STOCK PURCHASE AND SALE AGREEMENT
THIS STOCK PURCHASE AND SALE AGREEMENT, dated as of December ____, 1999 is
among FUSION NETWORKS, INC., a Delaware corporation (the "Fusion"), and
MARKETING SERVICES GROUP, INC., a Nevada corporation ("MSGI").
WHEREAS, Fusion is a newly formed corporation, formed and capitalized
pursuant to a business plan, a copy of which has been provided to MSGI (the
"Business Plan");
WHEREAS, Fusion entered into an Agreement and Plan of Merger (the "Merger
Agreement") dated August 18, 1999 with IDM Environmental Corp. ("IDM"), Fusion
Networks Holdings, Inc. (fka, 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 Fusion (the
"Merger") with both Fusion and IDM becoming wholly-owned subsidiaries of
Holdings and the shareholders of Fusion receiving one share of common stock of
Holdings ("Holdings Common Stock") for each share of Fusion common stock held
(after giving effect to a 1,000 for 1 stock split and a 17.7333333 for 1 stock
split carried out subsequent to the date of the Merger Agreement);
WHEREAS, MSGI, through its subsidiaries is a vertically integrated provider
of direct and Internet marketing services to large and medium sized companies;
WHEREAS, management of Fusion and MSGI have entered into negotiations and
agreed in principle as to the terms on which (1) MSGI would acquire, and Fusion
would issue, 3,500,000 shares of common stock of Fusion in exchange for the
issuance by MSGI to Fusion of 1,500,000 shares of common stock of MSGI and (2)
Fusion would grant to MSGI an option for a period of six months to acquire up to
an additional 3,500,000 shares of common stock of Fusion in exchange for the
issuance by MSGI to Fusion of up to an additional 1,500,000 shares of common
stock of MSGI on a pro rata basis in the case of a partial exercise; and
WHEREAS, the respective Boards of Directors of Fusion and MSGI, 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, taken together,
advisable and fair to, and in the best interests of, their respective
stockholders.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained, and intending to be
legally bound hereby, Fusion and MSGI hereby agree as follows:
SECTION 1. Agreement to Sell and Purchase the Fusion Shares and MSGI
Shares. (a) At the Closing (as defined in Section 3), Fusion will sell to MSGI,
and MSGI will buy from Fusion, upon the terms and conditions hereinafter set
forth, 3,500,000 shares of common stock, $0.00001 par value, of Fusion (the
"Fusion Shares").
(b) At the Closing, MSGI will deliver to Fusion 1,500,000 shares of common
stock, $0.01 par value, of MSGI (the "MSGI Shares"), delivery of which shall
constitute payment in full for the Fusion Shares (the "Purchase Price"). SECTION
2. Options. At the Closing, Fusion shall grant to MSGI the following options:
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(a) For a period of six months from the Closing Date, MSGI shall have the
option to purchase (the "Purchase Option") up to an additional 3,500,000 shares
of common stock of Fusion (the "Option Shares") in exchange for the issuance by
MSGI to Fusion of up to an additional 1,500,000 shares of common stock of MSGI
(the "MSGI Option Shares") on a pro rata basis in the case of a partial
exercise.
(b) If the Merger has not been consummated on or before June 30, 2000, or
has otherwise been abandoned or terminated prior to that date, MSGI shall have
the option to put the Fusion Shares and the Option Shares, if the Option Shares
have been acquired, to Fusion (the "Put Option") in exchange for the return to
MSGI of the MSGI Shares and the MSGI Option Shares.
(c) Exercise of the Purchase Option or the Put Option shall be effected, at
the sole discretion of MSGI, by the giving of written notice. Closing with
respect to the exercise of the Purchase Option or the Put Option shall be
effected, within five days after receipt by Fusion of written notice of exercise
of either such option, in a manner substantially identical to the procedures set
forth in Section 3 relating to closing.
SECTION 3. Closing. The completion of the purchase and sale of the Fusion
Shares (the "Closing") shall occur at the offices of Fusion, or such other
location as Fusion and MSGI shall agree, at such time as Fusion and MSGI shall
agree (the "Closing Date"); provided, however, that all appropriate filings and
clearance under the Xxxx-Xxxxx-Xxxxxx Act shall have been made or received prior
to Closing, if required.
