsidiaries which policies have been issued by insurers, which,
to Fusion's knowledge, are reputable and financially sound and provide coverage
for the operations conducted by Fusion and its subsidiaries of a scope and
coverage consistent with customary industry practice. Fusion has delivered to
Parent a true and correct copy of the claims history under such policies from
inception through the date hereof.
9
SECTION 3.21 Intellectual Property.
(a) Section 3.21 of the Fusion Disclosure Schedule sets forth a list of all
patents, patent rights, invention disclosure statements, trademarks, trademark
rights, trade names, trade name rights, service marks, and all applications for
any of the foregoing, of Fusion and its subsidiaries the absence of which would
reasonably be expected to have a Material Adverse Effect with respect to Fusion.
Except as set forth in Section 3.21 of the Fusion Disclosure Schedule, neither
Fusion nor any of its subsidiaries is entitled to receive or obligated to pay
any royalties or similar payments in respect of Intellectual Property.
(b) Fusion and its subsidiaries own or possess adequate licenses or other
valid rights to use (in each case, free and clear of any Liens), all
Intellectual Property (as hereinafter defined) used or held for use in
connection with the business of Fusion and its subsidiaries as currently
conducted or as contemplated to be conducted and the absence of which ownership
or rights would reasonably be expected to have a Material Adverse Effect with
respect to Fusion.
(c) The use of any Intellectual Property by Fusion and its subsidiaries
does not infringe on, or otherwise violate the rights of any person and is in
accordance with any applicable license pursuant to which Fusion or any of its
subsidiaries acquired the right to use any material Intellectual Property,
except where the result of such infringement, violation or failure does not and
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect with respect to Fusion.
(d) No person is challenging or, to the knowledge of Fusion, infringing on
or otherwise violating any right of Fusion or any of its subsidiaries with
respect to any Intellectual Property owned by and/or licensed to Fusion or its
subsidiaries, except where the result of such challenge, infringement or
violation does not and would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect with respect to Fusion.
(e) Neither Fusion nor any of its subsidiaries has received any notice
(written or otherwise) of any assertion or claim, pending or not, with respect
to any Intellectual Property used by Fusion or its subsidiaries, except where
the result of such assertion or claim does not and would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect with
respect to Fusion.
(f) No material Intellectual Property owned/or licensed by Fusion or its
subsidiaries is being used or enforced in a manner that would result in the
abandonment, cancellation or unenforceability of such Intellectual Property,
other than as does not and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Fusion.
For purposes of this Agreement, "Intellectual Property" means (i) all
trademarks, trademark rights, trade names, trade name rights, trade dress and
other indications of origin, corporate names, brand names, logos, certification
rights, service marks, applications for trademarks and for service marks,
know-how and other proprietary rights and information, the goodwill associated
with the foregoing and registration in any jurisdiction of, and applications in
any jurisdictions to register, the foregoing, including any extension,
modification or renewal of any such registration or application; (ii) all
inventions, discoveries and ideas (whether patentable or unpatentable and
whether or not reduced to practice), in any jurisdiction, all improvements
thereto, and all patents, patent rights, applications for patents (including,
without limitation, divisions, continuations, continuations in part and renewal
applications), and any renewals, extensions or reissues thereof, in any
jurisdiction; (iii) all licenses (whether Fusion is licensor or licensee) and
other agreements relating to any Intellectual Property described in (i) or (ii);
(iv) nonpublic information, trade secrets and confidential information and
rights in any jurisdiction to limit the use or disclosure thereof by any person;
(v) writings and other works, whether copyrightable or not, in any jurisdiction,
and all registrations or applications for registration of copyrights in any
jurisdiction, and any renewals or extensions thereof; (vi) all mask works and
all applications, registrations and renewals in connection therewith, in any
jurisdiction; (vii) all computer software (including data and related
documentation); (viii) any similar intellectual property or proprietary rights;
and (ix) all copies and tangible documentation thereof and any claims or causes
of action arising out of or relating to any infringement or misappropriation of
any of the foregoing.
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SECTION 3.22 Year 2000. Fusion and its subsidiaries are not subject to any
known the Year 2000 issues which, to the knowledge of Fusion, are material to
Fusion and its subsidiaries, including issues relating to internal information
systems and process control risks, embedded circuitry risks and third party
risks.
SECTION 3.23 Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission or expense reimbursement in
connection with the transactions contemplated by this Agreement based upon
arrangements made by and on behalf of Fusion or any of its affiliates.
SECTION 3.24 Tax Treatment. Neither Fusion nor any of its affiliates or
stockholders has taken or agreed to take any action or is aware of any fact or
circumstance that would prevent the Merger from qualifying as a reorganization
under Section 368 of the Code.
SECTION 3.25 Takeover Statutes. Fusion has taken all action required to be
taken by it in order to exempt this Agreement and the transactions contemplated
hereby from, and this Agreement and the transactions contemplated hereby (the
"Covered Transactions") are exempt from, the requirements of any "moratorium,"
"control share," "fair price," "affiliate transaction," "business combination"
or other antitakeover Laws and regulations of any state (collectively, "Takeover
Statutes"), including, without limitation, any antitakeover provision in
Fusion's articles of incorporation or code of regulations (the "Control Shares
Acquisition Law").
SECTION 3.26 Investment Intent; Investigation. By execution of this Merger
Agreement and approval of the same by the stockholders of Fusion, Fusion and
each of its stockholders:
(a) Will acquire the shares issuable by Parent, except as otherwise
permitted hereunder, only for his/hers/its own account, for investment and
without a view to the distribution thereof;
(b) Has reviewed all filings of the Parent, and IDM, with the Securities
and Exchange Commission or with other public agencies and has been given the
opportunity to ask questions of management of the Parent and IDM to the extent
he/she/it deems necessary to enter into the transactions contemplated hereby and
has the requisite knowledge and experience in financial and other matters to
make an informed decision regarding the same;
(c) Understands that he/she/it may sell or otherwise transfer the
Securities only if such transaction is duly registered under the Securities Act
of 1933, as amended (the "Securities Act"), or pursuant to an opinion of
counsel, satisfactory to the Parent and its counsel, to the effect that such
sale or other transfer may be made in the absence of registration under the
Securities Act.
(d) Acknowledges that, except as otherwise permitted hereunder, the
certificates representing the Securities will be legended to reflect the
restrictions of Section 3.26(c), and stop transfer instructions will apply; and
(e) Realizes that the Securities are not a liquid investment, and that
he/she/it may lose his/her/its entire investment.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUBSIDIARY
Except as set forth in the disclosure schedule delivered by Parent to
Fusion prior to the execution of this Agreement (the "Parent Disclosure
Schedule") (each Section of which qualifies the correspondingly numbered
representation and warranty or covenant to the extent specified therein), and
qualified, where appropriate to give effect to the IDM Reorganization, Parent
and the Merger Subsidiary hereby represent and warrant to Fusion as follows:
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SECTION 4.1 Organization.
(a) Each of Parent and Merger Subsidiary is a corporation duly organized,
validly existing and in good standing under the Laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its businesses as now conducted or
proposed by Parent or the Merger Subsidiary to be conducted, except where the
failure to be duly organized, existing and in good standing or to have such
power and authority would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on Parent or Merger Subsidiary.
(b) Each of Parent and Merger Subsidiary is duly qualified or licensed and
in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except where the failure to be
so duly qualified or licensed and in good standing does not and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent or Merger Subsidiary.
(c) Parent has heretofore delivered to Fusion accurate and complete copies
of the articles of incorporation and bylaws of Parent and Merger Subsidiary as
currently in effect.
SECTION 4.2 Capitalization of Parent.
