THIS WARRANT AND THE SHARES OF COMMON STOCK OF FUSION NETWORKS, INC. TO BE
ISSUED UPON ANY EXERCISE OF THE WARRANT HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
THIS WARRANT AND THE UNDERLYING SHARES OF COMMON STOCK MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED UNLESS REGISTERED UNDER THE SECURITIES ACT OR AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
_______________, 1999 #W99-A ____
WARRANT
to Purchase Shares
of
Common Stock
of
FUSION NETWORKS, INC.
This certifies that, for value received, _______________________, and any
subsequent transferee pursuant to the terms hereof (each, a "Holder"), is
entitled to purchase, subject to the provisions of this Warrant, from Fusion
Networks, Inc., a Delaware corporation (the "Issuer"), at any time or from time
to time on or after the date set forth above (the "Initial Exercise Date") and
on or before the third anniversary of the Initial Exercise Date (the "Expiration
Date"), __________________________________________ (________) fully paid and
nonassessable shares of common stock (the "Common Stock") of the Issuer at an
exercise price equal to $6.00 per share, subject to adjustment pursuant to the
terms hereunder (the "Exercise Price") (such shares of Common Stock and other
securities issued and issuable upon exercise of this Warrant, the "Warrant
Shares").
It is agreed and understood that the Issuer entered into an Agreement and
Plan of Merger (the "Merger Agreement") dated August 18, 1999 with IDM
Environmental Corp. ("IDM"), IDM/Fusion Holdings, Inc. ("Holdings") and IDM/FNI
Acquisition Corporation ("Merger Subsidiary") pursuant to which it is
contemplated that the Merger Subsidiary will merge with and into the Issuer (the
"Merger") with both the Issuer and IDM becoming wholly-owned subsidiaries of
Holdings and the shareholders of the Issuer receiving one share of common stock
of Holdings ("Holdings Common Stock") for each share of Issuer common stock
held. As a result of the Merger, Issuer will cause Holdings to assume all
obligations of the Issuer under this Warrant and, following the Merger, each
Warrant will entitle the Holder to purchase a like number of shares of Holdings
Common Stock at $6.00 per share. There can be no assurance, however, that the
Merger will be consummated on the terms described, or at all, in which case the
Warrants will continue to represent the right to acquire Common Stock of the
Issuer.
Section 1. Exercise of Warrant.
--------------------
(a) Subject to the provisions hereof, this Warrant may be exercised,
in whole or in part, but not as to a fractional share, at any time or from
time to time on or after the Initial Exercise Date and on or before the
Expiration Date, by presentation and surrender hereof to the Issuer at the
address which, in accordance with the provisions of Section 11 hereof, is
then effective for notices to the Issuer, with the Election to Purchase
Form annexed hereto as Schedule One, duly executed and accompanied by
payment to the Issuer as further set forth below in this Section 1, for the
account of the Issuer, of the Exercise Price for the number of Warrant
Shares specified in such form. If this Warrant should be exercised in part
only, the Issuer shall, upon surrender of this Warrant, execute and deliver
a new Warrant evidencing the rights of the Holder hereof to purchase the
balance of the Warrant Shares purchasable hereunder. The Issuer shall
maintain at its principal place of business a register for the registration
of this Warrant and registration of transfer of the Warrant. The Exercise
Price for the number of Warrant Shares specified in the Election to
Purchase Form shall be payable in United States Dollars by certified or
official bank check payable to the order of the Issuer or by wire transfer
of immediately available funds to an account specified by the Issuer for
that purpose.
(b) Certificates representing Warrant Shares shall bear the following
restrictive legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THE SHARES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF
EITHER AN EFFECTIVE REGISTRATION STATEMENT FOR THESE SHARES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT.
