PLAN OF REORGANIZATION AND MERGER
PLAN OF REORGANIZATION AND MERGER ("Agreement"), dated as of August 18,
1999, among IDM ENVIRONMENTAL CORP., a New Jersey corporation (the "Company"),
IDM/FUSION HOLDINGS, INC., a Delaware corporation ("Holdings") and a direct,
wholly-owned subsidiary of the Company, and IDM MERGER SUBSIDIARY., INC., a
Delaware corporation ("Mergeco") and a direct, wholly-owned subsidiary of
Holdings.
RECITALS
WHEREAS, as of the close of business on August 18, 1999, the authorized
capital stock of the Company consisted of 7,500,000 shares of common stock, par
value $.01 per share ("Company Common Stock"), and 1,000,000 shares of preferred
stock, par value $1.00 per share ("Company Preferred Stock"). As of August 18,
1999 (i) 3,331,085 shares of Company Common Stock were issued and outstanding;
(ii) 47,500 shares of Company Common Stock were reserved for issuance under the
Company's 1993 Stock Option Plan (the "1993 Plan"), of which 40,110 shares were
subject to outstanding options; (iii) 50,000 shares of Company Common Stock were
reserved for issuance pursuant to Company's 1995 Stock Option Plan (the "1995
Plan"), of which 46,900 shares were subject to outstanding options; (iv)
1,700,000 shares of Company Common Stock were reserved for issuance pursuant to
Company'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
Company 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 Company
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 Schedule 1 attached hereto. As of the date hereof, no shares
of Company Common Stock were held in treasury, no shares of Company Preferred
Stock are issued and outstanding and 200,000 shares of Company Preferred Stock
are reserved for issuance upon exercise of the Company Rights pursuant to the
Company Rights Agreement.
WHEREAS, as of the date hereof, the authorized capital stock of Holdings
consists of 200 shares of common stock, no par value ("Holdings Common Stock"),
of which 1 share is issued and outstanding and no shares are held in treasury.
WHEREAS, the designations, rights, powers and preferences, and the
qualifications, limitations and restrictions thereof, of the Holdings Common
Stock are the same as those of the Company Common Stock.
WHEREAS, the Certificate of Incorporation and the By-laws of Holdings
immediately after the Effective Time (as hereinafter defined) will contain
provisions identical to the Amended Certificate of Incorporation and By-laws of
the Company immediately before the Effective Time.
WHEREAS, the directors of the Company immediately prior to the Merger (as
hereinafter defined) will be the directors of Holdings as of the Effective Time.
WHEREAS, Holdings and Mergeco are newly formed corporations organized for
the purpose of participating in the transactions herein contemplated.
WHEREAS, the Company desires to create a new holding company structure by
merging Mergeco with and into the Company with the Company being the surviving
corporation (sometimes hereinafter referred to as the "Surviving Corporation"),
and converting each outstanding share of Company Common Stock into one share of
Holdings Common Stock, all in accordance with the terms of this Agreement.
WHEREAS, the Boards of Directors of Holdings , Mergeco and the Company have
approved this Agreement and the merger of Mergeco with and into the Company upon
the terms and subject to the conditions set forth in this Agreement (the
"Merger") and has directed that the Merger be submitted to a vote of the
stockholders of the Company at a special meeting to be called for the purpose of
approving the Merger.
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained in this Agreement, and intending to be legally bound
hereby, the Company, Holdings and Mergeco hereby agree as follows:
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ARTICLE I
THE MERGER
Section 1.1 The Merger. In accordance with the Delaware General Corporation
Law ("DGCL") and the New Jersey Business Corporation Act ("NJBCA") and subject
to and upon the terms and conditions of this Agreement, Mergeco shall, at the
Effective Time, be merged with and into the Company, the separate corporate
existence of Mergeco shall cease and the Company shall continue as the surviving
corporation. The Company as the surviving corporation after the Merger is
hereinafter sometimes referred to as the "Surviving Corporation." At the
Effective Time, the effect of the Merger shall be as provided in the DGCL and
NJBCA.