(a) The authorized capital stock of the Parent consists of 7,500,000 shares
of Parent Common Stock, par value $.01 per share, and 1,000,000 shares of
preferred stock, par value $1.00 per share ("Parent Preferred Stock"). As of
August 13, 1999, and giving effect to the IDM Reorganization, (i) 3,331,085
shares of Parent Common Stock were issued and outstanding; (ii) 47,500 shares of
Parent Common Stock were reserved for issuance under the Parent's 1993 Stock
Option Plan (the "1993 Plan"), of which 40,110 shares were subject to
outstanding options; (iii) 50,000 shares of Parent Common Stock were reserved
for issuance pursuant to Parent's 1995 Stock Option Plan (the "1995 Plan"), of
which 46,900 shares were subject to outstanding options; (iv) 1,700,000 shares
of Parent Common Stock were reserved for issuance pursuant to Parent's 1998
Stock Option Plan (the "1998 Plan"), including 1,600,000 shares reserved for
issuance under the 1998 Plan which are subject to approval by the Parent
stockholders relating to an amendment to increase the shares reserved under the
1998 Plan in said amount, of which 1,040,880 shares were subject to outstanding
options; (v) 350,000 shares were reserved for issuance to various consultants in
payment for past and future services, and (vi) shares of Parent Common Stock
were reserved and subject to issuance under various other options, warrants and
convertible notes (the "Other Derivative Securities") in the amounts listed in
Section 4.2(a) of the Parent Disclosure Schedule. As of the date hereof, no
shares of Parent Common Stock were held in treasury, no shares of Parent
Preferred Stock are issued and outstanding and 200,000 shares of Parent
Preferred Stock are reserved for issuance upon exercise of the Parent Rights
pursuant to the Parent Rights Agreement. All the outstanding shares of Parent
Common Stock are, and all shares to be issued as part of the Common Merger
Consideration will be, when issued in accordance with the terms hereof, duly
authorized, validly issued, fully paid and non-assessable. Except as set forth
above, and except for the transactions contemplated by this Agreement and
Parent's obligations under the Parent Rights Agreement, as of the date of this
Agreement (1) there are no shares of capital stock or other voting securities of
Parent authorized, issued or outstanding, (2) there are no authorized or
outstanding options, warrants, calls, preemptive rights, subscriptions or other
rights, agreements, arrangements or commitments of any character relating to the
issued or unissued capital stock or other voting securities of Parent,
obligating Parent to issue, transfer or sell or cause to be issued, transferred
or sold any shares of capital stock, voting securities or other equity interest
in Parent or securities convertible into or exchangeable for such shares or
equity interests, or obligating Parent to grant, extend or enter into any such
option, warrant, call, subscription or other right, agreement, arrangement or
commitment, (3) there are no outstanding contractual obligations of Parent to
repurchase, redeem or otherwise acquire any capital stock of Parent. Except as
set forth in Section 4.2(a) of the Parent Disclosure Schedule, here are no
stockholder agreements, voting trusts or other agreements or understandings to
which Parent is a party or by which it is bound relating to the voting of any
shares of capital stock of Parent.
12
(b) All of the outstanding capital stock of the Merger Subsidiary is owned
by Parent free and clear of any Lien or any other limitation or restriction
(including any restriction on the right to vote or sell the same, except as may
be provided as a matter of Law). There are no securities of Parent or its
subsidiaries convertible into or exchangeable for, no options or other rights to
acquire from Parent or its subsidiaries, and no other contract, understanding,
arrangement or obligation (whether or not contingent) providing for the issuance
or sale, directly or indirectly, of any capital stock or other ownership
interests in, or any other securities of, Merger Subsidiary. There are no
outstanding contractual obligations of Parent or Merger Subsidiary to
repurchase, redeem or otherwise acquire any outstanding shares of capital stock
or other ownership interests in Merger Subsidiary.
SECTION 4.3 Authority Relative to This Agreement.
(a) Each of Parent and the Merger Subsidiary has all necessary corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. No other corporate proceedings on the part of
Parent or the Merger Subsidiary are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby (other than, with respect to the
Parent Requisite Vote (as hereinafter defined)). This Agreement has been duly
and validly executed and delivered by each of Parent and the Merger Subsidiary
and, assuming the due authorization, execution and delivery hereof by Fusion,
constitutes a valid, legal and binding agreement of each of Parent and the
Merger Subsidiary, enforceable against each of Parent and the Merger Subsidiary
in accordance with its terms.
13
(b) The Boards of Directors of Parent (the "Parent Board") and Merger
Subsidiary, and the Parent as the sole stockholder of the Merger Subsidiary,
have duly and validly authorized the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, and taken all
corporate actions required to be taken by such Boards of Directors and Parent as
the sole stockholder of the Merger Subsidiary for the consummation of the
transactions. The affirmative approval of the holders of Parent Common Stock
representing a majority vote of stockholders present at the Parent Stockholders
Meeting (as hereinafter defined) (the "Parent Requisite Vote") is the only vote
of the holders of any class or series of capital stock of Parent necessary to
approve the items anticipated to be submitted for approval at the Parent
Shareholder Meeting (as hereinafter defined).
SECTION 4.4 SEC Reports; Financial Statements. Parent, including for
purposes of this Section 4.4 IDM, has filed all required forms, reports and
documents with the SEC since January 1, 1998, each of which has complied in all
material respects with all applicable requirements of the Securities Act and the
Exchange Act, each as in effect on the dates such forms, reports and documents
were filed. Parent has heretofore provided to Fusion, and the stockholders of
Fusion, access to all reports, proxy statements and other filings with the SEC
(including any amendments thereto)(the "Parent SEC Reports"). None of such
forms, reports or documents, including, without limitation, any financial
statements or schedules included or incorporated by reference therein,
contained, when filed, any untrue statement of a material fact or omitted to
state a material fact required to be stated or incorporated by reference therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The consolidated
financial statements included in the Parent SEC Reports complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto and fairly present, in
conformity with GAAP on a consistent basis (except as may be indicated in the
notes thereto), the consolidated financial position of Parent and its
consolidated subsidiaries as of the dates thereof and their consolidated results
of operations and changes in financial position for the periods then ended
(subject, in the case of the unaudited interim financial statements, to normal
year-end adjustments). Since January 1, 1999, there has not been any change, or
any application or request for any change, by Parent or any of its subsidiaries
in accounting principles, methods or policies for financial accounting or Tax
purposes.
SECTION 4.5 No Undisclosed Liabilities. Neither the Parent nor the Merger
Subsidiary has any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, and there is no existing condition, situation
or set of circumstances known to Parent which could be expected to result in
such a liability or obligation, except (a) liabilities or obligations reflected
in the Parent SEC Reports filed prior to the date hereof, (b) liabilities or
obligations incurred in the ordinary course of business which do not and would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Parent and (c) liabilities or obligations incurred in
connection with the transactions contemplated hereby.
14
SECTION 4.6 Absence of Certain Changes or Events. Except as disclosed in
the Parent SEC Reports filed prior to the date hereof or as set forth in Section
4.6 of the Parent Disclosure Schedule, since March 31, 1999 (a) the businesses
of the Parent and the Merger Subsidiary have been conducted in the ordinary
course consistent with past practice, and (b) there has not been any event,
change, occurrence or development that has had, or is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the Parent or
Merger Subsidiary.
SECTION 4.7 Information Supplied. None of the information supplied or to be
supplied by Parent or the Merger Subsidiary for inclusion or incorporation by
reference in the Proxy Statement will, at the date mailed to stockholders and at
the time of the Parent Stockholder Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time prior to
the Parent Stockholder Meeting any event with respect to Parent, its officers
and directors or any of its subsidiaries should occur which is required to be
described in an amendment of, or a supplement to, the Proxy Statement, Parent
shall promptly so advise Fusion and such event shall be so described, and such
amendment or supplement (which Fusion shall have a reasonable opportunity to
review) shall be promptly filed with the SEC and, as required by Law,
disseminated to the stockholders of Parent. The Proxy Statement will comply as
to form in all material respects with the provisions of the Exchange Act and the
respective rules and regulations thereunder.