Section 2. Reservation of Shares; Preservation of Rights of Holder. The
Issuer hereby agrees that there shall be reserved for issuance and/or delivery
upon exercise of this Warrant, such number of Warrant Shares as shall be
required for issuance or delivery upon exercise of this Warrant. The Warrant
surrendered upon exercise shall be canceled by the Issuer. After the Expiration
Date no shares of Common Stock shall be subject to reservation in respect of
this Warrant. The Issuer further agrees (i) that it will not, by amendment of
its Certificate of Incorporation or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observation or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by the Issuer,
(ii) promptly to take all action as may from time to time be required in order
to permit the Holder to exercise this Warrant and the Issuer duly and
effectively to issue shares of its Common Stock or other securities as provided
herein upon the exercise hereof, and (iii) promptly to take all action required
or provided herein to protect the rights of the Holder granted hereunder against
dilution. Without limiting the generality of the foregoing, should the Warrant
Shares at any time consist in whole or in part of shares of capital stock having
a par value, the Issuer agrees that before taking any action which would cause
an adjustment of the Exercise Price so that the same would be less than the then
par value of such Warrant Shares, the Issuer shall take any corporate action
which may, in the opinion of its counsel, be necessary in order that the Issuer
may validly and legally issue fully paid and nonassessable shares of such Common
Stock at the Exercise Price as so adjusted. The Issuer further agrees that it
will not establish a par value for its Common Stock while this Warrant is
outstanding in an amount greater than the Exercise Price.
2
Section 3. Exchange, Transfer, Assignment or Loss of Warrant. Any attempted
transfer of this Warrant, the Warrant Shares or any new Warrant not in
accordance with this Section shall be null and void, and the Issuer shall not in
any way be required to give effect to such transfer. No transfer of this Warrant
shall be effective for any purpose hereunder until (i) written notice of such
transfer and of the name and address of the transferee has been received by the
Issuer, and (ii) the transferee shall first agree in a writing deposited with
the Secretary of the Issuer to be bound by all the provisions of this Warrant.
Upon surrender of this Warrant to the Issuer by any transferee authorized under
the provisions of this Section 3, the Issuer shall, without charge, execute and
deliver a new Warrant registered in the name of such transferee at the address
specified by such transferee, and this Warrant shall promptly be canceled. The
Issuer may deem and treat the registered holder of any Warrant as the absolute
owner thereof for all purposes, and the Issuer shall not be affected by any
notice to the contrary. Any Warrant if presented by an authorized transferee,
may be exercised by such transferee without prior delivery of a new Warrant
issued in the name of the transferee.
Upon receipt by the Issuer of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant, and (in the case of
loss, theft or destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Warrant, if mutilated, the Issuer will
execute and deliver a new Warrant of like tenor and date. Any such new Warrant
executed and delivered shall constitute a separate contractual obligation on the
part of the Issuer, whether or not the Warrant so lost, stolen destroyed or
mutilated shall be at any time enforceable by anyone.
Section 4. Rights of Holder. Neither a Holder nor his transferee by devise
or the laws of descent and distribution or otherwise shall be, or have any
rights or privileges of, a shareholder of the Issuer with respect to any Warrant
Shares, unless and until certificates representing such Warrant Shares shall
have been issued and delivered thereto.
Section 5. Adjustments in Exercise Price and Warrant Shares. The Exercise
Price and Warrant Shares shall be subject to adjustment as noted above in
connection with the Merger and, from time to time, as provided in this Section
5.
(a) If the Issuer is recapitalized through the subdivision or
combination of its outstanding shares of Common Stock into a larger or
smaller number of shares, the number of shares of Common Stock for which
this Warrant may be exercised shall be increased or reduced, as of the
record date for such recapitalization, in the same proportion as the
increase or decrease in the outstanding shares of Common Stock, and the
Exercise Price shall be adjusted so that the aggregate amount payable for
the purchase of all Warrant Shares issuable hereunder immediately after the
record date for such recapitalization shall equal the aggregate amount so
payable immediately before such record date.