Section 1.2 Effective Time. The Merger shall become effective upon the
filing of a copy of this Agreement with the Secretary of State of the State of
Delaware and the Secretary of State of the State of New Jersey (the time of such
filing being referred to herein as the "Effective Time").
Section 1.3 Amended and Restated Certificate of Incorporation of the
Surviving Corporation. From and after the Effective Time, the Amended and
Restated Certificate of Incorporation of the Company, as in effect immediately
prior to the Effective Time, shall be the certificate of incorporation of the
Surviving Corporation until thereafter amended as provided by law; provided,
however, that, from and after the Effective Time, Article III shall be amended
so as to read in its entirety as described in Schedule 2 attached hereto.
Section 1.4 By-laws. From and after the Effective Time, the By-laws of the
Company, as in effect immediately prior to the Effective Time, shall be the
By-laws of the Surviving Corporation until thereafter amended as provided
therein or by applicable law.
Section 1.5 Directors. The directors of the Company immediately prior to
the Effective Time shall be the initial directors of the Surviving Corporation
and will hold office from the Effective Time until their successors are duly
elected or appointed and qualified in the manner provided in the Certificate of
Incorporation and the By-laws of the Surviving Corporation or as otherwise
provided by law.
Section 1.6 Officers. The officers of the Company immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation and
will hold office from the Effective Time until their successors are duly elected
or appointed and qualified in the manner provided in the Certificate of
Incorporation and the By-laws of the Surviving Corporation or as otherwise
provided by law.
Section 1.7 Additional Actions. Subject to the terms of this Agreement, the
parties hereto shall take all such reasonable and lawful action as may be
necessary or appropriate in order to effectuate the Merger. If, at any time
after the Effective Time, the Surviving Corporation shall consider or be advised
that any deeds, bills of sale, assignments, assurances or any other actions or
things are necessary or desirable to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, properties or assets of either of Mergeco or the
Company acquired or to be acquired by the Surviving Corporation as a result of,
or in connection with, the Merger or otherwise to carry out this Agreement, the
officers of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of each of Mergeco and the Company, all such
deeds, bills of sale, assignments and assurances and to take and do, in the name
and on behalf of each of Mergeco and the Company or otherwise, all such other
actions and things as may be necessary or desirable to vest, perfect or confirm
any and all right, title and interest in, to and under such rights, properties
or assets in the Surviving Corporation or otherwise to carry out this Agreement.
Section 1.8 Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of Holdings, Mergeco, the Company
or the holder of any of the following securities:
(a) Each issued and outstanding share of Holdings Common Stock owned of
record by the Company immediately prior to the Effective Time shall be cancelled
and retired without payment of any consideration therefor and shall cease to
exist and no Company Common Stock or other consideration shall be delivered in
exchange for any such Holdings Common Stock.
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(b) Each share or fraction of a share of Company Common Stock issued and
outstanding immediately prior to the Effective Time shall be converted into one,
or an equal fraction of one, duly issued, fully paid and nonassessable share of
Holdings Common Stock.
(c) Each share of common stock, par value $0.01 per share, of Mergeco
issued and outstanding immediately prior to the Effective Time shall be
converted into and thereafter represent one duly issued, fully paid and
nonassessable share of common stock, par value $0.01 per share, of the Surviving
Corporation.
(d) From and after the Effective Time, holders of certificates formerly
evidencing Company Common Stock shall cease to have any rights as stockholders
of the Company, except as provided by law; provided, however, that such holders
shall have the rights set forth in Section 1.9 herein.
Section 1.9 No Surrender of Certificates; Stock Transfer Books. At the
Effective Time, the designations, rights, powers and preferences, and
qualifications, limitations and restrictions thereof, of the capital stock of
Holdings, will, in each case, be identical with those of the Company immediately
prior to the Effective Time. Accordingly, until thereafter surrendered for
transfer or exchange in the ordinary course, each outstanding certificate that,
immediately prior to the Effective Time, evidenced Company Common Stock shall,
from the Effective Time, be deemed and treated for all corporate purposes to
evidence the ownership of the same number of shares of Holdings Common Stock.
ARTICLE II
ACTIONS TO BE TAKEN IN
CONNECTION WITH THE MERGER
Section 2.1 Assumption of Plans. Holdings and the Company hereby agree that
they will, at the Effective Time, execute, acknowledge and deliver an assumption
agreement pursuant to which Holdings will, from and after the Effective Time,
assume and agree to perform all obligations of the Company pursuant to (a) the
Company's 1993, (b) the Company's 1995 Plan, (c) the Company's 1998 Plan, and
(d) the Company's Other Derivative Securities listed on Schedule 1 attached
hereto.
Section 2.2 Reservation of Shares. On or prior to the Effective Time,
Holdings will reserve sufficient shares of Holdings Common Stock to provide for
the issuance of Holdings Common Stock upon exercise of options outstanding under
the 1993 Plan, the 1995 Plan and the 1998 Plan, and the exercise or conversion
of all Other Derivative Securities.
ARTICLE III
CONDITIONS OF MERGER
Section 3.1 Conditions Precedent. The obligations of the parties to this
Agreement to consummate the Merger and the transactions contemplated by this
Agreement shall be subject to fulfillment or waiver by the parties hereto at or
prior to the Effective Time of each of the following conditions:
(a) No order, statute, rule, regulation, executive order, injunction, stay,
decree, judgment or restraining order that is in effect shall have been enacted,
entered, promulgated or enforced by any court or governmental or regulatory
authority or instrumentality which prohibits or makes illegal the consummation
of the Merger or the transactions contemplated hereby.
(b) Xxxxxxxx Xxxxxxxxxx LLP , special tax counsel to the Company, shall not
have withdrawn its opinion that holders of the Company Common Stock will not
recognize gain or loss for United States federal income tax purposes as a result
of the Merger.
(c) The Merger shall have received approval by the holders of the Company
Common Stock in the manner required by the Bylaws and Certificate of
Incorporation of the Company and the NJBCA.
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ARTICLE IV
COVENANTS
Section 4.1 Further Actions. Prior to the Effective Time, the Company, in
its capacity as the sole stockholder of Holdings, will, if necessary to comply
with the NJBCA and the DGCL, take all actions reasonably necessary to carry out
the purposes of this agreement.
Section 4.3 The Plans and Other Derivative Securities. The Company and
Holdings will take or cause to be taken all actions necessary or desirable in
order for Holdings to assume the 1993 Plan, the 1995 Plan and the 1998 Plan and
the obligations under the Other Derivative Securities.
ARTICLE V
TERMINATION AND AMENDMENT
Section 5.1 Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Effective Time by
action of the Board of Directors of the Company, the Board of Directors of
Holdings or the Board of Directors of Mergeco if such Board of Directors should
determine that for any reason the completion of the transactions provided for
herein would be inadvisable or not in the best interest of such corporation or
its stockholders. In the event of such termination and abandonment, this
Agreement shall become void and neither the Company, Holdings or Mergeco nor
their respective stockholders, directors or officers shall have any liability
with respect to such termination and abandonment.
Section 5.2 Amendment. This Agreement may be supplemented, amended or
modified by the mutual consent of the Boards of Directors of the parties to this
Agreement to the fullest extent permitted by law.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1 Governing Law. This Agreement shall be governed by and
construed and enforced under the laws of the State of New Jersey.
Section 6.2 Counterparts. This Agreement may be executed in one or more
counterparts, each of which when executed shall be deemed to be an original but
all of which shall constitute one and the same agreement.
Section 6.3 Entire Agreement. This Agreement, including the documents and
instruments referred to herein, constitutes the entire agreement and supersedes
all other prior agreements and undertakings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof.
IN WITNESS WHEREOF, Holdings, Mergeco and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
IDM ENVIRONMENTAL CORP. IDM MERGER SUBSIDIARY., INC.
a New Jersey corporation (the "Company") a Delaware corporation ("Mergco")
By: /S/ XXXX XXXXXXXX By: /S/ XXXX XXXXXXXX
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Xxxx Xxxxxxxx, President Xxxx Xxxxxxxx, President
IDM/FUSION HOLDINGS, INC.
a Delaware corporation ("Holdings")
By: /S/ XXXX XXXXXXXX
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Xxxx Xxxxxxxx, President