SECTION 4.8 Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky Laws, the filing and recordation of certificates of
merger as required by the DGCL and as otherwise set forth in Section 4.8 to the
Parent Disclosure Schedule (the "Parent Required Approvals"), no filing with or
notice to, and no permit, authorization, consent or approval of, any
Governmental Entity is necessary for the execution and delivery by Parent or the
Merger Subsidiary of this Agreement or the consummation by Parent or the Merger
Subsidiary of the transactions contemplated hereby, except where the failure to
obtain such permits, authorizations, consents or approvals or to make such
filings or give such notice do not or would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Parent. Neither
the execution, delivery and performance of this Agreement by Parent or the
Merger Subsidiary nor the consummation by Parent or the Merger Subsidiary of the
transactions contemplated hereby will (i) conflict with or result in any breach
of any provision of the respective articles of incorporation or bylaws (or
similar governing documents) of Parent or the Merger Subsidiary or any of
Parent's subsidiaries, (ii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration or Lien)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which Parent or the Merger Subsidiary or any of Parent's subsidiaries is a
party or by which any of them or any of their respective properties or assets
may be bound (collectively, the "Parent and Merger Subsidiary Agreements") or
(iii) violate any Law applicable to Parent or the Merger Subsidiary or any of
Parent's subsidiaries or any of their respective properties or assets, except in
the case of (ii) or (iii) for violations, breaches or defaults which do not or
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent. Section 4.8 of the Parent Disclosure Schedule
sets forth a list of all material third party consents and approvals required to
be obtained under the Parent and Merger Subsidiary Agreements prior to the
consummation of the transactions contemplated by this Agreement.
SECTION 4.9 Litigation. Except as and to the extent disclosed in Section
4.9 of the Parent Company Disclosure Schedule, there is no suit, claim, action,
proceeding or investigation pending or, to the Parent's knowledge, threatened
against the Parent or the Merger Subsidiary or any of their respective
properties or assets which (a) does or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Parent or (b)
as of the date hereof, questions the validity of this Agreement or any action to
be taken by the Parent in connection with the consummation of the transactions
contemplated hereby or could otherwise prevent or delay the consummation of the
transactions contemplated by this Agreement. Except as and to the extent
publicly disclosed by the Parent in Section 4.9 of the Parent Disclosure
Schedule, there is no judgment, order, writ, injunction or decree outstanding
against the Parent or the Merger Subsidiary which does or would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Parent or the Merger Subsidiary.
15
SECTION 4.10 Compliance with Applicable Laws. Except as and to the extent
publicly disclosed by Parent in the Parent SEC Reports filed prior to the date
hereof, the businesses of Parent and the Merger subsidiary are not being
conducted in violation of any Law, ordinance or regulation of any Governmental
Entity, except for violations or possible violations which do not and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent. To Parent's knowledge, no investigation or review by
any Governmental Entity with respect to Parent or the Merger subsidiary is
pending or threatened, nor, to Parent's knowledge, has any Governmental Entity
indicated an intention to conduct the same, other than, in each case, those
which Parent reasonably believes do not or would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Parent or
the Merger Subsidiary.
SECTION 4.11 Absence of Questionable Payments. Neither Parent nor the
Merger Subsidiary nor, to Parent's knowledge, any director, officer, agent,
employee or other person acting on behalf of Parent or the Merger Subsidiary,
has used any corporate or other funds for unlawful contributions, payments,
gifts, or entertainment, or made any unlawful expenditures relating to political
activity to government officials or others or established or maintained any
unlawful or unrecorded funds in violation of Section 30A of the Exchange Act.
Neither Parent nor the Merger Subsidiary nor, to Parent's knowledge, any
director, officer, agent, employee or other person acting on behalf of Parent or
the Merger Subsidiary, has accepted or received any unlawful contributions,
payments, gifts, or expenditures.
SECTION 4.12 Employee Plans. Except as and to the extent disclosed in
Section 4.12 of the Parent Disclosure Schedule there are no "employee benefit
plans," as defined in Section 3(3) of ERISA, employment, executive compensation,
consulting or other compensation agreements, and stock option, stock award,
stock purchase or other equity-based compensation, deferred compensation,
severance, salary continuation, life insurance, bonus or other incentive
compensation programs or arrangements, and directors' benefit, bonus or other
incentive compensation arrangements, for which the Parent or the Merger
Subsidiary has any obligation to or liability, contingent or otherwise.
SECTION 4.13 Material Contracts.
(a) Section 4.13 of the Parent Disclosure Schedule sets forth a list of all
Material Contracts (as hereinafter defined). The Parent has heretofore made
available to Fusion true, correct and complete copies of all written or oral
contracts and agreements (and all material amendments, modifications and
supplements thereto and all side letters to which Parent or the Merger
Subsidiary is a party materially affecting the obligations of any party
thereunder) to which the Parent or the Merger Subsidiary is a party or by which
any of its properties or assets are bound that are material to the business,
properties or assets of the Parent and the Merger Subsidiary taken as a whole,
including, without limitation, all: (i) employment, severance, personal services
or consulting contracts (other than any such contracts that are terminable
without penalty upon not more than 90 days notice), and all non-competition or
indemnification contracts with current or former directors, officers or
employees of the Parent or the Merger Subsidiary (including, without limitation,
any contract to which Parent or the Merger Subsidiary is a party involving
employees of the Parent); (ii) material license agreements relating to
Intellectual Property granting to the Parent a license to practice technology
used in the conduct of its current or planned operations; (iii) contracts
granting a right of first refusal or first negotiation for essential properties,
services or supplies, or material sales not in the ordinary course; (iv)
partnership or joint venture agreements; (v) agreements for the acquisition,
sale or lease (including leases in connection with financing transactions) of
any properties or assets of the Parent with a value in excess of $5,000 (by
merger, purchase or sale of assets or stock or otherwise) entered into since
March 31, 1999; (vi) material contracts or agreements with any Governmental
Entity; (vii) loan or credit agreements, mortgages, indentures or other
agreements or instruments evidencing (A) indebtedness for borrowed money by the
Parent or the Merger Subsidiary or any such agreement pursuant to which
indebtedness for borrowed money may be incurred (including guaranties) or (B)
Liens securing any such indebtedness; (viii) agreements that purport to limit,
curtail or restrict the ability of the Parent or the Merger Subsidiary, or would
restrict the ability of Parent or the Merger Subsidiary, to compete in any
geographic area or line of business; (ix) agreements or arrangements, including
but not limited to xxxxxx, options, swaps, caps and collars, designed to protect
the Parent or the Merger Subsidiary against fluctuations in interest rates,
currency exchange rates or the prices of certain commodities and raw materials;
and (x) commitments and agreements to enter into any of the foregoing
(collectively, together with any such contracts entered into in accordance with
Section 5.1 hereof, the "Material Contracts"). Except as set forth in Section
4.13 of the Parent Disclosure Schedule, neither the Parent nor the Merger
Subsidiary is a party to or bound by any severance or other agreement with any
employee or consultant pursuant to which such person would be entitled to
receive any additional compensation or an accelerated payment of compensation as
a result of (x) the consummation of the transactions contemplated hereby or (y)
the termination of such employment or consulting following such consummation.
(b) Each of the Material Contracts is in full force and effect. There is no
breach or default under any Material Contract either by the Parent or, to the
Parent's knowledge, by any other party thereto, and no event has occurred that
with the lapse of time or the giving of notice or both would constitute a breach
or default thereunder by the Parent or, to the Parent's knowledge, any other
party, except for any such breach or default as does not or would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
on the Parent.
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(c) No party to any such Material Contract has given notice to the Parent
of or made a claim against the Parent with respect to any breach or default
thereunder, except for any such breach or default as does not or would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Parent.
SECTION 4.14 Year 2000. Parent and its subsidiaries have developed and are
executing a plan with respect to Year 2000 readiness (the "Parent Year 2000
Plan").The Parent Year 2000 Plan addresses the Year 2000 issues which, to the
knowledge of Parent, are material to Parent and its subsidiaries, including
internal information systems and process control risks, embedded circuitry risks
and third party risks.
SECTION 4.15 Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of Parent or the Merger Subsidiary or any of their affiliates.
SECTION 4.16 Tax Treatment. Neither Parent nor any of its affiliates has
taken or agreed to take any action or is aware of any fact or circumstance that
would prevent the Merger from qualifying as a reorganization under Section 368
of the Code.
ARTICLE V
COVENANTS RELATED TO CONDUCT OF BUSINESS
SECTION 5.1 Conduct of Business of Fusion. Except as contemplated by this
Agreement, during the period from the date hereof to the Effective Time, Fusion
will, and will cause each of its subsidiaries to, conduct its operations in the
ordinary and usual course of business consistent with the Business Plan and, to
the extent consistent therewith, with no less diligence and effort than would be
applied in the absence of this Agreement, seek to preserve intact its current
business organizations, seek to keep available the service of its current
officers and employees and seek to preserve its relationships with customers,
suppliers and others having business dealings with it to the end that goodwill
and ongoing businesses shall be unimpaired at the Effective Time. Without
limiting the generality of the foregoing, and except as otherwise expressly
provided in this Agreement or in Section 5.1 of the Fusion Disclosure Schedule,
prior to the Effective Time, neither Fusion nor any of its subsidiaries will,
without the prior written consent of Parent:
(a) amend its certificate of incorporation or bylaws (or other similar
governing instrument);
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities convertible into or exchangeable for any
stock or any equity equivalents (including, without limitation, any stock
options or stock appreciation rights); provided, however, that it is
specifically contemplated by the Business Plan, and Fusion is authorized
hereunder, to issue, sell, deliver or agree or commit to issue, sell or deliver,
shares of its common stock or securities convertible into or exchangeable for
common stock of Fusion, as deemed appropriate by management of Fusion to carry
out Fusion's Business Plan and provided that Fusion will notify management of
Parent prior to any such issuance or commitment to issue securities;
(c) (i) split, combine or reclassify any shares of its capital stock; (ii)
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock;
(iii) make any other actual, constructive or deemed distribution in respect of
any shares of its capital stock or otherwise make any payments to stockholders
in their capacity as such; or (iv) redeem, repurchase or otherwise acquire any
of its securities or any securities of any of its subsidiaries;
(d) adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of Fusion
or any of its subsidiaries (other than the Merger);
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(e) alter through merger, liquidation, reorganization, restructuring or in
any other fashion the corporate structure or ownership of any subsidiary;
(f) (i) incur or assume any long-term or short-term debt or issue any debt
securities, except for borrowings under existing lines of credit in the ordinary
and usual course of business consistent with past practice (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person, except in
the ordinary and usual course of business consistent with the Business Plan and
in amounts not material to Fusion and its subsidiaries, taken as a whole, and
except for obligations of the wholly owned subsidiaries of Fusion; (iii) make
any loans, advances or capital contributions to, or investments in, any other
person (other than to the wholly owned subsidiaries of Fusion or customary loans
or advances to employees in the ordinary and usual course of business consistent
with the Business Plan and in amounts not material to the maker of such loan or
advance); (iv) pledge or otherwise encumber shares of capital stock of Fusion or
its subsidiaries; or (v) mortgage or pledge any of its material assets, tangible
or intangible, or create or suffer to be created any material Lien thereupon;
(g) except as may be required by Law, enter into, adopt, amend, extend or
terminate any bonus, profit sharing, compensation, severance, termination, stock
option, stock appreciation right, restricted stock, performance unit, stock
equivalent, stock purchase agreement, pension, retirement, deferred
compensation, labor, collective bargaining, employment, severance or other
employee benefit agreement, trust, plan, fund, award or other arrangement for
the benefit or welfare of any director, officer or employee in any manner, or
increase in any manner the compensation or fringe benefits of any director,
officer or (except as required under agreements existing on the date hereof and
except for increases in compensation, bonus or other benefits payable to
employees of Fusion or any of its subsidiaries in the ordinary and usual course
of business consistent with the Business Plan) employee or pay any benefit not
required by any plan and arrangement as in effect as of the date hereof
(including, without limitation, the granting of stock appreciation rights or
performance units);
(h) acquire, sell, lease or dispose of any assets outside the ordinary and
usual course of business consistent with the Business Plan or any assets which
in the aggregate are material to Fusion and its subsidiaries taken as a whole,
enter into any commitment or transaction outside the ordinary and usual course
of business consistent with the Business Plan or grant any exclusive
distribution rights;
(i) except as may be required as a result of a change in Law or in GAAP,
change any of the accounting principles or practices used by it;
(j) revalue in any material respect any of its assets, including, without
limitation, writing down the value of inventory or writing-off notes or accounts
receivable other than in the ordinary and usual course of business consistent
with Business Plan or as required by GAAP;
(k) acquire (by merger, consolidation, or acquisition of stock or assets)
any corporation, partnership or other business organization or division thereof
or any equity interest therein; (ii) enter into any material contract or
agreement, other than in the ordinary and usual course of business consistent
with the Business Plan or amend in any material respect any of the Material
Contracts or the agreements referred to in Section 3.18; or (iii) enter into or
amend any contract, agreement, commitment or arrangement providing for the
taking of any action that would be prohibited hereunder;
(l) make or revoke any Tax election, or settle or compromise any Tax
liability in excess of amounts reserved therefor on the consolidated balance
sheet of Fusion as at the Audit Date, or change (or make a request to any Taxing
authority to change) any aspect of its method of accounting for Tax purposes;
(m) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
and usual course of business consistent with the Business Plan;
(n) waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which Fusion or any of its
subsidiaries is a party;
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(o) settle or compromise any pending or threatened suit, action or claim
relating to the transactions contemplated hereby;
(p) take any action (including any action otherwise permitted by this
Section 5.1) that would prevent or impede the Merger from qualifying as a
reorganization under Section 368(a) of the Code;
(q) enter into any agreement or arrangement that limits or otherwise
restricts Fusion or any of its subsidiaries or any successor thereto or that
could, after the Effective Time, limit or restrict the Surviving Corporation and
its affiliates (including Parent) or any successor thereto, from engaging or
competing in any line of business or in any geographic area;
(r) take, propose to take, or agree in writing or otherwise to take, any of
the actions described in Sections 5.1(a) through 5.1(q) or any action which
would (y) make any of the representations or warranties of Fusion contained in
this Agreement (i) which are qualified as to materiality untrue or incorrect or
(ii) which are not so qualified untrue or incorrect in any material respect or
(z) result in any of the conditions to the Merger set forth in Article VII
hereof not being satisfied.
SECTION 5.2 Conduct of Business of Parent and IDM. Except as otherwise
expressly provided in this Agreement or as set forth in Section 5.2 of the
Parent Disclosure Schedule, prior to the Effective Time, neither Parent, nor IDM
nor the Merger Subsidiary will, without the prior written consent of Fusion:
(a) amend its certificate of incorporation (or other similar governing
instrument) in any manner that would be materially adverse to the holders of
Parent Common Stock;
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities convertible into or exchangeable for any
stock or any equity equivalents (including, without limitation, any stock
options or stock appreciation rights);
(c) (i) declare, set aside or pay any dividend or other distribution in
respect of its capital stock, (ii) make any other actual, constructive or deemed
distribution in respect of any shares of its capital stock or otherwise make any
payments to stockholders in their capacity as such or (iii) redeem, repurchase
or otherwise acquire any shares of Parent Common Stock;
(d) take any action (including any action otherwise permitted by this
Section 5.2) that would prevent or impede the Merger from qualifying as a
reorganization under Section 368(a) of the Code; or
(e) take, propose to take, or agree in writing or otherwise to take, any of
the actions described in Section 2.1(e) or Sections 5.2(a) through 5.2(d) or any
action which (y) would make the representations or warranties of Parent and the
Merger Subsidiary in this Agreement (i) which are qualified as to materiality
untrue or incorrect or (ii) which are not so qualified untrue in any material
respect or (z) result in any of the conditions to the Merger set forth in
Article VII hereof not being satisfied.
SECTION 5.3 Access to Information.