3
(b) In case of any consolidation of the Issuer with, or merger of the
Issuer into, any other corporation (other than a consolidation or merger in
which the Issuer is the continuing corporation and in which no change
occurs in its outstanding Common Stock), or in case of any sale or transfer
of all or substantially all of the assets of the Issuer, or in the case of
any statutory exchange of securities with another corporation (including
any exchange effected in connection with a merger of a third corporation
into the Issuer, except where the Issuer is the surviving entity and no
change occurs in its outstanding Common Stock), the corporation formed by
such consolidation or the corporation resulting from such merger or the
corporation which shall have acquired such assets or securities of the
Issuer, as the case may be, shall execute and deliver to the Holder
simultaneously therewith a new Warrant, satisfactory in form and substance
to the Holder, together with such other documents as the Holder may
reasonably request, entitling the Holder thereof to receive upon exercise
of such Warrant the kind and amount of shares of stock and other securities
and property receivable upon such consolidation, merger, sale, transfer, or
exchange of securities, or upon the dissolution following such sale or
other transfer, by a holder of the number of shares of Common Stock
purchasable upon exercise of this Warrant immediately prior to such
consolidation, merger, sale, transfer, or exchange. Such new Warrant shall
contain the same basic other terms and conditions as this Warrant and shall
provide for adjustments which, for events subsequent to the effective date
of such written instrument, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 5. The above
provisions of this paragraph (d) shall similarly apply to successive
consolidations, mergers, exchanges, sales or other transfers covered
hereby.
(c) If an event occurs which is similar in nature to the events
described in this Section 5, but is not expressly covered hereby, the Board
of Directors of the Issuer shall make or arrange for an equitable
adjustment to the number of Warrant Shares and the Exercise Price.
(d) The term "Common Stock" shall mean the Common Stock of the Issuer
as the same exists at the date of issuance of this Warrant or as such stock
may be constituted from time to time, except that for the purpose of this
Section 5, the term "Common Stock" shall include any stock of any class of
the Issuer which has no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Issuer and which is not subject to
redemption by the Issuer.
(e) The Issuer shall retain a firm of independent public accountants
of recognized standing (who may be any such firm regularly employed by the
Issuer) to make any computation required under this Section 5, and a
certificate signed by such firm shall be conclusive evidence of the
correctness of any computation made under this Section 5.
(f) Whenever the number of Warrant Shares or the Exercise Price shall
be adjusted as required by the provisions of this Section 5, the Issuer
forthwith shall file in the custody of its secretary or an assistant
secretary, at its principal office, and furnish to each Holder hereof, a
certificate prepared in accordance with paragraph (h) above, showing the
adjusted number of Warrant Shares and the Exercise Price and setting forth
in reasonable detail the circumstances requiring the adjustments.
4
(g) Notwithstanding any other provision, this Warrant shall be binding
upon and inure to the benefit of any successors and assigns of the Issuer.
(h) No adjustment in the Exercise Price in accordance with the
provisions of this Section 5 need be made if such adjustment would amount
to a change in such Exercise Price of less than $.01 provided however, that
the amount by which any adjustment is not made by reason of the provisions
of this paragraph (h) shall be carried forward and taken into account at
the time of any subsequent adjustment in the Exercise Price.
(i) If an adjustment is made under this Section 5 and the event to
which the adjustment relates does not occur, then any adjustments in
accordance with this Section 5 shall be readjusted to the Exercise Price
and the number of Warrant Shares which would be in effect had the earlier
adjustment not been made.
Section 6. Taxes on Issue or Transfer of Common Stock and Warrant. The
Issuer shall pay any and all documentary stamp or similar issue or transfer
taxes payable in respect of the issue or delivery of shares of Common Stock or
other securities on the exercise of this Warrant. The Issuer shall not be
required to pay any tax which may be payable in respect of any transfer of this
Warrant or in respect of any transfers involved in the issue or delivery of
shares or the exercise of this Warrant in a name other than that of the Holder
and the person requesting such transfer, issue or delivery shall be responsible
for the payment of any such tax (and the Issuer shall not be required to issue
or deliver said shares until such tax has been paid or provided for).