(a) At the Closing, Fusion shall deliver to MSGI:
(i) one or more stock certificates, or irrevocable instructions to
Fusion's transfer agent in form satisfactory to MSGI to deliver to MSGI one
or more stock certificates, registered in the name of MSGI, or in such
nominee name(s) as designated by MSGI, representing the Fusion Shares and
(ii) a written confirmation of the Closing Date affirming the grant of
the Purchase Option and the Put Option
(b) At the Closing, MSGI shall deliver to Fusion one or more stock
certificates, or irrevocable instructions to MSGI's transfer agent in form
satisfactory to Fusion to deliver to Fusion one or more stock certificates,
registered in the name of Fusion, or in such nominee name(s) as designated by
Fusion, representing the MSGI Shares.
SECTION 4. Appointment of Director. For a period of not less than one year
following the Closing Date, MSGI shall have the right to nominate one person for
election to the board of directors of Fusion and, following the Merger,
Holdings. Fusion shall use all reasonable efforts to the nominee of MSGI to
elected to the board of such companies.
SECTION 5. Representations, Warranties and Covenants of Fusion. Fusion
hereby represents and warrants to, and covenants with, MSGI as follows:
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5.1 Organization and Qualification. Each of Fusion and its subsidiaries is
a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has all requisite corporate power
and authority to conduct its business as currently conducted. Each of Fusion and
its subsidiaries is qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which the failure to so qualify would have
a material adverse effect on the operations of Fusion and its subsidiaries,
taken as a whole.
5.2 Authorized Capital Stock; Authorization of Securities. (a) As of
November 23, 1999, the authorized capital stock of Fusion consisted of:
60,000,000 shares of common stock ("Common Stock"), of which (i) 29,613,333
shares were validly issued and are outstanding, fully paid and non-assessable,
(ii) 5,320,000 shares were reserved for issuance under the Fusion Networks, Inc.
1999 Stock Option Plan, of which 825,000 options were issued and outstanding,
and (iii) 5,739,330 shares were reserved for issuance under outstanding warrants
of Fusion. Except as set forth above, at November 23, 1999, there were no
outstanding securities exercisable for or convertible into shares of capital
stock of Fusion.
(b) The Fusion Shares and the Option Shares to be issued and sold by
Fusion to MSGI will be, upon issuance and payment therefor, duly
authorized, validly issued, fully paid and non-assessable and will not be
subject to any preemptive or similar rights.
(c) Upon consummation of the Merger, the shares of Holdings Common
Stock to be issued to MSGI upon surrender of the Fusion Shares and the
Option Shares shall be, upon issuance, duly authorized, validly issued,
fully paid and non-assessable and will not be subject to any preemptive or
similar rights.
5.3 Due Execution, Delivery and Performance of the Agreements. Fusion has
full power and authority to enter into this Agreement. This Agreement has been
duly authorized, executed and delivered by Fusion. Fusion's execution, delivery
and performance of this Agreement will not violate (i) any law, rule or
regulation applicable to Fusion or any of its subsidiaries or (ii) the
Certificate of Incorporation or Bylaws of Fusion or any of its subsidiaries or
(iii) any provision of any indenture, mortgage, agreement, contract or other
instrument to which Fusion or any of its subsidiaries is a party or by which
Fusion or any of its subsidiaries or any of their properties or assets is bound
as of the date hereof, or result in a breach of or constitute (upon notice or
lapse of time or both) a default under any such indenture, mortgage, agreement,
contract or other instrument or result in the creation or imposition of any
lien, security interest, mortgage, pledge, charge or other encumbrance upon any
properties or assets of Fusion or any of its subsidiaries, except, in the case
of such clause (iii), where such violation, breach or default would not have a
material adverse effect on the business, properties, prospects, condition
(financial or otherwise), net worth or results of operations of Fusion and its
subsidiaries taken as a whole (a "Material Adverse Effect"). Upon execution and
delivery (assuming the valid execution thereof by the respective parties thereto
other than Fusion), this Agreement will constitute a valid and binding
obligation of Fusion, enforceable in accordance with their respective terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
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5.4 Litigation. There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of Fusion, threatened, against or affecting Fusion or any of its
subsidiaries which might result in any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of Fusion and its subsidiaries, taken as a whole, or which might
materially and adversely affect their property or assets or which might
materially and adversely affect the consummation of this Agreement; all pending
legal or governmental proceedings to which Fusion or any of its subsidiaries is
a party or of which any of their property or assets is the subject, including
ordinary routine litigation incidental to the business, are, considered in the
aggregate, not material to the business of Fusion and its subsidiaries, taken as
a whole.
5.5 No Material Change; No Material Misstatement or Omission. (a) As of the
date hereof, there has been no material adverse change in the financial
condition, business or results of operations of Fusion since the date of the
Business Plan. Since the date of the Business Plan, neither Fusion nor any of
its subsidiaries has incurred, other than in the ordinary course of its
business, any material liabilities or obligations, direct or contingent, nor has
Fusion or any of its subsidiaries paid or declared any dividends or other
distributions on their capital stock; and, with the exception of (i) a 1,000 for
1 stock split effective August 23, 1999, (ii) a 17.7333333 for 1 stock split
effective November 18, 1999, and (iii) the sale of approximately $9,000,000 of
Units in a private placement, there has been no change in the capital stock or,
long-term debt or, any increase in the short-term borrowings (other than in the
ordinary course of business) of Fusion or any material adverse change to the
business, properties, assets, net worth, condition (financial or other), results
of operations or prospects of Fusion and its subsidiaries, taken as a whole
(other than the continuing losses from operations and the corresponding
reduction of net worth).
(b) As of the date thereof, the Business Plan, including all addenda
and exhibits thereto, does not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
5.6 No Consents, Etc. No consent, approval, authorization, order,
registration, filing, qualification, license or permit of or with any court or
any public, governmental, or regulatory agency or body having jurisdiction over
Fusion or any of its subsidiaries or any of their respective properties or
assets is required for the execution, delivery and performance of this Agreement
or the consummation of the transactions contemplated hereby, except for such as
may be required by under state securities or Blue Sky laws in connection with
the purchase and distribution of the Fusion Shares and the Option Shares.
5.7 Securities Law Compliance. Assuming the compliance by MSGI with its
representations and warranties set forth herein and in the other Agreements, the
issuance, offer and sale by Fusion to MSGI of the Fusion Shares and the Option
Shares is exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) or 3(b) thereof.
5.8 The Merger and IDM. The execution of this Agreement and performance of
the terms set forth herein by Fusion will not constitute a breach of the terms
of the Merger with IDM and Fusion has obtained, or prior to the Closing Date
will obtain, all required consents of IDM to carry out the terms of this
Agreement.
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5.9 Investment Representations. In connection with its acceptance of the
MSGI Shares as payment of the Purchase Price with respect to the Fusion Shares,
and the MSGI Option Shares as payment with respect to the Option Shares, Fusion
represents and warrants to, and covenants with, MSGI as follows:
(a) Fusion is knowledgeable, sophisticated and experienced in making,
and is qualified to make, decisions with respect to investments in shares
presenting an investment decision like that involved in accepting the MSGI
Shares as payment of the Purchase Price, and acceptance of the MSGI Option
Shares as payment for the Option Shares, and has requested, received,
reviewed and considered all information it deems relevant in making an
informed decision to accept the MSGI Shares and MSGI Option Shares;
(b) Fusion is acquiring the MSGI Shares, and the MSGI Option Shares,
in the ordinary course of its business and for its own account for
investment only and with no present intention of distributing any of such
MSGI Shares, or MSGI Option Shares, or any arrangement or understanding
with any other persons regarding the distribution or purchase of such MSGI
Shares or MSGI Option Shares;
(c)Fusion will not, directly or indirectly, offer, sell, pledge,
transfer or otherwise dispose of (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of) any of the MSGI Shares or MSGI
Option Shares except in compliance with the Securities Act of 1933, as
amended (the "Securities Act"), and the rules and regulations promulgated
thereunder and under the Exchange Act, and the rules and regulations
promulgated thereunder, and the terms and conditions of this Agreement;
(d) Fusion, in connection with its decision to accept the MSGI Shares
and MSGI Option Shares, has reviewed all filings of MSGI with the
Securities and Exchange Commission (the "SEC") or with other public
agencies and has been given the opportunity to ask questions of management
of MSGI to the extent it deems necessary to enter into the transactions
contemplated hereby and has relied solely upon its own investigation and
the reports filed by MSGI with the SEC and the representations and
warranties of MSGI contained in writing herein, and has not relied upon any
other statements, representations, warranties, covenants or assurances of
MSGI;
(e) Fusion understands that (i) the MSGI Shares and MSGI Option Shares
are not a liquid investment, (ii) it may sell or otherwise transfer the
MSGI Shares or MSGI Option Shares only if such transaction is duly
registered under the Securities Act, or pursuant to an opinion of counsel,
satisfactory to MSGI and its counsel, to the effect that such sale or
transfer may be made in the absence of registration under the Securities
Act and (iii) the MSGI Shares and MSGI Option Shares will be subject to
stop transfer instructions and will contain legends to the following
effect:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
SECURITIES 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. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE TERMS OF A STOCK PURCHASE AND SALE
AGREEMENT DATED DECEMBER ___, 1999, INCLUDING THE PROVISIONS OF A PUT
OPTION INCLUDED IN SAID AGREEMENT.
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SECTION 6. Representations, Warranties and Covenants of MSGI. MSGI
represents and warrants to, and covenants with, Fusion as follows:
6.1 Organization and Qualification. Each of MSGI and its subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has all requisite corporate power and
authority to conduct its business as currently conducted. Each of MSGI and its
subsidiaries is qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the failure to so qualify would have a
material adverse effect on the operations of MSGI and its subsidiaries, taken as
a whole.
6.2 Authorized Capital Stock; Authorization of Securities. (a) As of June
30, 1999, the authorized capital stock of MSGI consisted of: 75,000,000 shares
of common stock, of which (i) 22,513,772 shares were validly issued and are
outstanding, fully paid and non-assessable, including 423,894 shares held in
treasury, (ii) 1,000,000 shares were reserved for issuance under the 1999 Stock
Option Plan, of which 190,000 options were issued and outstanding, (iii)
2,960,053 shares were reserved for issuance under older option plans or nonplan
options and (iv) 204,185 shares were reserved for issuance under outstanding
warrants of MSGI. In addition, MSGI is a party to an Agreement and Plan of
Merger, dated July 8, 1999 with GCG Merger Corp., and Xxxxxxxx Advertising
Incorporated ("Xxxxxxxx") pursuant to which it shall issue $50,000,000 of its
common stock pursuant to a market valuation calculation as set forth in such
agreement. MSGI is also a party to certain agreements with GE Capital as
described in the MSGI SEC Reports. Except as set forth above or in the MSGI SEC
Reports, at June 30, 1999, there were no outstanding securities exercisable for
or convertible into shares of capital stock of MSGI.
(b) The MSGI Shares to be issued to Fusion as payment of the Purchase
Price, and the MSGI Option Shares to be issued as payment for the Option
Shares, will be, upon issuance and payment therefor, duly authorized,
validly issued, fully paid and non-assessable and will not be subject to
any preemptive or similar rights.
6.3 Due Execution, Delivery and Performance of the Agreements. MSGI has
full power and authority to enter into this Agreement. This Agreement has been
duly authorized, executed and delivered by MSGI. MSGI's execution, delivery and
performance of this Agreement will not violate (i) any law, rule or regulation
applicable to MSGI or any of its subsidiaries or (ii) the Articles of
Incorporation or Bylaws of MSGI or any of its subsidiaries or (iii) any
provision of any indenture, mortgage, agreement, contract or other instrument to
which MSGI or any of its subsidiaries is a party or by which MSGI or any of its
subsidiaries or any of their properties or assets is bound as of the date
hereof, or result in a breach of or constitute (upon notice or lapse of time or
both) a default under any such indenture, mortgage, agreement, contract or other
instrument or result in the creation or imposition of any lien, security
interest, mortgage, pledge, charge or other encumbrance upon any properties or
assets of MSGI or any of its subsidiaries, except, in the case of such clause
(iii), where such violation, breach or default would not have a material adverse
effect on the business, properties, prospects, condition (financial or
otherwise), net worth or results of operations of MSGI and its subsidiaries
taken as a whole (a "Material Adverse Effect"). Upon execution and delivery
(assuming the valid execution thereof by the respective parties thereto other
than MSGI), this Agreement will constitute a valid and binding obligation of
MSGI, enforceable in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
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6.4 Litigation. There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of MSGI, threatened, against or affecting MSGI or any of its
subsidiaries which might result in any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of MSGI and its subsidiaries, taken as a whole, or which might
materially and adversely affect their property or assets or which might
materially and adversely affect the consummation of this Agreement; all pending
legal or governmental proceedings to which MSGI or any of its subsidiaries is a
party or of which any of their property or assets is the subject, including
ordinary routine litigation incidental to the business, are, considered in the
aggregate, not material to the business of MSGI and its subsidiaries, taken as a
whole.
6.5 SEC Reports; Financial Statements. MSGI has filed all required forms,
reports and documents with the SEC since January 1, 1999, 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. MSGI has heretofore provided to Fusion access
to all reports, proxy statements and other filings with the SEC (including any
amendments thereto)(the "MSGI 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 MSGI 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 MSGI 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 MSGI or
any of its subsidiaries in accounting principles, methods or policies for
financial accounting or tax purposes.
6.6 No Material Change. As of the date hereof, there has been no material
adverse change in the financial condition, business or results of operations of
MSGI since June 30, 1999. Since June 30, 1999, neither MSGI nor any of its
subsidiaries has incurred, other than in the ordinary course of its business,
any material liabilities or obligations, direct or contingent, nor has MSGI or
any of its subsidiaries paid or declared any dividends or other distributions on
their capital stock; and, there has been no change in the capital stock or,
long-term debt or, any increase in the short-term borrowings (other than in the
ordinary course of business) of MSGI or any material adverse change to the
business, properties, assets, net worth, condition (financial or other), results
of operations or prospects of MSGI and its subsidiaries, taken as a whole (other
than the continuing losses from operations and the corresponding reduction of
net worth).
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6.7 No Consents, Etc. No consent, approval, authorization, order,
registration, filing, qualification, license or permit of or with any court or
any public, governmental, or regulatory agency or body having jurisdiction over
MSGI or any of its subsidiaries or any of their respective properties or assets
is required for the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby, except for such as may be
required by under state securities or Blue Sky laws in connection with the
purchase and distribution of the MSGI Shares, except for the consent of
Xxxxxxxx, which has been obtained.
6.8 Securities Law Compliance. Assuming the compliance by Fusion with its
representations and warranties set forth herein and in the other Agreements, the
issuance by MSGI to Fusion of the MSGI Shares, and the MSGI Option Shares, is
exempt from the registration requirements of the Securities Act pursuant to
Section 4(2) or 3(b) thereof.
6.9 Investment Representations. In connection with the offer and sale of
the Fusion Shares and the Option Shares, MSGI represents and warrants to, and
covenants with, Fusion as follows:
(a) MSGI is knowledgeable, sophisticated and experienced in making,
and is qualified to make, decisions with respect to investments in shares
presenting an investment decision like that involved in the purchase of the
Fusion Shares and the Option Shares and has requested, received, reviewed
and considered all information it deems relevant in making an informed
decision to purchase the Fusion Shares and the Option Shares;
(b) MSGI is acquiring the Fusion Shares, and the Option Shares, in the
ordinary course of its business and for its own account for investment only
and with no present intention of distributing any of such Fusion Shares, or
Option Shares, or any arrangement or understanding with any other persons
regarding the distribution or purchase of such Fusion Shares, or Option
Shares;
(c) MSGI will not, directly or indirectly, offer, sell, pledge,
transfer or otherwise dispose of (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of) any of the Fusion Shares, or Option
Shares, except in compliance with the Securities Act and the rules and
regulations promulgated thereunder and under the Exchange Act, and the
rules and regulations promulgated thereunder, and the terms and conditions
of this Agreement;
(d) MSGI, in connection with its decision to purchase the Fusion
Shares, and the Option Shares, has been provided with the Business Plan and
has had such access to financial and other information concerning Fusion
and the Fusion Shares, and Option Shares, as it deemed necessary to enter
into the transactions contemplated hereby, including an opportunity to ask
questions and request information from Fusion and its management, and all
such questions have been answered and all information requested has been
provided to the satisfaction of MSGI, and MSGI has relied solely upon its
own investigation and the representations and warranties of Fusion
contained in writing herein, and has not relied upon any other statements,
representations, warranties, covenants or assurances of Fusion.
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(e) MSGI understands and acknowledges that Fusion is newly formed, has
no operating history and limited financial resources and there is no
assurance that Fusion can carry out its business plan as described in the
Business Plan or that the Merger will be consummated on the terms
described, or at all, in which case, MSGI will continue to hold common
stock of Fusion, for which no liquid market exists, and, in which case,
MSGI may be required to hold the Fusion Shares, and the Option Shares, for
an indefinite period of time; and
(f) MSGI understands that (i) the Fusion Shares, and the Option
Shares, are not a liquid investment, (ii) it may sell or otherwise transfer
the Fusion Shares, and the Option Shares, only if such transaction is duly
registered under the Securities Act, or pursuant to an opinion of counsel,
satisfactory to Fusion and its counsel, to the effect that such sale or
transfer may be made in the absence of registration under the Securities
Act and (iii) the Fusion Shares, and the Option Shares, will be subject to
stop transfer instruction and will contain a legend to the following
effect:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
SECURITIES 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.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERMS OF A STOCK PURCHASE AND SALE AGREEMENT DATED DECEMBER ___, 1999,
INCLUDING THE PROVISIONS OF A PUT OPTION INCLUDED IN SAID AGREEMENT.
SECTION 7. Survival of Representations, Warranties and Agreements.
Notwithstanding any representation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by Fusion and MSGI in
writing herein shall survive the execution of this Agreement, the delivery to
MSGI of the Fusion Shares being purchased, and the Option Shares, and the
delivery to Fusion of the MSGI Shares, and the MSGI Option Shares, in payment
therefor.
SECTION 8. Lock-Up Agreement. (a) MSGI agrees that it will not, without the
prior written consent of Fusion, directly or indirectly, offer, offer to sell,
grant an option for the sale of, transfer, assign, pledge, hypothecate or
otherwise encumber any securities of Fusion whether or not owned by or
registered in the name of or beneficially owned by MSGI, or otherwise dispose of
any interest therein prior to the first anniversary of the Closing Date.
(b) Fusion agrees that it will not, without the prior written consent
of MSGI, directly or indirectly, offer, offer to sell, grant an option for
the sale of, transfer, assign, pledge, hypothecate or otherwise encumber
any securities of MSGI whether or not owned by or registered in the name of
or beneficially owned by Fusion, or otherwise dispose of any interest
therein prior to the first anniversary of the Closing Date.
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(c) In order to enforce the "lock-up" requirements of this provision,
the certificates evidencing the Fusion Shares, the Option Shares, the MSGI
Shares, and the MSGI Option Shares shall bear a legend with shall read as
follows:
THE SHARES EVIDENCED HEREBY ARE SUBJECT TO A LOCK-UP AGREEMENT
PURSUANT TO WHICH SUCH SHARES MAY NOT BE SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF WITHOUT THE PRIOR
WRITTEN CONSENT OF THE ISSUING COMPANY PRIOR TO __________________,
2000.
(d) Each of MSGI and Fusion agree that if any request is made to
shorten the "lock-up" period provided for in this Section 7, such request,
and any agreement to so shorten said period, shall be reciprocal as to the
same relative amount of shares on a percentage basis.
SECTION 9. Broker's Fee. 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 MSGI or any of their affiliates.
SECTION 10. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be by telecopier, with a
copy being mailed by a nationally recognized overnight express courier, and
shall be deemed given when receipt is acknowledged by transmit confirmation
report and shall be addressed as follows:
(a) if to Fusion, to:
Fusion Networks, Inc.
0000 X.X. 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxxx Xxxxxxx, President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
or to such other person at such other place as Fusion shall designate to MSGI in
writing;
(b) if to MSGI, to:
Marketing Services Group, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxx, President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
or at such other address or addresses as may have been furnished to Fusion in
writing.
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SECTION 11. Changes. This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by Fusion and MSGI.
SECTION 12. Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.
SECTION 13. Severability. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
SECTION 14. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida (without reference
to its rules as to conflicts of law) and the federal law of the United States of
America.
SECTION 15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties. Facsimile signatures are considered to be
originals and shall have the same effect.
SECTION 16. Entire Agreement. This Agreement is intended by the parties as
a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the day and year first above
written.
FUSION NETWORKS, INC. MARKETING SERVICES GROUP, INC.
By:_______________________ By:____________________________
Name: Xxxxxxxx Xxxxxxx Name: Xxxxxx Xxxxxxx
Title: President Title: President
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