(a) Between the date hereof and the Effective Time, Fusion will give Parent
and the Merger Subsidiary and their authorized representatives (including
counsel, financial advisors and auditors) reasonable access during normal
business hours to all employees, offices and other facilities and to all books
and records of Fusion and its subsidiaries, will permit Parent and the Merger
Subsidiary to make such inspections as Parent and the Merger Subsidiary may
reasonably require and will cause Fusion's officers and those of its
subsidiaries to furnish Parent with such financial and operating data and other
information with respect to the business, properties and personnel of Fusion and
its subsidiaries as Parent or the Merger Subsidiary may from time to time
reasonably request, provided that no investigation pursuant to this Section
5.3(a) shall affect or be deemed to modify any of the representations or
warranties made by Fusion in this Agreement.
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(b) Between the date hereof and the Effective Time, Parent and the Merger
Subsidiary will give Fusion and its authorized representatives (including
counsel, financial advisors and auditors) reasonable access during normal
business hours to all employees, plants, offices, warehouses and other
facilities and to all books and records of Parent and its subsidiaries, will
permit Fusion to make such inspections as Fusion may reasonably require and will
cause Parent's officers and those of its subsidiaries to furnish Fusion with
such financial and operating data and other information with respect to the
business, properties and personnel of Parent and its subsidiaries as Fusion may
from time to time reasonably request, provided that no investigation pursuant to
this Section 5.3(b) shall affect or be deemed to modify any of the
representations or warranties made by Parent or the Merger Subsidiary in this
Agreement.
(c) Between the date hereof and the Effective Time, Fusion shall furnish to
Parent and the Merger Subsidiary, concurrently with the deliveries thereof to
management or Fusion Board, such monthly financial statements and data as are
regularly prepared for distribution to Fusion management or the Fusion Board.
(d) Until the Effective Time, each of Parent and the Merger Subsidiary will
hold and will cause its authorized representatives to hold in confidence all
documents and information concerning Fusion and its subsidiaries furnished to
Parent or the Merger Subsidiary in connection with the transactions contemplated
by this Agreement except to the extent such documents and information are
required to be disclosed by Law, including disclosure required by federal and
state securities laws.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Stockholder Meetings.
(a) Fusion shall take all lawful action to (i) cause the stockholders of
Fusion to execute a unanimous consent approving the terms of this Agreement, or
(ii) cause a special meeting of its stockholders (the "Fusion Stockholder
Meeting") to be duly called and held as soon as practicable after the date of
this Agreement for the purpose of voting on the approval and adoption of this
Agreement and (iii) solicit proxies from its stockholders to obtain the Fusion
Requisite Vote for the approval and adoption of this Agreement. The Fusion Board
shall recommend approval and adoption of this Agreement and the Merger by
Fusion's stockholders and the Fusion Board shall not withdraw, amend or modify
in a manner adverse to Parent such recommendation (or announce publicly its
intention to do so).
(b) Parent, as sole stockholder of Merger Subsidiary, shall execute a
written consent or otherwise take such steps as may be necessary to satisfy
applicable stockholder approval requirements relating to the Merger.
(c) Parent and IDM shall take all lawful action to (i) cause a special
meeting of the stockholders of IDM (the "Parent Stockholder Meeting") to be duly
called and held as soon as practicable after the date of this Agreement for the
purpose of voting on the approval of the Action Items (as defined in Section 6.4
below) and (ii) solicit proxies from IDM's stockholders to obtain the Parent
Requisite Vote. IDM's Board shall recommend approval of the Action Items by
IDM's stockholders and, except as required to comply with their fiduciary duty
under applicable Law, IDM's Board shall not be permitted to withdraw, amend or
modify in a manner adverse to Fusion such recommendation (or announce publicly
its intention to do so).
SECTION 6.2 Registration of Securities to be Issued.
(a) As soon as practicable after the date hereof, Parent shall file with
the Securities and Exchange Commission a registration statement (the
"Registration Statement") on Form S-4, or such other form as may be appropriate
for the purpose of registering the Parent Common Stock to be issued to the
Fusion shareholders pursuant to the Merger and seeking proxies in connection
with the vote of the stockholders of the Parent with respect to the Action
Items. Parent shall use all reasonable efforts to cause the Registration
Statement to become effective as soon as possible. Prior to filing, Parent shall
consult with Fusion and provide Fusion with a full opportunity to review and
comment on all portions of the Prospectus/Proxy Statement and Registration
Statement. Fusion shall cooperate with Parent and its counsel in the preparation
of the Registration Statement and shall provide all information and documents
reasonably requested, including financial statements as shall be required, in
connection with preparation of such Registration Statement.
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(b) If, and to the extent necessary to facilitate the resale of shares
received in the Merger free of the limitations of Rule 144 or Rule 145, Parent
shall file with the SEC an additional registration statement (the "Resale
Registration Statement") on Form S-3, or such other form as may be appropriate,
for the purpose of registering the resale by non-management shareholders of
Fusion of up to 7,300,000 shares of Parent Common Stock to be issued in the
Merger. Parent shall use all reasonable efforts to cause the Resale Registration
Statement to become effective as soon as possible following the Effective Time.
Fusion shall provide a list of selling shareholders who desire to have shares
included in the Resale Registration Statement and Fusion, and such selling
shareholders, shall cooperate fully with Parent and its counsel in the
preparation of the Resale Registration Statement.
SECTION 6.3 Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, each party will use its reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable Laws to consummate the Merger
and the other transactions contemplated by this Agreement.
SECTION 6.4 Action Items. The Parent's Board and IDM's board shall approve,
and submit to IDM's stockholders for approval, a single proposal to (i) approve
the terms of the Merger; (ii) approve the terms of the IDM Reorganization; (iii)
amend the Parent Certificate of Incorporation to increase the authorized shares
of Common Stock of the Parent to 100,000,000 shares; (iv) amend the Parent
Certificate of Incorporation to decrease the par value of the Parent Common
Stock to $0.001 per share; (v) amend the Parent Certificate of Incorporation to
change the name of the Parent to a name to be determined by the Parent Board
after consultation with management of Fusion; (vi) approve, a proposal, as
previously approved by the Parent's Board, to increase the number of shares
reserved for issuance pursuant to Parent's 1998 Plan by 1,600,000 shares
(collectively, the foregoing items (i) through (vi) submitted for approval at
the Parent Stockholder Meeting are referred to as the "Action Items") and (vii)
carry out such other matters as management of Parent shall reasonably deem
necessary. The Action Items shall be voted on, and approved or rejected, by the
Parent stockholders as a single proposal and not individually. Xxxx Xxxxxxxx and
Xxxxx Xxxxx, as the principal officers and shareholders of Parent, agree to vote
for the Action Items at the Parent Stockholder Meeting.
SECTION 6.5. Grants of Options. Parent's Board is specifically authorized
under this Merger Agreement to grant additional options in an aggregate amount
up to the total shares reserved for issuance under Parent's 1993 Plan, 1995 Plan
and 1998 Plan, as increased.
SECTION 6.6. Parent Directors. On, or as soon as practical following, the
Effective Time, Parent shall decrease the size of its board of directors to five
persons with three of such directors to be designated by Fusion and two of such
directors to be designated by IDM.
SECTION 6.7. Undertakings of Fusion and Parent Relating to IDM. Parent and
Fusion agree: (i) to guarantee, for a period of three years following the
Effective Time, the salary of Xxxx Xxxxxxxx and Xxxxx Xxxxx, pursuant to their
existing employment agreements with IDM, in the amount of $50,000 per year each;
(ii) to cause fifty percent (50%) of all proceeds received from the conversion
or exercise of options or warrants of IDM or Parent outstanding on the Effective
Time to be contributed to the capital of IDM and fifty percent (50%) of such
proceeds to be contributed to the capital of Fusion; and (iii) to nominate and
recommend the election of Xxxx Xxxxxxxx and Xxxxx Xxxxx to the board of Parent
for a minimum of five years following the Parent Stockholder Meeting.
SECTION 6.8. Approval of Issuances of Shares in Payment of Expenses. The
Parent's Board is hereby authorized under this Merger Agreement to issue up to
350,000 shares of Parent Common Stock, currently reserved for issuance, in
payment of certain amounts owed by IDM to consultants and service providers.
SECTION 6.9 No Solicitation; Acquisition Proposals. From the date hereof
until the termination hereof, and except as expressly permitted by the following
provisions of this Section 6.9, Fusion will not, nor will it permit any of its
subsidiaries to, nor will it authorize or permit any officer, director or
employee of or any investment banker, attorney, accountant or other advisor or
representative of, Fusion or any of its subsidiaries to, directly or indirectly,
(i) solicit, initiate or encourage the submission of any Acquisition Proposal
(as defined in Section 9.12(a)), (ii) participate in any discussions or
negotiations regarding, or furnish to any person any non-public information with
respect to Fusion or any of its subsidiaries, or take any other action to
facilitate, any Acquisition Proposal or any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal or (iii) enter into any agreement with respect to an
Acquisition Proposal.
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SECTION 6.10 Public Announcements. Each of Parent, the Merger Subsidiary
and Fusion will consult with one another before issuing any press release or
otherwise making any public statements with respect to the transactions
contemplated by this Agreement, including, without limitation, the Merger, and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by applicable Law or by
obligations pursuant to any listing agreement with the Nasdaq SmallCap Market,
as determined by Parent, the Merger Subsidiary or Fusion, as the case may be.
SECTION 6.11 Notification of Certain Matters. Fusion shall, upon obtaining
knowledge of any of the following, give prompt notice to Parent and the Merger
Subsidiary, and Parent and the Merger Subsidiary shall, upon obtaining knowledge
of any of the following, give prompt notice to Fusion, of (i) the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of which would be
likely to cause any representation or warranty contained in this Agreement,
which is qualified as to materiality, to be untrue or inaccurate, or any
representation or warranty not so qualified, to be untrue or inaccurate in any
material respect at or prior to the Effective Time, (ii) any material failure of
Fusion, Parent or the Merger Subsidiary, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder, (iii) the occurrence or non-occurrence of any event the occurrence
or non-occurrence of which would be likely to cause any condition to the
obligations of any party to the effect of the transactions contemplated hereby
not to be satisfied, (iv) any notice of, or other communication relating to, a
default or event which, with notice or lapse of time or both, would become a
default, received by it or any of its subsidiaries subsequent to the date of
this Agreement and prior to the Effective Time, under any contract or agreement
material to the financial condition, properties, businesses, results of
operations or prospects of it and its subsidiaries taken as a whole to which it
or any of its subsidiaries is a party or is subject, (v) any notice or other
communication from any Governmental Entity in connection with the Merger, (vi)
any actions, suits, claims, investigations or other proceedings (or
communications indicating that the same may be contemplated) commenced or
threatened against Fusion or any of its subsidiaries which, if pending on the
date of this Agreement, would have been required to have been disclosed pursuant
to Section 3.12 or which relate to the consummation of the Merger, (vii) any
notice or other communication from any third party alleging that the consent of
such third party is or may be required in connection with the transactions
contemplated by this Agreement, or (viii) any Material Adverse Effect in their
respective financial condition, properties, businesses, results of operations or
prospects, taken as a whole; provided, however, that the delivery of any notice
pursuant to this Section 6.13 shall not cure such breach or non-compliance or
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
SECTION 6.11 Tax-Free Reorganization Treatment. Fusion, Parent and the
Merger Subsidiary shall execute and deliver to Xxxxxxxx Siegelbaum LLP, special
tax counsel to the Parent, certificates substantially in the forms agreed to on
or prior to the date hereof at such time or times as reasonably requested by
such law firm in connection with the delivery of an opinion with respect to the
transactions contemplated hereby. Prior to the Effective Time, none of Fusion,
Parent or the Merger Subsidiary shall take or cause to be taken any action which
would cause to be untrue (or fail to take or cause not to be taken any action
which would cause to be untrue) any of the representations in such certificates.
SECTION 6.12 Employee Matters. Parent will cause the Surviving Corporation
to honor the obligations of Fusion or any of its subsidiaries under the
provisions of all employment, consulting, termination, severance, change in
control and indemnification agreements disclosed in Section 6.12 of Fusion
Disclosure Schedule between and among Fusion or any of its subsidiaries and any
current or former officer, director, consultant or employee of Fusion or any of
its subsidiaries.
SECTION 6.13 SEC Filings. Parent shall furnish to Fusion copies of all
reports, proxy statements and prospectuses of the type referred to in Section
4.4 which it files with the SEC on or after the date hereof, and Parent
represents and warrants that as of the respective dates thereof, such reports
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements and the unaudited
consolidated interim financial statements included in such reports (including
any related notes and schedules) will fairly present the financial position of
Parent and its consolidated Subsidiaries as of the dates thereof and the results
of operations and cash flows or other information included therein for the
periods or as of the date then ended (subject, in the case of the interim
financial statements, to normal, recurring year-end adjustments), in each case
in accordance with past practice and GAAP consistently applied during the
periods involved (except as otherwise disclosed in the notes thereto).
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SECTION 6.14 Listing of Stock. Parent shall use its best efforts to cause
the shares of Parent Common Stock to be issued in connection with the Merger to
be approved for listing on the Nasdaq SmallCap Market on or prior to the Closing
Date, subject to official notice of issuance.
SECTION 6.15 Antitakeover Statutes. If any Takeover Statute is or may
become applicable to the Merger, each of Parent and Fusion shall take such
actions as are necessary so that the transactions contemplated by this Agreement
may be consummated as promptly as practicable on the terms contemplated hereby
and otherwise act to eliminate or minimize the effects of any Takeover Statute
on the Merger.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.1 Conditions to Each Party's Obligations to Effect the Merger.
The respective obligations of each party to consummate the transactions
contemplated by this Agreement are subject to the fulfillment at or prior to the
Effective Time of each of the following conditions, any or all of which may be
waived in whole or in part by the party being benefitted thereby, to the extent
permitted by applicable Law:
(a) This Agreement shall have been approved and adopted by the unanimous
vote of the stockholders of Fusion and the Merger Subsidiary and the Action
Items shall have been approved by the stockholders of IDM;
(b) There shall not be in effect any Law of any Governmental Entity of
competent jurisdiction, restraining, enjoining or otherwise preventing
consummation of the transactions contemplated by this Agreement or permitting
such consummation only subject to any condition or restriction that has or would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Fusion or Parent and no Governmental Entity shall have
instituted any proceeding which continues to be pending seeking any such Law;
and
(c) All necessary approvals under state securities Laws or the Securities
Act or Exchange Act relating to the issuance or trading of the Parent Common
Stock shall have been received.
SECTION 7.2 Conditions to the Obligations of the Parent and the Merger
Subsidiary. The respective obligations of Parent and the Merger Subsidiary to
consummate the transactions contemplated by this Agreement are subject to the
fulfillment at or prior to the Effective Time of each of the following
additional conditions, any or all of which may be waived in whole or part by
Parent and the Merger Subsidiary, as the case may be, to the extent permitted by
applicable Law:
(a) The representations and warranties of Fusion contained herein or
otherwise required to be made after the date hereof in a writing expressly
referred to herein by or on behalf of Fusion pursuant to this Agreement, to the
extent qualified by materiality or Material Adverse Effect, shall have been true
and, to the extent not qualified by materiality or Material Adverse Effect,
shall have been true in all material respects, in each case when made and on and
as of the Closing Date as though made on and as of the Closing Date (except for
representations and warranties made as of a specified date, which need be true,
or true in all material respects, as the case may be, only as of the specified
date).
(b) Fusion shall have performed or complied in all material respects with
all agreements and conditions contained herein required to be performed or
complied with by it prior to or at the time of the Closing.
(c) Fusion shall have delivered to Parent a certificate, dated the date of
the Closing, signed by the President or any Vice President of Fusion (but
without personal liability thereto), certifying as to the fulfillment of the
conditions specified in Sections 7.2(a) and 7.2(b).
(d) Parent shall have received an opinion of Xxxxxxxx Xxxxxxxxxx LLP, dated
the Effective Time, based on the representations of Parent, the Merger
Subsidiary and Fusion, referred to in Section 6.11, to the effect that the
Merger will be treated for Federal income Tax purposes as a reorganization
within the meaning of Section 368(a) of the Code.
23
(e) (i) All authorizations, consents or approvals of a Governmental Entity
(other than those specified in Section 7.1(b) hereof) required in connection
with the execution and delivery of this Agreement and the performance of the
obligations hereunder shall have been made or obtained, without any limitation,
restriction or condition that has or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Fusion or Parent,
except for such authorizations, consents or approvals, the failure of which to
have been made or obtained does not and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Fusion or
Parent.
(ii) There shall not be pending or threatened by any Governmental
Entity any suit, action or proceeding (A) seeking to restrain or prohibit
the consummation of the Merger or any of the other transactions
contemplated by this Agreement or seeking to obtain from Fusion or Parent
any damages that are material in relation to Fusion and its subsidiaries
taken as a whole or Parent and its subsidiaries taken as a whole, as
applicable, (B) seeking to (1) prohibit or limit the ownership or operation
by Fusion, Parent or any of their respective subsidiaries of any material
portion of the business or assets of Fusion and its subsidiaries, taken as
a whole, or Parent and its subsidiaries, taken as a whole, as applicable,
(2) compel Fusion, Parent or any of their respective subsidiaries to
dispose of or "hold separate" any material portion of the business or
assets of Fusion and its subsidiaries, taken as a whole, or Parent and its
subsidiaries, taken as a whole, as applicable, as a result of the Merger or
any of the other transactions contemplated by this Agreement or (3) impose
any other significant restrictions upon, or the making of any material
accommodation (financial or otherwise) in respect of, the transactions
contemplated hereby or the conduct of the business of the Surviving
Corporation or the Parent (including any agreement not to compete in any
geographic area or line of business), (C) seeking to impose limitations on
the ability of Parent to acquire or hold, or exercise full rights of
ownership of, any shares of capital stock of Fusion or the Surviving
Corporation, including the right to vote the common stock of the Surviving
Corporation, on all matters properly presented to the stockholders of the
Surviving Corporation, (D) seeking to prohibit Parent and its subsidiaries
from effectively controlling in any material respect the business or
operations of Fusion and its subsidiaries, taken as a whole, (E) which
would result in the abrogation or diminishment of any authority or license
granted by any Governmental Entity or (F) which otherwise could reasonably
be expected to have a Material Adverse Effect on Fusion or Material Adverse
Effect on Parent.
(e) Fusion shall have obtained (i) the consents and approvals set forth in
Sections 3.3 and 3.8 of the Fusion Disclosure Schedule and (ii) the consent or
approval of each person whose consent or approval shall be required under any
Material Contract, Real Property Lease or other obligation to which Fusion or
any of its subsidiaries is a party, except those for which the failure to obtain
such consents or approvals does not or would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Fusion and would
not prevent or materially impair the ability of Fusion to consummate the
transactions contemplated by this Agreement.
(f) The Board of Directors of the Parent shall have received an opinion of
Chartered Capital Advisers, Inc., dated the date of this Agreement, to the
effect that, as of such date, the terms of the Merger are fair to the Parent and
its stockholders from a financial point of view and, as of the Closing Date,
such opinion has not been withdrawn or modified in a manner adverse to Parent.
SECTION 7.3 Conditions to the Obligations of Fusion. The obligations of
Fusion to consummate the transactions contemplated by this Agreement are subject
to the fulfillment at or prior to the Effective Time of each of the following
conditions, any or all of which may be waived in whole or in part by Fusion to
the extent permitted by applicable Law:
(a) The representations and warranties of Parent and the Merger Subsidiary
contained herein or otherwise required to be made after the date hereof in a
writing expressly referred to herein by or on behalf of Parent and the Merger
Subsidiary pursuant to this Agreement, to the extent qualified by materiality or
Material Adverse Effect, shall have been true and, to the extent not qualified
by materiality or Material Adverse Effect, shall have been true in all material
respects, in each case when made and on and as of the Closing Date as though
made on and as of the Closing Date (except for representations and warranties
made as of a specified date, which need be true, or true in all material
respects, as the case may be, only as of the specified date).
(b) Parent shall have performed or complied in all material respects with
all agreements and conditions contained herein required to be performed or
complied with by it prior to or at the time of the Closing.
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(c) Parent shall have delivered to Fusion a certificate, dated the date of
the Closing, signed by the President or any Vice President of Parent (but
without personal liability thereto), certifying as to the fulfillment of the
conditions specified in Section 7.3(a) and 7.3(b).
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
SECTION 8.1 Termination by Mutual Agreement. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after the approval of the Merger by the vote referred to
in Section 7.1(a), by mutual written consent of Fusion and Parent by action of
their respective Boards of Directors.
SECTION 8.2 Termination by Either Parent or Fusion. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time by action of the Board of Directors of either Parent or Fusion if:
(a) the Merger shall not have been consummated by March 31, 2000, whether
such date is before or after the date of approval of the Merger by the vote
referred to in Section 7.1(a)(the "Termination Date"); provided, however, that
if either Parent or Fusion determines that additional time is necessary in
connection with obtaining any consent, registration, approval, permit or
authorization required to be obtained from any Governmental Entity, the
Termination Date may be extended by Parent or Fusion from time to time by
written notice to the other party to a date not beyond June 30, 2000;
(b) the requisite vote of the stockholders of IDM shall not have been
obtained at the Parent Stockholder Meeting or at any adjournment or postponement
thereof;
(c) any Law permanently restraining, enjoining or otherwise prohibiting
consummation of the Merger shall become final and non-appealable (whether before
or after the approval of the Merger by the stockholders of Fusion); or
(e) any Governmental Entity shall have failed to issue an order, decree or
ruling or to take any other action which is necessary to fulfill the conditions
set forth in Sections 7.1(b), and 7.2(e), as applicable, and such denial of a
request to issue such order, decree, ruling or take such other action shall have
been final and nonappealable; provided, that the right to terminate this
Agreement pursuant to this Section 8.2 shall not be available to any party that
has breached in any material respect its obligations under this Agreement in any
manner that shall have proximately contributed to the occurrence of the failure
of the Merger to be consummated.
SECTION 8.3 Termination by Fusion. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after the approval of the Merger by Fusion stockholders referred to in
Section 7.1(a), by action of the Fusion Board if there is a breach by Parent or
the Merger Subsidiary of any representation, warranty, covenant or agreement
contained in this Agreement that would give rise to a failure of a condition set
forth in Section 7.3(a) or 7.3(b), which has not been cured within 15 business
days following receipt by Parent of written notice of such breach;
SECTION 8.4 Termination by Parent. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after the approval of the Merger by the Parent Requisite Vote referred to in
Section 7.1(a) if there is a breach by Fusion of any representation, warranty,
covenant or agreement contained in this Agreement that would give rise to a
failure of a condition set forth in Section 7.2(a) or 7.2(b), which has not been
cured within 15 business days following receipt by Fusion of written notice of
such breach
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SECTION 8.5 Effect of Termination and Abandonment. In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article VIII, this Agreement (other than this Section 8.5 and Sections 5.3(d),
6.14 and Article IX) shall become void and of no effect with no liability on the
part of any party hereto (or of any of its directors, officers, employees,
agents, legal and financial advisors or other representatives); provided,
however, except as otherwise provided in this Section 8.5, no such termination
shall relieve any party hereto of any liability or damages resulting from (i)
any willful breach of any representations or warranties contained in this
Agreement or (ii) any breach of any covenant or agreement contained in this
Agreement.
SECTION 8.6 Amendment. This Agreement may be amended by action taken by
Fusion, Parent and the Merger Subsidiary at any time before or after approval of
the Merger by the Fusion stockholders and the Parent Requisite Vote but, after
any such approval, no amendment shall be made which requires the approval of
such stockholders under applicable Law without such approval. This Agreement may
not be amended except by an instrument in writing signed on behalf of the
parties hereto.
SECTION 8.7 Extension; Waiver. At any time prior to the Effective Time,
each party hereto (for these purposes, Parent and the Merger Subsidiary shall
together be deemed one party and Fusion shall be deemed the other party) may (i)
extend the time for the performance of any of the obligations or other acts of
the other party, (ii) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document, certificate
or writing delivered pursuant hereto, or (iii) waive compliance by the other
party with any of the agreements or conditions contained herein. Any agreement
on the part of either party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure of either party hereto to assert any of its rights hereunder
shall not constitute a waiver of such rights.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Nonsurvival of Representations and Warranties. None of the
representations, warranties, covenants and agreements in this Agreement or in
any exhibit, schedule or instrument delivered pursuant to this Agreement shall
survive beyond the Effective Time, except for those covenants and agreements
contained herein and therein that by their terms apply or are to be performed in
whole or in part after the Effective Time and this Article IX. This Section 9.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
SECTION 9.2 Entire Agreement; Assignment.
(a) This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof.
(b) Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by operation of Law (including, but not limited to,
by merger or consolidation) or otherwise; provided, however, that Fusion may
assign, in its sole discretion, any or all of its rights, interests and
obligations under this Agreement to any direct wholly owned subsidiary of
Parent, but no such assignment shall relieve Parent or the Merger Subsidiary of
its obligations hereunder if such assignee does not perform such obligations.
Any assignment in violation of the preceding sentence shall be void. Subject to
the preceding sentence, this Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective successors
and assigns.
SECTION 9.3 Notices. All notices, requests, instructions or other documents
to be given under this Agreement shall be in writing and shall be deemed given,
(i) five business days following sending by registered or certified mail,
postage prepaid, (ii) when sent if sent by facsimile; provided that the fax is
promptly confirmed by telephone confirmation thereof, (iii) when delivered, if
delivered personally to the intended recipient and (iv) one business day
following sending by overnight delivery via a national courier service, and in
each case, addressed to a party at the following address for such party:
26
if to Parent or to Merger Subsidiary, to: IDM Environmental Corp.
000 Xxxxxxxxx Xxxxxx
Xxxxx Xxxxx, Xxx Xxxxxx 00000
Attn: Xxxx Xxxxxxxx, President
Facsimile: (000) 000-0000
with a copy to: Vanderkam & Xxxxxxx
000 Xxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
if to Fusion, to: Fusion Networks, Inc.
0000 X. X. 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxxx Xxxxxxx
Facsimile: (000) 000-0000
with a copy to: Xxxxx X. Xxxxxx, Esq.
Xxxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
SECTION 9.4 Governing Law. Except to the extent that Delaware Law is
mandatorily applicable to the Merger and for the rights of the shareholders of
Fusion, this Agreement shall be governed by and construed in accordance with the
Laws of the State of New York, without regard to the principles of conflicts of
Law thereof.
SECTION 9.5 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 9.6 Parties in Interest. This Agreement shall be binding upon and
except as provided in Section 6.7(c) inure solely to the benefit of each party
hereto and its successors and permitted assigns, and, except as provided in
Section 6.7(c), nothing in this Agreement, express or implied, is intended to or
shall confer upon any other person any rights, benefits or remedies of any
nature whatsoever under or by reason of this Agreement.
SECTION 9.7 Indemnification. Each of Fusion, Parent and Merger Subsidiary
(each, an "Indemnitor") hereby jointly and severally agrees to indemnify the
other, and their respective officers, directors, employees, attorneys and agents
(each, an "Indemnitee") and hold them harmless against and in respect of (i) any
and all loss, liability or damage suffered or incurred by the Indemnitee by
reason of any untrue representation, breach of warranty or non-fulfillment of
any covenant by the Indemnitor; and (ii) any and all actions, suits,
proceedings, claims, demands, assessments, judgments, costs and expenses,
including, without limitation, legal fees and expenses, incident to any of the
foregoing or incurred in investigating or attempting to avoid the same or to
oppose the imposition thereof, or in enforcing this indemnity.
SECTION 9.8 Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
27
SECTION 9.9 Specific Performance. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the Southern District of the State of New York or in New York state
court, this being in addition to any other remedy to which they are entitled at
Law or in equity. In addition, each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of the courts of the United States for the
Southern District of New York or any New York state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated
hereby, (b) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court and (c)
agrees that it will not bring any action relating to this Agreement or any of
the transactions contemplated hereby in any other court.
SECTION 9.10 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 9.11 Interpretation.
(a) The words "hereof," "herein" and "herewith" and words of similar import
shall, unless otherwise stated, be construed to refer to this Agreement as a
whole and not to any particular provision of this Agreement, and article,
section, paragraph, exhibit and schedule references are to the articles,
sections, paragraphs, exhibits and schedules of this Agreement unless otherwise
specified. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." All terms defined in this Agreement shall have the defined meanings
contained herein when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such terms. Any agreement, instrument or statute defined or referred
to herein or in any agreement or instrument that is referred to herein means
such agreement, instrument or statute as from time to time, amended, qualified
or supplemented, including (in the case of agreements and instruments) by waiver
or consent and (in the case of statutes) by succession of comparable successor
statutes and all attachments thereto and instruments incorporated therein.
References to a person are also to its permitted successors and assigns.
(b) The phrases "the date of this Agreement," "the date hereof" and terms
of similar import, unless the context otherwise requires, shall be deemed to
refer to August 18, 1999. The phrase "made available" in this agreement shall
mean that the information referred to has been actually delivered to the party
to whom such information is to be made available.
(c) The parties have participated jointly in the negotiation and drafting
of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
SECTION 9.12 Definitions.
(a) "Acquisition Proposal" means an inquiry, offer or proposal regarding
any of the following (other than the transactions contemplated by this
Agreement) involving Fusion: (i) any merger, consolidation, share exchange,
recapitalization, business combination or other similar transaction; (ii) any
sale, lease, exchange, mortgage, pledge, transfer or other disposition of all or
substantially all the assets of Fusion and its subsidiaries, taken as a whole,
in a single transaction or series of related transactions; (iii) any tender
offer or exchange offer for 20 percent or more of the outstanding Shares or the
filing of a registration statement under the Securities Act in connection
therewith; or (iv) any public announcement of a proposal, plan or intention to
do any of the foregoing or any agreement to engage in any of the foregoing.
(b) "beneficial ownership" or "beneficially own" shall have the meaning
provided in Section 13(d) of the Exchange Act and the rules and regulations
thereunder.
28
(c) "know" or "knowledge" means, with respect to any party, the knowledge
of such party's executive officers after due inquiry, including inquiry of such
party's counsel and other officers or employees of such party responsible for
the relevant matter.
(d) "Material Adverse Effect" means with respect to any entity, any change,
circumstance or effect that, individually or in the aggregate with all other
changes, circumstances and effects, is or is reasonably likely to be materially
adverse to (i) the assets, properties, business, condition (financial or
otherwise) or results of operations of such entity and its subsidiaries taken as
a whole or (ii) the ability of such party to consummate the transactions
contemplated by this Agreement.
(e) "person" means an individual, corporation, limited liability company,
partnership, association, trust, unincorporated organization, other entity or
group (as defined in the Exchange Act).
(f) "subsidiary" means, when used with reference to any entity, any
corporation or other organization, whether incorporated or unincorporated, (i)
of which such party or any other subsidiary of such party is a general or
managing partner or (ii) the outstanding voting securities or interests of,
which having by their terms ordinary voting power to elect a majority of the
Board of Directors or others performing similar functions with respect to such
corporation or other organization, is directly or indirectly owned or controlled
by such party or by any one or more of its subsidiaries.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
IDM ENVIRONMENTAL CORP. IDM/FNI ACQUISITION CORPORATION
By: /S/ XXXX XXXXXXXX By: /S/ XXXX XXXXXXXX
------------------------- ----------------------------
Name: Xxxx Xxxxxxxx Name: Xxxx Xxxxxxxx
Title: President and Title: President and
Chief Executive Officer Chief Executive Officer
IDM/FUSION HOLDINGS, INC FUSION NETWORKS, INC.
By: /S/ XXXX XXXXXXXX By: /S/ XXXXXXXX XXXXXXX
------------------------- ----------------------------
Name: Xxxx Xxxxxxxx Name: Xxxxxxxx Xxxxxxx
Title: President and Title: President
Chief Executive Officer