Section 7. Notice of Adjustment. So long as this Warrant shall be
outstanding, (a) if the Issuer shall propose to pay any dividends or make any
distribution upon the Common Stock, or (b) if the Issuer shall offer generally
to the holder of Common Stock the right to subscribe to or purchase any shares
of any class of Common Stock or securities convertible into Common Stock or any
other similar rights, or (c) if there shall be any proposed capital
reorganization of the Issuer in which the Issuer is not the surviving entity,
recapitalization of the capital stock of the Issuer, consolidation or merger of
the Issuer with or into another corporation, sale, lease or other transfer of
all or substantially all of the property and assets of the Issuer, or voluntary
or involuntary dissolution, liquidation or winding up of the Issuer, or (d) if
the Issuer shall give to its stockholders any notices, report or other
communication respecting any significant or special action or event, then in
such event, the Issuer shall give to the Holder, at least ten days prior to the
relevant date described below (or such shorter period as is reasonably possible
if ten days is not reasonably possible), a notice containing a description of
the proposed action or event and stating the date or expected date on which a
record of the Issuer's stockholders is to be taken for any of the foregoing
purposes, and the date or expected date on which any such dividend,
distribution, subscription, reclassification, reorganization, consolidation,
combination, merger, conveyance, sale, lease or transfer, dissolution,
liquidation or winding up is to take place and the date or expected date, if any
is to be fixed, as of which the holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such event.
5
Section 8. Registration Rights.
--------------------
(a) The Issuer agrees that it will cause Holdings to (i) file a
registration statement (the "Registration Statement") with the SEC, within
ninety (90) days following the Merger, covering the resale of the Warrant Shares
and (ii) maintain the effectiveness of the Registration Statement for a period
of two years.
(b) In connection with the registration of Warrant Shares hereunder, the
Issuer agrees to (i) bear the expenses of any registration; provided, however,
that in no event shall the Issuer be obligated to pay (A) any fees and
disbursements of special counsel for holders of Warrant Shares, (B) any
underwriters' discount or commission in respect of such Warrant Shares, and (C)
any stock transfer taxes attributable to the sale of the Warrant Shares; and
(ii) use its best efforts to register or qualify the Warrant Shares for offer or
sale under state securities or Blue Sky laws of such jurisdictions in which such
Holders shall reasonably request, provided, however, that no qualification shall
be required in any jurisdiction where, as a result thereof, the Issuer would be
subject to service of general process or to taxation as a foreign corporation
doing business in such jurisdiction to which it is not then subject.
(c) The Issuer's obligations under this Section 8 shall be conditioned upon
a timely receipt by the Issuer in writing of: (i) information as to the terms of
such public offering furnished by or on behalf of each Holder of Warrants and
Warrant Shares intending to make a public offering of his, her or its Warrant
Shares, and (ii) such other information as the Issuer may reasonably require
from such Holders, or any underwriter for any of them, for inclusion in such
registration statement.
Section 9. Notices. All communications hereunder shall be in writing, and,
if sent to the Holder shall be sufficient in all respects if delivered, sent by
registered mail, or by facsimile and confirmed to the Holder at its address and
telecopier number as set forth in the Subscription Agreement between the Holder
and the Issuer relating to the purchase and sale of Units offered by the Issuer,
or at such other address or addresses as may have been furnished to the Issuer
in writing, or, if sent to the Issuer, shall be delivered, sent by registered
mail or by facsimile and confirmed to the Issuer at:
Fusion Networks, Inc.
0000 X.X. 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxxx Xxxxxxx, President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
6
Section 10. Governing Law. This Warrant shall be governed by, and
interpreted in accordance with, the laws of the State of Florida.
Dated: , 1999
FUSION NETWORKS, INC.
By:
Name:
Title:
ATTEST:
Name:_______________________
Warrant #: W99-A-_____
Registered Holder: ___________
Number of Shares: ___________
7
Schedule One
ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise this Warrant and to
purchase shares of Fusion Networks, Inc. Common Stock issuable upon the exercise
of this Warrant, and requests that certificates for such shares be issued in the
name of:
(Name)
(Address)
(United States Social Security or other taxpayer
identifying number, if applicable)
and, if different from above, be delivered to:
(Name)
(Address)
and, if the number of Warrant Shares so purchased are not all of the Warrant
Shares issuable upon exercise of this Warrant, that a Warrant to purchase the
balance of such Warrant Shares be registered in the name of, and delivered to,
the undersigned at the address stated below.
Date: , 19___
Name of Registered Owner:
Address:
Signature:
