UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 18, 2000
-------------------
FUSION NETWORKS HOLDINGS, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-23900 51-0393382
- - ---------------------------- ------------ ----------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) file number) Identification Number)
8115 N.W. 29th Street, Miami, Florida 33122
--------------------------------------------------
(Address of principal executive offices)(Zip Code)
(305) 477-6701
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(Registrant's telephone number, including area code)
--------------------------------------------------------
(Former name and former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets
On August 18, 2000, Fusion Networks Holdings, Inc. (the "Company")
completed the sale of all of the stock of its wholly-owned subsidiary, IDM
Environmental Corp. ("IDM"). The IDM stock was sold to Joel Freedman and Frank
Falco (the "Purchasers"), the principal officers and directors of IDM and
directors of the Company.
The consideration paid by the Purchasers consisted of a three year secured
interest bearing promissory note in the amount of $58,881 and the release of the
Company from guarantees in the aggregate amount of $300,000. The terms of the
sale were negotiated by the Company's Chief Executive Officer based on a
combination of factors, including (1) the substantial recurring operating losses
and working capital deficits of IDM, (2) uncertainty with respect to the timing
and ultimate realization of value from investments of IDM in affiliates, (3) the
substantial time, management effort and capital required to turn-around IDM's
operations and the uncertainty on any such efforts, (4) the adverse feedback
from the investment community relative to the ongoing affiliation with IDM, (5)
the desire to focus the Company's efforts and resources on development of the
Company's core Internet software business, and (6) the lack of viable
alternative purchasers.
In connection with the sale of IDM, Joel Freedman and Frank Falco resigned
as directors of the Company and Gary M. Goldfarb was appointed as a director.
The Company, during the quarter ended June 30, 2000, wrote down goodwill in
the amount of $7,354,181 in connection with the anticipated sale of IDM.
Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information
Introduction to Pro Forma Financial Information............ F-1
Pro Forma Condensed Consolidated Balance Sheet at
June 30, 2000.............................................. F-2
Pro Forma Condensed Consolidated Statement of
Operations for the six months ended June 30, 2000.......... F-3
Pro Forma Condensed Consolidated Statement of Operations
for the year ended December 31, 1999....................... F-4
(c) Exhibits
Exhibit
Number Description
--------- -------------
2.1 Stock Purchase Agreement dated August 18, 2000, by
and among Fusion Networks Holdings, Inc., Joel
Freedman and Frank Falco.
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized.
FUSION NETWORKS HOLDINGS, INC.
Dated: August 31, 2000
By: /s/ Gary Goldfarb
---------------------
Gary Goldfarb
President
3
INTRODUCTION TO PRO FORMA FINANCIAL INFORMATION
The pro forma condensed consolidated balance sheet of Fusion Networks Holdings,
Inc. as of June 30, 2000 reflects the financial position of the Company assuming
the disposition of IDM Environmental Corp. took place on June 30, 2000 and after
giving effect to that disposition.
The pro forma condensed consolidated statements of operations for the six months
ended June 30, 2000 and the fiscal year ended December 31, 1999 gives effect to
the disposition as if such disposition occurred on January 1, 1999 and are based
on the operations of the Company for the six months ended June 30, 2000 and the
fiscal year ended December 31, 1999. Nonrecurring charges or credits resulting
directly from the transaction such as asset write-downs, liability accruals and
severance have not been considered in these pro forma statements of operations.
The unaudited pro forma condensed consolidated financial statements have been
prepared by the Company based upon assumptions deemed proper by it. The
unaudited pro forma condensed consolidated financial statements presented herein
are shown for illustrative purposes only and are not necessarily indicative of
the future financial position or future results of operations of the Company, or
of the financial position or results of operations of the Company that would
have actually occurred had the transaction been in effect as of the date or for
the period presented.
The unaudited pro forma condensed consolidated financial statements should be
read in conjunction with the historical financial statements and related notes
of the Company.
F-1
PRO FORMA FINANCIAL INFORMATION
FUSION NETWORKS HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AT JUNE 30, 2000
(Unaudited)
Historical Adjustments Proforma Results
------------ ------------- -----------------
ASSETS
Current Assets:
Cash $3,307,159 (134,909)(2) $3,172,250
Accounts receivable 4,034,981 (4,034,981)(2) 0
Notes Receivable 58,881 (2) 58,881
Other loans 174,820 2,890 (2) 177,710
Recoverable income taxes 650,242 (650,242)(2) 0
Prepaid expenses and other
current assets 2,320,461 (2,020,078)(2) 300,383
------------- -------------- ------------
Total Current Assets 10,487,663 (6,778,439) 3,709,224
------------- -------------- ------------
Goodwill, net of accumulated amortization 0
Investments in and advances to
unconsolidated affiliates 929,266 (929,266)(2) 0
Investment in affiliate, at cost 27,353,125 (1,853,125)(2) 25,500,000
Property, plant and equipment, net 3,273,922 (1,618,436)(2) 1,655,486
Other assets 979,925 (979,925)(2) 0
------------- -------------- ------------
$43,023,901 $(12,159,191) $30,864,710
============= ============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $12,819 $(12,819)(2) $ -
Accounts payable and accrued expenses 9,638,208 (9,128,701)(2) 509,507
Billings in excess of costs and estimated
earnings 1,130,597 (1,130,597)(2) 0
Due to officers 100,418 (100,418)(2) 0
------------- -------------- ------------
Total Current Liabilities 10,882,042 (10,372,535) 509,507
------------- -------------- ------------
Long-Term Debt 4,015,810 (15,810)(2) 4,000,000
------------- -------------- ------------
Total Liabilities 14,897,852 (10,388,345) 4,509,507
------------- -------------- ------------
Commitments and Contingencies
Stockholders' Equity:
Common stock, authorized 60,000,000 shares
$.00001 par value, issued and outstanding
37,036,226 at June 30, 2000 and 33,113,333
at December 31, 1999. 370 370
Additional paid-in-capital 65,032,705 (12,419,272) 52,613,433
Foreign currency translation 7,271 7,271
Retained earnings (36,914,297) 7,354,181(1) (26,265,871)
1,888,608(2)
1,405,637(3)
------------- -------------- ------------
Total Stockholders' Equity 28,126,049 (1,770,846) 26,355,203
------------- -------------- ------------
$43,023,901 $(12,159,191) $30,864,710
============= ============== ============
F-2
PRO FORMA FINANCIAL INFORMATION
FUSION NETWORKS HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(Unaudited)
June 30, 2000
Unaudited
--------------------------------------
Fusion
Networks
Fusion Holdings, Inc.
Networks Proforma Proforma
Holdings, Inc. Adjustments Adjusted
---------------- ------------- ---------------
Contract Income $1,978,209 $(1,978,209)(3) $ -
Direct Job Costs 1,304,730 (1,304,730)(3) -
----------- --------------- -----------
Gross Profit (Loss) 673,479 (673,479) 0
----------- --------------- -----------
Costs and Expenses:
General and administrative
expenses 5,130,776 (1,888,689)(3) 3,242,087
Product development and
engineering 2,518,082 2,518,082
Sales and marketing 881,530 881,530
Write-down of Goodwill 7,354,181 (7,354,181)(1) -
Depreciation and amortization 214,396 (66,101)(3) 148,295
----------- --------------- -----------
16,098,965 (9,308,971) 6,789,994
----------- --------------- -----------
Loss from Operations (15,425,486) (8,635,492) (6,789,994)
Other Income (Expense):
Loss on disposal of property,
plant and equipment (74,382) 74,382(3) -
Gain on sale of subsidiary 1,888,608(2) 1,888,608
Miscellaneous income (expense) (72,740) - (72,740)
Interest income (expense) 32,280 49,944(3) 82,224
----------- --------------- -----------
(114,842) 2,012,934 1,898,092
Loss before Credit for Income Taxes (15,540,328) (10,648,426) (4,891,902)
Provision (Credit) for Income Taxes - - -
----------- --------------- -----------
Net Loss ($15,540,328) ($10,648,426) ($4,891,902)
=========== =============== ===========
Loss per Share:
Basic loss per share $(0.44) $(0.14)
=========== ===========
Diluted loss per share $(0.44) $(0.14)
=========== ===========
Basic common shares outstanding 35,074,780 35,074,780
Diluted common shares outstanding 35,074,780 35,074,780
See Notes to Pro Forma Consolidated Financial Data
F-3
PRO FORMA FINANCIAL INFORMATION
FUSION NETWORKS HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(Unaudited)
December 31, 1999
Audited
----------------------------
Fusion
Networks
Fusion Holdings, Inc.
Networks Proforma Proforma
Holdings, Inc. Adjustments Adjusted
------------------ -------------- -----------------
Contract Income - -
Direct Job Costs - -
------------ -------------
Gross Profit (Loss) 0 0
------------ -------------
Costs and Expenses:
General and administrative
expenses 386,742 386,742
Product development and
engineering 1,038,671 1,038,671
Sales and marketing 164,249 164,249
Consulting expenses 19,575,000 19,575,000
Merger Expenses 238,350 238,350
------------ -------------
21,403,012 21,403,012
------------ -------------
Loss from Operations (21,403,012) (21,403,012)
Other Income (Expense):
Interest income (expense) 29,040 29,040
------------ -------------
29,040 29,040
Loss before Credit for Income Taxes (21,373,972) (21,373,972)
Provision (Credit) for Income Taxes - - -
------------ -------------
Net Loss ($21,373,972) ($21,373,972)
============ =============
Loss per Share:
Basic loss per share $(0.64) $(0.64)
============ =============
Diluted loss per share $(0.64) $(0.64)
============ =============
Basic common shares outstanding 33,113,333 33,113,333
Diluted common shares outstanding 33,113,333 33,113,333
See Notes to Pro Forma Consolidated Financial Data
F-4
FUSION NETWORKS HOLDINGS, INC .
Notes to Pro Forma Consolidated Financial Statements
June 30, 2000
(1) To eliminate the write down of goodwill of $7,354,181 associated with the
merger of IDM. The write-down of the goodwill was recorded during the
quarter ended June 30, 2000 to reflect the sale of IDM to the principal
officers and directors of IDM the "purchasers".
(2) To record the sale of $1,829,727 net liabilities of IDM, the issuance of a
note receivable from the purchasers to the company of $ 58,881, and the
corresponding gain of $1,888,608 associated with the corresponding sale.
(3) To eliminate the net loss of $1,405,637 of IDM from the date of acquisition
to June 30, 2000 which included in the consolidated statement of operations
for the period ended June 30, 2000.
F-5
Stock Purchase Agreement
By and Among
FUSION NETWORKS HOLDINGS, INC.
as Seller
and
JOEL A. FREEDMAN and
FRANK A. FALCO
as Purchasers
August 18, 2000
TABLE OF CONTENTS
Page
------
ARTICLE I Definitions..................................... 1
Section 1.01. Certain Defined Terms........................... 1
Section 1.02. References, Etc................................. 1
ARTICLE II Purchase and Sale of the Stock.................. 2
Section 2.01. Purchase and Sale............................... 2
Section 2.02. Purchase Price.................................. 2
Section 2.03. Time and Place of Closing....................... 2
Section 2.04. Delivery of the Stock; Payment of Purchase Price 2
ARTICLE III Representations and Warranties of Seller........ 3
Section 3.01. Authority ...................................... 3
Section 3.02. No Conflict..................................... 3
Section 3.03. Consents and Approvals.......................... 3
Section 3.04. Litigation...................................... 3
Section 3.05. Brokers, Finders and Financial Advisors......... 3
ARTICLE IV Representations and Warranties of Purchaser..... 4
Section 4.01. Authority....................................... 4
Section 4.02. No Conflict..................................... 4
Section 4.03. Consents and Approvals ......................... 4
Section 4.04. Litigation...................................... 4
Section 4.05. Brokers, Finders and Financial Advisors......... 5
Section 4.06. Knowledge Regarding the Company ................ 5
ARTICLE V Covenants....................................... 5
Section 5.01. Cooperation..................................... 5
Section 5.02. Further Assurances.............................. 5
Section 5.03. Public Announcements............................ 5
Section 5.04. Acquisition Transactions........................ 6
Section 5.05. Non-Competition................................. 6
Section 5.06. Option Grants .................................. 6
Section 5.07. Affirmation of Options and Warrants ............ 7
Section 5.08. Continuation of Directors and Officers Insurance
Coverage........................................ 7
-i-
ARTICLE VI Conditions...................................... 7
Section 6.01. Conditions to Obligations of each of the Parties 7
Section 6.02. Conditions to Obligations of Seller............. 7
Section 6.03. Conditions to Obligations of Purchasers......... 8
ARTICLE VII Termination..................................... 8
Section 7.01. Termination..................................... 8
Section 7.02. Effect of Termination........................... 9
ARTICLE VIII Indemnification ................................ 9
Section 8.01. Indemnification of Seller ...................... 9
Section 8.02. Indemnification of Purchasers .................. 10
Section 8.03. Limitations on Indemnification ................. 11
Section 8.04. Indemnification Procedures...................... 11
Section 8.05. Payment......................................... 12
Section 8.06. Other Indemnities; Survival of Representations,
Warranties and Covenants........................ 12
ARTICLE IX Miscellaneous................................... 12
Section 9.01. Notices......................................... 12
Section 9.02. Benefit and Burden.............................. 13
Section 9.03. No Third Party Rights........................... 13
Section 9.04. Amendments and Waiver........................... 13
Section 9.05. Assignments..................................... 14
Section 9.06. Counterparts ................................... 14
Section 9.07. Captions and Headings .......................... 14
Section 9.08. Construction.................................... 14
Section 9.09. Severability.................................... 14
Section 9.10. Remedies ....................................... 14
Section 9.11. Applicable Law ................................. 14
Section 9.12. Submission to Jurisdiction...................... 15
Section 9.13. Expenses; Prevailing Party Costs ............... 15
Section 9.14. Entire Agreement................................ 15
Section 9.15. Legal Representation............................ 16
EXHIBITS, ANNEXES AND SCHEDULES
Schedule 2.02. Purchase Price.................................. 17
Annex A Definitions
Exhibit A Form of Promissory Note
Exhibit B Form of Release Option
Exhibit C Form of New Option
-ii-
Stock Purchase Agreement
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made effective as of
the 18th day of August, 2000, by and among Fusion Networks Holdings, Inc.
("Fusion") being herein referred to as "Seller", and Joel A. Freedman, an
individual ("Freedman"), and Frank A. Falco, an individual ("Falco"), or their
assignees provided for in Section 9.05 (Freedman and Falco or such assignees
being herein referred to as "Purchasers").
PRELIMINARY STATEMENTS
A. IDM Environmental Corp. is a corporation organized under the laws of
the State of New Jersey (the "Company"), and the Seller owns all of
the issued and outstanding capital stock of the Company (the "Stock").
B. Freedman and Falco founded the Company and serve as the principal
officers of the Company.
C. Seller acquired the Company (the "Merger") as a wholly-owned
subsidiary pursuant to the terms of a Plan of Reorganization and
Merger dated August 18, 1999 (the "Holding Company Agreement") and an
Agreement and Plan of Merger dated August 18, 1999 (the "Merger
Agreement").
B. Seller desires to sell the Stock to Purchasers, and Purchasers desire
to purchase the Stock from Seller, on the terms, provisions and
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements contained herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Seller and Purchasers do hereby agree as
follows:
ARTICLE I
Definitions
Section 1.01. Certain Defined Terms . Capitalized terms used in this
Agreement and not otherwise defined herein shall have the respective
meanings set forth in Annex A hereto.
Section 1.02. References, Etc. The words "hereof,""herein" and
"hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of
this Agreement. All terms defined in Annex A or in any other provision of
this Agreement in the singular shall have the same meanings in the plural
and vice versa. All pronouns, nouns and other terms used in this Agreement
shall include the masculine, feminine and neuter forms thereof, wherever
appropriate to the context. All references herein to Articles, Sections,
Annexes, Exhibits and Schedules shall, unless the context requires a
different construction, be deemed to be references to the Articles and
Sections of this Agreement and the Annexes, Exhibits and Schedules attached
hereto and made a part hereof. In this Agreement, unless a clear contrary
intention appears, the word "including" (and with correlative meaning
"include") means including, without limiting the generality of any
description preceding such term. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP.
ARTICLE II
Purchase and Sale of the Stock
Section 2.01. Purchase and Sale . On the Closing Date and upon the
terms and subject to the conditions set forth herein, the Seller shall
sell, convey, transfer, assign and deliver the Stock to Purchasers, free
and clear of all Liens, and Purchasers shall purchase and accept the Stock
from the Seller.
Section 2.02. Purchase Price . The purchase price (the "Purchase
Price") for the Stock shall consist of the consideration and satisfaction
of the requirements set forth on Schedule 2.02 attached hereto.
Section 2.03. Time and Place of Closing . Subject to the satisfaction
or waiver of the conditions set forth in Article VI hereof, the closing of
the transactions contemplated by this Agreement shall take place on the
Closing Date at 10:00 A.M., Miami, Florida time, at the offices of Seller,
8115 N.W. 29th Street, Miami, Florida, or at such other time, date or place
as Seller and Purchasers may agree. Upon consummation of the Closing, the
transactions contemplated by this Agreement shall be deemed effective as of
the close of business June 30, 2000 ("Effective Time").
Section 2.04. Delivery of the Stock; Payment of Purchase Price . On
the Closing Date: (a) the Seller shall deliver to Purchasers the
certificates representing the Stock, duly endorsed in blank or accompanied
by stock powers duly endorsed in blank, subject to the pledge of the Stock
described on Schedule 2.02, with all Taxes attributable to the transfer and
sale of the Stock paid by the Seller; and (b) in full consideration and
exchange for the Stock, the Purchasers shall deliver to the Seller
documents in payment of the Purchase Price as set forth on Schedule 2.02
attached hereto.
2
ARTICLE III
Representations and Warranties of Seller
Subject to all of the terms, conditions and provisions of this Agreement,
Seller hereby represents and warrants to Purchasers, as of the date hereof and
as of the Closing Date, as follows:
Section 3.01. Authority . The Seller has all requisite power and
authority, corporate or otherwise, to execute and deliver this Agreement
and the Closing Documents and to consummate the transactions contemplated
hereby and thereby. The Seller has duly and validly executed and delivered
this Agreement and will, on or prior to the Closing Date, execute and
deliver the Closing Documents and, assuming the due authorization,
execution and delivery of this Agreement and the Closing Documents by the
Purchasers constitutes, and when executed and delivered each of such
Closing Documents will constitute, the legal, valid and binding obligation
of the Seller enforceable against the Seller in accordance with its terms,
except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar Laws affecting creditors'
rights generally and general equitable principles.
Section 3.02. No Conflict . The execution and delivery by the Seller
of this Agreement and the Closing Documents and the consummation of the
transactions contemplated hereby and thereby, do not and will not, by the
lapse of time, the giving of notice or otherwise: (a) constitute a
violation of any Law; (b) constitute a breach of any provision contained
in, or a default under, any Governmental Approval, any writ, injunction,
order, judgment or decree of any Governmental Authority or any Contract to
which the Seller is a party or by which the Seller or any of its Assets and
Properties is bound or affected; or (c) result in or require the creation
of any Lien upon the Stock or, except as otherwise provided in this
Agreement and the Closing Documents, any of the Assets and Properties of
any of the Seller.
Section 3.03. Consents and Approvals . No Governmental Approvals and
no notifications, filings or registrations to or with any Governmental
Authority or any other Person is or will be necessary for the valid
execution and delivery by the Seller of this Agreement and the Closing
Documents or the consummation of the transactions contemplated hereby or
thereby, or the enforceability hereof or thereof, other than those which
have been obtained or made and are in full force and effect.
Section 3.04. Litigation . There are no Claims pending or, to the
knowledge of Seller, threatened against or affecting the Seller which seeks
to restrain or enjoin the execution and delivery of this Agreement or any
of the Closing Documents or the consummation of any of the transactions
contemplated hereby or thereby.
Section 3.05. Brokers, Finders and Financial Advisors . No broker,
finder or financial advisor has acted for Seller in connection with this
Agreement or any of the Closing Documents or the transactions contemplated
hereby or thereby, and no broker, finder or financial advisor is entitled
to any broker's, finder's or financial advisor's fee or other commission in
respect thereof based in any way on any Contract with Seller. ARTICLE IV
3
Representations and Warranties of Purchasers
Subject to all of the terms, conditions and provisions of this
Agreement, Purchasers hereby represent and warrant to Seller, as of the
date hereof and as of the Closing Date, as follows:
Section 4.01. Authority . Purchasers have all requisite power and
authority to execute and deliver this Agreement and the Closing Documents
and to consummate the transactions contemplated hereby and thereby.
Purchasers have duly and validly executed and delivered this Agreement and
will, on or prior to the Closing Date, execute and deliver each of the
Closing Documents and, assuming the due authorization, execution and
delivery of this Agreement and such Closing Documents by the Seller, this
Agreement constitutes, and when executed and delivered each of such Closing
Documents will constitute, the legal, valid and binding obligation of the
Purchasers, enforceable against the Purchasers in accordance with its
terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar Laws affecting creditors'
rights generally and general equitable principles.
Section 4.02. No Conflict . The execution and delivery by Purchasers
of this Agreement and the Closing Documents and the consummation of the
transactions contemplated hereby and thereby do not and shall not, by the
lapse of time, the giving of notice or otherwise: (a) constitute a
violation of any Law; (b) constitute a breach of any provision contained
in, or a default under, any Governmental Approval, any writ, injunction,
order, judgment or decree of any Governmental Authority or any Contract to
which Purchasers are parties or by which Purchasers or their Assets and
Properties are bound or affected; or (c) except as otherwise contemplated
by this Agreement and the Closing Documents, result in or require the
creation of any Lien upon any of the Assets and Properties of Purchasers.
Section 4.03. Consents and Approvals . No Governmental Approvals and
no notifications, filings or registrations to or with any Governmental
Authority or any other Person is or will be necessary for the valid
execution and delivery by Purchasers of this Agreement and the Closing
Documents or the consummation of the transactions contemplated hereby or
thereby, or the enforceability hereof or thereof, other than those which
have been obtained or made and are in full force and effect.
Section 4.04. Litigation . There are no Claims pending or, to the
knowledge of Purchasers, threatened before or by any Governmental Authority
or any other Person, and Purchasers have no knowledge of the basis for any
Claim, which either alone or in the aggregate, seeks to restrain or enjoin
the execution and delivery of this Agreement or any of the Closing
Documents or the consummation of any of the transactions contemplated
hereby or thereby. There are no judgments or outstanding orders,
injunctions, decrees, stipulations or awards (whether rendered by a
Governmental Authority or by an arbitrator) against Purchasers which
prohibit or restrict, or could reasonably be expected to result in any
delay of, the consummation of the transactions contemplated by this
Agreement or any of the Closing Documents.
4
Section 4.05. Brokers, Finders and Financial Advisors . No broker,
finder or financial advisor has acted for the Purchasers in connection with
this Agreement or any of the Closing Documents or the transactions
contemplated hereby or thereby, and no broker, finder or financial advisor
is entitled to any broker's, finder's or financial advisor's fee or other
commission in respect thereof based in any way on any Contract with
Purchasers.
Section 4.06. Knowledge Regarding the Company. Purchasers, as
principal members of management of the Company, represent and acknowledge
that they are familiar with the Assets and Properties and the Liabilities
and operations of the Company and are not relying on any representations of
the Seller with respect to the Assets and Properties or Liabilities or
operations of the Company and agree to accept the Stock as is without
warranty.
ARTICLE V
Covenants
Section 5.01. Cooperation . Subject to the terms and conditions
herein provided, Seller and Purchasers each agree to use commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated
by this Agreement and the Closing Documents and to cooperate with the other
in connection with the foregoing.
Section 5.02. Further Assurances . Seller and Purchasers agree that,
from time to time, whether before, at or after the Closing Date, each of
them will take such other action as may be reasonably requested and
necessary or appropriate to carry out the purposes and intent of this
Agreement and the Closing Documents. Purchasers further agree to take, or
to cause the Company to take, such other actions and supply such further
information, from time to time, as may be reasonably requested and
necessary or appropriate for Seller to comply with ongoing reporting
obligations under the Securities Exchange Act of 1934, including, but not
limited to, supplying such financial information as may required to comply
with those obligations.
Section 5.03. Public Announcements . Except as required by Law,
without the prior written approval of the other party, neither Seller nor
Purchasers will issue, or permit any agent or Affiliate thereof to issue,
any press release or otherwise make or permit any agent or Affiliate
thereof to make, any public statement or announcement with respect to this
Agreement, the Closing Documents or the transactions contemplated hereby
and thereby; provided, however, that to the extent that, in the opinion of
their respective counsels, any public statements are required to be made by
the Company or Purchaser pursuant to any Law, the parties shall endeavor to
consult with each other prior to issuing any such press release or written
public statement.
5
Section 5.04. Acquisition Transactions . After the date hereof and
prior to the Closing Date or the earlier termination of this Agreement,
Seller shall not initiate, solicit, negotiate, encourage or facilitate any
proposal or offer to acquire all or any substantial part of the business or
Assets and Properties of the Company or any capital stock of the Company,
whether by merger, purchase of Assets and Properties, tender offer or
otherwise, and whether for cash, securities or any other consideration or
combination thereof. Seller: (a) acknowledges and agrees that a breach of
any of the covenants contained in this Section 5.04 will result in
irreparable harm to Purchasers which will not be compensable in money
damages; and (b) agrees that such covenant shall be specifically
enforceable and that specific performance and injunctive relief shall be a
remedy properly available to Purchaser for a breach of such covenant.
Seller further hereby agrees to indemnify, defend and hold harmless
Purchasers from and against any and all Claims, Liabilities and Losses
which may be imposed on, incurred by or asserted against Purchaser, arising
out of or resulting from any breach of the covenants contained in this
Section 5.04.
Section 5.05. Non-Competition . In consideration of the terms and
provisions of this Agreement, Seller agrees that, for the period commencing
at the Closing Date and ending five years after the Closing Date, Seller
shall not, directly or indirectly, as an employee, employer, consultant,
agent, representative, principal, partner, stockholder (other than
ownership of securities of a publicly held corporation in which Seller owns
less than 1% of the outstanding equity), officer, director, investor or
financier, or in any other individual or representative capacity:
(a) engage or participate in the Company's Business (as hereinafter
defined) without the prior written consent of the Company, (b) call on or
solicit, or attempt to call on or solicit, any of the Company's past and
current or prospective (determined immediately prior to the Closing Date)
customer or supplier in a manner that is competitive with the Company
Business, (c) induce or attempt to induce any Employee to terminate his
employment with the Company, or hire or attempt to hire any Employee, or
(d) engage in any act or activity that would interfere with or harm any
business relationship that the Company may have with any investor,
customer, Employee, principal or supplier. For purposes of this Agreement,
the term "Company Business" means the provision of environmental consulting
and remediation services and development and operation of independent power
projects.
Section 5.06. Option Grants. On the Closing Date, the Seller agrees,
as consideration for the Resignations and the Release of Guarantee, to, and
will, grant to the Purchasers 75,000 options each, or an aggregate of
150,000 stock options (the "Release Options"), in the form attached hereto
as Exhibit "B", and will grant to all holders of presently outstanding
options issued by IDM, one new option (the "New Options") for each option
presently outstanding (the "Old Options") and priced above the Market Price
on the Closing Date (the Release Options and the New Options are,
collectively, referred to herein as the "Options"). The New Options shall
be (a) nonqualified stock options, (b) priced at the Market Price, but not
greater than $2.50 per share, (c) exercisable for a term of five years,
provided that holders of Old Options exercise Old Options for cash within
three trading days after the closing bid price of the common stock of the
Seller exceeds the exercise price of each Old Option by ten percent (10%),
and shall be in the form attached hereto as Exhibit "C". The Purchasers
agree to provide to the Seller a comprehensive schedule of Old Options at
least three business days prior to the Closing Date.
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Section 5.07. Affirmation of Options and Warrants. Seller affirms its
assumption of all outstanding options and warrants of the Company pursuant
to the Merger Agreement, including the Seller's undertaking thereunder to
contribute one-half of the proceeds from the exercise of options and
warrants outstanding on the closing of the Merger to the Company, and
further agrees and affirms that the transactions contemplated hereby,
except as specifically stated otherwise herein, will not terminate the
Seller's obligation to honor all exercises of such options or warrants
during the terms set forth in the documents evidencing those options and
warrants, notwithstanding that employees of the Company will not be
employees of the Seller following the Closing Date.
Section 5.08. Continuation of Directors and Officers Insurance
Coverage. Seller agrees to continue to maintain directors and officers
insurance coverage ("D&O Insurance") covering all officers and directors of
the Company at the time of the Merger, including prior acts coverage, for a
period of three years.
ARTICLE VI
Conditions
Section 6.01. Conditions to Obligations of each of the Parties . The
respective obligations of each party to consummate the transactions
contemplated hereby shall be subject to the fulfillment at or prior to the
Closing Date of the following conditions:
(a) no preliminary or permanent injunction or other order, decree
or ruling by any Governmental Authority or any other Person which
prevents the consummation of the transactions contemplated by this
Agreement or any of the Closing Documents shall have been issued and
remain in effect;
(b) no Claim shall have been asserted, threatened or commenced by
any Governmental Authority or any other Person and no Law shall have
been enacted, promulgated or issued by any Governmental Authority,
which would reasonably be expected to (i) prohibit the ownership or
operation of all or any material portion of the business of the
Company, (ii) prohibit the purchase of, payment for or retention of
the Stock by Purchasers or the consummation of the transactions
contemplated by this Agreement or any of the Closing Documents or
(iii) make the consummation of any such transactions illegal; and
(c) all Governmental Approvals legally required for the
consummation of the transactions contemplated by this Agreement and
the Closing Documents shall have been obtained and be in full force
and effect on the Closing Date.
Section 6.02. Conditions to Obligations of Seller . The obligations
of Seller to consummate the transactions contemplated hereby shall be
subject to the fulfillment at or prior to the Closing Date of the following
additional conditions, except as Seller may waive in writing:
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(a) Purchasers shall have complied with and performed in all
material respects all of the terms, covenants, agreements and
conditions contained in this Agreement and the Closing Documents and
performed on or prior to the Closing Date;
(b) the representations and warranties of Purchasers in this
Agreement and in each of the Closing Documents shall have been true
and correct on the date hereof or thereof, as applicable, and such
representations and warranties shall be true and correct on and as of
the Closing Date (except those, if any, expressly stated to be true
and correct at an earlier date), with the same force and effect as
though such representations and warranties had been made on and as of
the Closing Date.
Section 6.03. Conditions to Obligations of Purchasers . The
obligations of the Purchasers to consummate the transactions contemplated
hereby shall be subject to the fulfillment at or prior to the Closing Date
of the following additional conditions, except as Purchasers may waive in
writing:
(a) the Seller shall have complied with and performed in all
material respects all of the terms, covenants, agreements and
conditions contained in this Agreement and the Closing Documents to
which each is a party which are required to be complied with and
performed on or prior to the Closing Date;
(b) the representations and warranties of the Seller in this
Agreement and in each of the Closing Documents shall have been true
and correct on the date hereof or thereof, as applicable, and such
representations and warranties shall be true and correct on and as of
the Closing Date (except those, if any, expressly stated to be true
and correct at an earlier date), with the same force and effect as
though such representations and warranties had been made on and as of
the Closing Date;
(c) Purchaser shall have received each of the following, dated as
of the Closing Date or, with respect to certificates of Governmental
Authorities, dated within ten Business Days prior to the Closing Date
a certificate executed by the Seller certifying as to fulfillment of
the conditions specified in Section 6.03(a) and Section 6.03(b);
ARTICLE VII
Termination
Section 7.01. Termination . This Agreement may be terminated at any time
prior to the Closing Date:
(a) by the mutual written consent of Seller and Purchasers;
(b) by Seller, on the one hand, or Purchasers, on the other hand, if
(i) the non-terminating party or any of its Affiliates fails to satisfy any
term, covenant, agreement or condition required to be satisfied by it on or
before the Closing Date or (ii) there has been a breach of any
representation, warranty, term, covenant or agreement made to or for the
benefit of the terminating party or any of its Affiliates in this
Agreement, which breach has not been cured as of the Closing Date;
8
(c) by either Seller or Purchasers if the Closing has not occurred on
or prior to September 1, 2000; provided, however, that the right to
terminate this Agreement shall not be available to any party whose failure,
or the failure of any of its Affiliates, to fulfill an obligation under
this Agreement has been the cause of or resulted in the failure of the
Closing Date to occur on or before such date; or
(d) by either Seller or Purchasers upon the issuance of an injunction,
stay or restraining order issued by any court of competent jurisdiction
enjoining or preventing consummation of the purchase and sale of the Stock
or the other transactions contemplated by this Agreement or any of the
Closing Documents beyond September 1, 2000, which injunction, stay or order
has not been reversed, vacated or expired so as to permit the Closing Date
to occur on or before September 1, 2000.
Section 7.02. Effect of Termination . In order to elect to terminate this
Agreement pursuant to Section 7.01, written notice of such election must be
given by the terminating party to the other party and, upon receipt of such
notice by the non-terminating party, this Agreement shall terminate and have no
further effect; provided, however, that if this Agreement is terminated by a
party under circumstances in which the other party or any of its Affiliates has
willfully or in bad faith failed or refused to satisfy a covenant or condition
to the obligations of either party to consummate the transactions contemplated
by this Agreement (the "Defaulting Party"), the Defaulting Party shall be and
remain liable for all Claims, Liabilities and Losses imposed on, incurred by or
asserted against the non-defaulting party, directly or indirectly, arising out
of or resulting from such failure.
ARTICLE VIII
Indemnification
Section 8.01. Indemnification of Seller . Subject to the terms and
conditions of this Article VIII, Purchasers agree to indemnify, defend and hold
harmless Seller, and its respective heirs, executors, personal representatives,
administrators, successors and assigns (the "Seller Indemnified Persons"), from
and against any and all Claims, Liabilities and Losses which may be imposed on,
incurred by or asserted against any Seller Indemnified Person, arising out of or
resulting from, directly or indirectly:
(a) the inaccuracy of any representation or breach of any warranty of
Purchasers contained in or made pursuant to this Agreement or any of the
Closing Documents which was not disclosed to Seller in writing prior to the
Closing; provided that no such notification shall be deemed to waive or
abrogate any right of Seller with respect to conditions to Closing in
Section 6.02;
9
(b) the breach of any covenant or agreement of Purchasers
contained in this Agreement or in any of the Closing Documents; or
(c) the conduct of the business of the Company after the Closing
Date, or any act or failure to act of the Company prior to the Closing
Date;
(d) the presence, release or threatened release of any hazardous
material located on, within or affecting any of the Assets and
Properties of the Company, or migrating to adjacent properties;
(e) any compliance, investigative, enforcement, cleanup, removal,
containment, remedial, response, cost recovery, contribution,
brownfields cleanup or other private or governmental or regulatory
action at any time threatened, instituted or completed, which is in
any way connected with (i) any hazardous material or (ii) the
activities of, or ownership or operation of the Assets and Properties
of the Company; or
(f) any Claim to fees or costs for alleged services by a broker,
agent, finder or other Person claiming to act in a similar capacity at
the request of Purchasers in connection with this Agreement or any of
the Closing Documents;
provided, however, that Purchasers shall not be liable for any portion of any
Claims, Liabilities or Losses resulting from a material breach by Seller of any
of its obligations under this Agreement or any of the Closing Documents or from
a Seller Indemnified Person's gross negligence, fraud or willful misconduct.
Section 8.02. Indemnification of Purchasers . Subject to the terms and
conditions of this Article VIII, from and after the Closing Date, Seller agrees
to indemnify, defend and hold harmless Purchasers and their respective
Affiliates, their respective present and former directors, officers,
shareholders, employees and agents and their respective heirs, executors,
personal representatives, administrators, successors and assigns (the "Purchaser
Indemnified Persons"), from and against any and all Claims, Liabilities and
Losses which may be imposed on, incurred by or asserted against any Purchaser
Indemnified Person, arising out of or resulting from, directly or indirectly:
(a) the inaccuracy of any representation or breach of any warranty of
Seller contained in or made pursuant to this Agreement or any of the
Closing Documents which was not disclosed to Purchasers in writing prior to
the Closing; provided that no such notification shall be deemed to waive or
abrogate any right of Purchasers with respect to conditions to Closing in
Section 6.03;
(b) the breach of any covenant or agreement of Seller contained in
this Agreement or any of the Closing Documents; or
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(c) any Claim to fees or costs for alleged services rendered by a
broker, agent, finder or other Person claiming to act in a similar capacity
at the request of Seller in connection with this Agreement or any of the
Closing Documents;
provided, however, that Seller shall not be liable for any portion of any
Claims, Liabilities or Losses resulting from a material breach by Purchasers of
their obligations under this Agreement or any of the Closing Documents or from a
Purchaser Indemnified Person's gross negligence, fraud or willful misconduct.
Section 8.03. Limitations on Indemnification . The obligations of
Purchasers and Seller to indemnify any Person pursuant to this Article VIII
shall be subject to the following limitations:
(a) except as provided in Sections 8.03(b), notice of the Claim shall
have been given by such Seller Indemnified Person or Purchaser Indemnified
Person, as the case may be, to Purchasers or Seller within the two-year
period after the Closing Date (or such longer period of time for notice of
Claims as is provided in Section 8.06 hereof); and
(b) with respect solely to claims for indemnification pursuant to
Section 8.02(d) or 8.02(e), notice of such Claim shall have been given by
the Purchaser Indemnified Person to Seller within the two-year period after
the Closing Date as provided in Section 8.06(a) hereof.
Section 8.04. Indemnification Procedures. The obligations and Liabilities
of any party to indemnify any other party pursuant to this Article VIII shall be
subject to the following terms and conditions:
(a) Notice and Defense. Within a reasonable period of time after a
party or parties to be indemnified (whether one or more, the "Indemnified
Party") receives actual notice of any Claim covered by Section 8.01 or
8.02, as the case may be, the Indemnified Party shall, if a Claim in
respect thereof is to be made pursuant to Section 8.01 or 8.02, as the case
may be, notify the party from whom indemnification is sought (the
"Indemnifying Party") in writing of such Claim; provided however, that the
failure to so notify the Indemnifying Party shall not relieve the
Indemnifying Party from any Liability which it may have to the Indemnified
Party pursuant to Section 8.01 or 8.02, as the case may be, except to the
extent of material detriment suffered by the Indemnifying Party as a result
of such failure. In the event that a Claim, Liability or Loss arises out of
or results from matters with respect to third parties, the Indemnifying
Party will undertake the defense thereof by representatives chosen by it
which are reasonably acceptable to the Indemnified Party. So long as the
Indemnifying Party is defending any such Claim actively and in good faith,
the Indemnified Party shall not settle such Claim. Each of the Indemnifying
Party and the Indemnified Party shall be entitled to consult with each
other, to the extent it reasonably requests, in respect of the defense of
such Claim and shall cooperate in the defense of any such Claim, including
making its officers, directors, employees and Books and Records available
for use in such Claim, and shall take those actions reasonably within its
power which are reasonably necessary to preserve any legal defenses to such
matters.
11
(b) Failure to Defend. If the Indemnifying Party, within a
reasonable time after notice of any such Claim, fails to defend such
Claim actively and in good faith, the Indemnified Party will (upon
further notice) have the right to undertake the defense, compromise or
settlement of such Claim or consent to the entry of a judgment with
respect to such Claim, on behalf of and for the account and risk of
the Indemnifying Party, and the Indemnifying Party shall thereafter
have no right to challenge the Indemnified Party's defense,
compromise, settlement or consent to judgment.
(c) Indemnified Party's Rights. Notwithstanding anything
contained in this Article VIII to the contrary: (i) if there is a
reasonable probability that a Claim may materially and adversely
affect the Indemnified Party other than as a result of money damages
or other money payments, the Indemnified Party shall have the right to
defend, compromise or settle such Claim; and (ii) no consent order
shall be entered into or Claim settled unless the Indemnified Party
has given its prior written consent thereto, which consent shall not
be unreasonably withheld or delayed; provided, however, that the
Indemnified Party shall consent to any settlement, compromise or
discharge of such Claim that the Indemnifying Party may recommend that
by its terms fully releases the Indemnified Party from any further
Claims with respect to the matters giving rise to such Claim.
Section 8.05. Payment . The Indemnifying Party shall promptly pay the
Indemnified Party any amount due under this Article VIII and reimburse each
Indemnified Party for all reasonable expenses (including reasonable counsel
fees) for which the Indemnified Party is entitled to be indemnified hereunder as
they are incurred by such Indemnified Party. Upon judgment, determination,
settlement or compromise of any third party Claim, the Indemnifying Party shall
promptly pay on behalf of the Indemnified Party, and/or to the Indemnified Party
in reimbursement of any amount theretofore required to be paid by it, the amount
so determined by such judgment, determination, settlement or compromise and all
other Claims of the Indemnified Party with respect thereto, unless in the case
of a judgment or determination an appeal is made from such judgment or
determination; provided, however, that if the Indemnifying Party desires to
appeal from an adverse judgment or determination, then the Indemnifying Party
shall post and pay the cost of the security or bond to stay execution of the
judgment or determination pending appeal. Upon the payment in full by the
Indemnifying Party of all of such amounts, the Indemnifying Party shall succeed
to the rights of the Indemnified Party, to the extent such rights are not waived
in settlement, against the third party who made such third party Claim.
Section 8.06. Other Indemnities; Survival of Representations, Warranties
and Covenants . The indemnities provided in Sections 8.01 and 8.02 are in
addition to, and not in lieu of, other indemnification obligations of the
parties contained in this Agreement. Except as otherwise provided herein, all
representations, warranties, covenants and agreements made by Sellers, the
Company and Purchaser in this Agreement, the Closing Documents or in any
certificate or other instrument delivered by Sellers, the Company or Purchaser
under this Agreement or any of the Closing Documents shall survive the execution
and delivery of this Agreement and the Closing Documents, regardless of any
investigation made by or on behalf of any party.
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ARTICLE IX
Miscellaneous
Section 9.01. Notices . Any and all notices, requests or other
communications hereunder shall be given in writing and delivered by: (a)
regular, overnight or registered or certified mail (return receipt requested),
with first class postage prepaid; (b) hand delivery; (c) facsimile transmission;
or (d) overnight courier service, to the parties at the following addresses or
facsimile numbers:
(i) if to Seller, to:
Gary Goldfarb, President
Fusion Networks Holdings, Inc.
8115 N.W. 29th Street
Miami, Florida 33122
Facsimile Number: (305) 477-6703
Telephone Number: (305) 477-6701
(ii) if to Purchasers, to:
Joel Freedman
Frank Falco
IDM Environmental Corp.
396 Whitehead Ave.
South River, New Jersey 08882
Facsimile Number: (732) 350-9545
Telephone Number: (732) 350-9550
or at such other address or number as shall be designated by either of the
parties in a notice to the other party given in accordance with this Section
9.01. Except as otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given: (A) in the case of a notice sent by
regular or registered or certified mail, three Business Days after it is duly
deposited in the mails; (B) in the case of a notice delivered by hand, when
personally delivered; (C) in the case of a notice sent by facsimile, upon
transmission subject to telephone confirmation of receipt; and (D) in the case
of a notice sent by overnight mail or overnight courier service, the next
Business Day after such notice is mailed or delivered to such courier, in each
case given or addressed as aforesaid.
Section 9.02. Benefit and Burden . This Agreement shall inure to the
benefit of, and shall be binding upon, the parties hereto and their successors
and permitted assigns.
13
Section 9.03. No Third Party Rights . Nothing in this Agreement shall be
deemed to create any right in any creditor or other Person not a party hereto
(other than the Seller Indemnified Persons and the Purchaser Indemnified
Persons) and this Agreement shall not be construed in any respect to be a
Contract in whole or in part for the benefit of any third party (other than the
Seller Indemnified Persons and the Purchaser Indemnified Persons).
Section 9.04. Amendments and Waiver . No amendment, modification,
restatement or supplement of this Agreement shall be valid unless the same is in
writing and signed by the parties hereto. No waiver of any provision of this
Agreement shall be valid unless in writing and signed by the party against whom
that waiver is sought to be enforced. No failure or delay on the part of any
party hereto in exercising any right, power or privilege hereunder and no course
of dealing between or among any of the parties hereto shall operate as a waiver
of any right, power or privilege hereunder. No single or partial exercise of any
right, power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder. No
notice to or demand on any party in any case shall entitle such party to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of any party to any other or further action in
any circumstances without notice or demand.
Section 9.05. Assignments . Except for Purchasers' right to assign any of
their rights, interests and obligations under this Agreement to an Affiliate of
Purchasers, neither this Agreement nor any right, interest or obligation
hereunder may be assigned by any party hereto and any attempt to do so shall be
null and void.
Section 9.06. Counterparts . This Agreement may be executed in
counterparts and by the different parties in separate counterparts, each of
which when so executed shall be deemed an original and all of which taken
together shall constitute one and the same agreement.
Section 9.07. Captions and Headings . The captions and headings contained
in this Agreement are inserted and included solely for convenience and shall not
be considered or given any effect in construing the provisions hereof if any
question of intent should arise.
Section 9.08. Construction . The parties acknowledge that each of them has
had the benefit of legal counsel of its own choice and has been afforded an
opportunity to review this Agreement with its legal counsel and that this
Agreement shall be construed as if jointly drafted by the parties hereto.
Section 9.09. Severability . Should any clause, sentence, paragraph,
subsection, Section or Article of this Agreement be judicially declared to be
invalid, unenforceable or void, such decision will not have the effect of
invalidating or voiding the remainder of this Agreement, and the parties agree
that the part or parts of this Agreement so held to be invalid, unenforceable or
void will be deemed to have been stricken herefrom by the parties, and the
remainder will have the same force and effectiveness as if such stricken part or
parts had never been included herein.
Section 9.10. Remedies . The parties agree that the covenants and
obligations contained in this Agreement and the Closing Documents relate to
special, unique and extraordinary matters and that a violation of any of the
terms hereof or thereof would cause irreparable injury in an amount which would
be impossible to estimate or determine and for which any remedy at law would be
inadequate. As such, the parties agree that if either party fails or refuses to
fulfill any of its obligations under this Agreement or any of the Closing
Documents or to make any payment or deliver any instrument required hereunder or
thereunder, then the other party shall have the remedy of specific performance,
which remedy shall be cumulative and nonexclusive and shall be in addition to
any other rights and remedies otherwise available under any other Contract or at
law or in equity and to which such party might be entitled.
14
Section 9.11. Applicable Law . THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA, WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAW PRINCIPLES THEREOF.
Section 9.12. Submission to Jurisdiction . Each of the parties hereby:
(a) irrevocably submits to the non-exclusive personal jurisdiction of any
Florida state or federal court sitting in Miami, Florida, over any Claim arising
out of or relating to this Agreement or any of the Closing Documents and
irrevocably agrees that all such Claims may be heard and determined in such
Florida state or federal court; and (b) irrevocably waives, to the fullest
extent permitted by applicable Law, any objection it may now or hereafter have
to the laying of venue in any proceeding brought in a Florida state or federal
court sitting in Miami, Florida, and any claim that any such proceeding brought
in a Florida state or federal court sitting in Miami, Florida, has been brought
in an inconvenient forum; provided, however, that nothing in this Section 9.12
is intended to waive the right of either of the parties to remove any such
action or proceeding commenced in any such Florida state court to an appropriate
Florida federal court to the extent the basis for such removal exists under
applicable Law. Each of the parties hereby irrevocably agrees that service of
copies of the summons and complaint and any other process which may be served in
any such action or proceeding may be made by mailing, by certified mail, a copy
of such process to such party at its address for notices specified herein. As an
alternative method of service, each of the parties also irrevocably consents to
the service of any and all process in any such action or proceeding by the
mailing by certified mail of copies of such process to it at its address for
notices specified herein. Each of the parties agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by Law.
Nothing in this Section 9.12 shall affect the right of either of the parties to
serve legal process in any other manner permitted by Law or affect the right of
either of the parties to bring any action or proceeding in the courts of any
other jurisdictions, domestic or foreign.
Section 9.13. Expenses; Prevailing Party Costs . Each of Seller and
Purchasers shall pay its own expenses incident to this Agreement and the Closing
Documents and the transactions contemplated hereby and thereby, including all
legal and accounting fees and disbursements. Notwithstanding anything contained
herein or therein to the contrary, if any party commences an action against
another party to enforce any of the terms, covenants, conditions or provisions
of this Agreement or any of the Closing Documents, or because of a breach by a
party of its obligations under this Agreement or any of the Closing Documents,
the prevailing party in any such action shall be entitled to recover its Losses,
including reasonable attorneys' fees, incurred in connection with the
prosecution or defense of such action, from the losing party.
15
Section 9.14. Entire Agreement . This Agreement and the Closing Documents
set forth all of the promises, agreements, conditions, understandings,
warranties and representations among the parties with respect to the
transactions contemplated hereby and thereby, and supersede all prior
agreements, arrangements and understandings between the parties, whether
written, oral or otherwise. There are no promises, agreements, conditions,
understandings, warranties or representations, oral or written, express or
implied, among the parties concerning the subject matter hereof or thereof
except as set forth herein and therein.
Section 9.15. Legal Representation. This Agreement and the Closing
Documents have been drafted by the law firm of Vanderkam & Sanders (the "Law
Firm"). The Law Firm represented the Company prior to, and in connection with,
the transactions carried out pursuant to the Holding Company Agreement and the
Merger Agreement, currently represents the Seller and, from time to time in the
past has advised the Purchasers in their capacities as officers of the Company.
Each of the Seller and the Purchasers acknowledges that their are potential
conflicts of interest which may arise as a result of the past services of the
Law Firm as noted above and the services rendered by the Law Firm in connection
with drafting this Agreement and the Closing Documents. Each of the parties
hereto acknowledges that the Law Firm has not been involved in negotiating the
transactions described herein and has acted solely in the capacity as a
scrivener. Each of the parties hereto expressly waives and releases the Law Firm
from any potential conflicts of interest arising as a result of this Agreement.
Each party has consulted its own separate legal counsel to the extent they
deemed necessary and proper.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.
"SELLER"
FUSION NETWORKS HOLDINGS, INC.
By:__________________________
Title:
"PURCHASERS"
______________________________
JOEL A. FREEDMAN
______________________________
FRANK A. FALCO
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Schedule 2.02
PURCHASE PRICE
The Purchase Price shall consist of delivery by Purchasers and, where
appropriate, the Company to the Seller of the following:
1. A Promissory Note (the "Note") in an amount equal to the market price (the
"Market Price") of 47,105 shares of common stock of the Seller, not to
exceed $2.50 per share. The Note shall (a) be secured by a pledge of the
Stock, (b) bear interest at 8% per annum payable semi-annually and (c) be
due in three years subject to mandatory prepayment of principal from the
trading profit realized by the Purchasers from the exercise of any Options
held by the Purchasers, and shall be in the form attached hereto as Exhibit
"A". For purposes, hereof, Market Price shall be the closing price of the
common stock of the Seller on the trading day prior to the Closing Date.
2. A release (the "Release of Guarantee") of the Seller from the salary
guarantee provisions of Section 6.7(i) of the Merger Agreement.
3. Resignations (the "Resignations") of each of the Purchasers as directors of
the Seller and release of the Seller from the obligation to nominate and
recommend the election of the Purchasers as directors of the Seller
pursuant to the provisions of Section 6.7 (iii) of the Merger Agreement.
17
ANNEX "A"
Definitions
"Affiliate" means, with respect to any Person, any other Person: (i) that
directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with such Person; and (ii) in the case
of a natural person, that is the parent, spouse, child or sibling (herein,
collectively "Related Persons") of such Person. The term "control" (including,
with correlative meaning, the terms "controlling", "controlled by" and "under
common control with") means the possession, directly or indirectly, of the power
to direct or cause direction of the management and policies of a Person, whether
through the ownership of voting securities, by Contract or otherwise.
"Agreement" means the Stock Purchase Agreement to which this Annex A is
attached, as the same may be amended, modified or supplemented from time to
time.
"Assets and Properties" means all assets and properties of every kind,
nature, character and description, whether real, personal or mixed, tangible or
intangible, wherever situated, including any goodwill related thereto, and, with
respect to any Person, means all such assets and properties operated, owned or
leased by such Person.
"Books and Records" means, with respect to any Person, all files,
documents, instruments, papers, books and records relating to the business,
operations, condition (financial and otherwise), results of operations and
Assets and Properties of such Person, including financial statements, Tax
returns and related guidelines, ledgers, journals, deeds, title policies,
surveys, minute books, stock certificates and books, stock transfer ledgers,
Contracts, Governmental Approvals, customer lists, vendor lists, representative
listings, sales literature, computer files and programs, retrieval programs,
operating data and plans and environmental studies and plans.
"Business Day" means any day on which commercial banks are not authorized
or required to close in Miami, Florida.
"Claim" means any claim, demand, investigation, cause of action, suit,
default, assessment, litigation or other proceeding, including arbitral
proceedings and proceedings by or before any Governmental Authority.
"Closing Date" means September 1,2000 or such other date as shall be
mutually agreed by the parties.
"Closing Documents" means all agreements, instruments and documents
executed by or on behalf of Seller, the Company or Purchasers or any of their
respective Affiliates in connection with or relating to the Agreement, together
with all agreements, instruments and documents referred to therein or
contemplated thereby.
A-i
"Company" means IDM Environmental Corp., a New Jersey corporation.
"Contract" means any agreement, lease, license, evidence of Debt, mortgage,
deed of trust, note, bond, indenture, security agreement, commitment,
instrument, understanding or other contract, obligation or arrangement of any
kind.
"Debt" means, for any Person, all indebtedness, liabilities and obligations
of such Person: (i) for the repayment of money borrowed (whether or not
represented by bonds, debentures, notes, securities or other evidences of
indebtedness); (ii) representing deferred payment of the purchase price for
goods, services or Assets and Properties; (iii) under any lease which, in
conformity with GAAP, is required to be capitalized for balance sheet purposes;
(iv) under guaranties, endorsements (other than for collection or deposit in the
ordinary course of business) or assumptions of, or other contingent obligations
in respect of, or to purchase or otherwise acquire, any indebtedness,
liabilities or other obligations of any other Person; (v) in respect of letters
of credit; (vi) secured by a Lien existing on Assets and Properties owned by
such Person, whether or not the indebtedness, liabilities or obligations secured
thereby shall have been assumed by such Person; and/or (vii) to redeem or
repurchase any of such Person's capital stock, warrants, equity interests or
equivalents.
"Governmental Approval" means any authorization, consent, approval,
license, franchise, lease, ruling, tariff, rate, permit, certificate or
exemption of, or filing or registration with, any Governmental Authority.
"Governmental Authority" means any nation or government, any federal,
state, county, province, city, town, municipality, local or other political
subdivision thereof or thereto and any court, tribunal, department, commission,
board, bureau, instrumentality, agency, council, arbitrator or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any other governmental entity with
authority over the applicable Person or Assets and Properties.
"Laws" means all laws, statutes, rules, regulations, ordinances, orders,
writs, injunctions or decrees and other pronouncements having the effect of law
of any Governmental Authority.
"Liability" means, with respect to any Person, any Debt, obligation and
other liability of such Person, whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due, including liabilities for Taxes,
material forward or long-term commitments, or unrealized or anticipated Losses
from any unfavorable Contracts or commitments.
"Lien" means any mortgage, lien, charge, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, security interest, assessment, lease, adverse
claim, levy, preference or priority or other security agreement of any kind or
nature whatsoever (whether voluntary or involuntary, affirmative or negative,
and whether imposed or created by operation of Law or otherwise) in, on or with
respect to, or pledge of, any Assets and Properties or equity interests, whether
now owned or hereafter acquired, or any other interest in Assets and Properties
or equity interests designed to secure the repayment of Debt or any other
obligation, whether arising by Contract, operation of Law or otherwise, or any
Contract to give any of the foregoing, and including any conditional sale or
other title retention agreement and any financing lease having substantially the
same effect as any of the foregoing.
A-ii
"Loss" means any and all damages (including consequential, punitive and
exemplary), fines, penalties, judgments, deficiencies, losses, costs and
expenses, including court costs, reasonable fees of attorneys, accountants and
other experts and other reasonable expenses of any Claim.
"Person" means any individual, firm, corporation, trust, association,
company, limited liability company, joint stock company, partnership, joint
venture, Governmental Authority or other entity or enterprise.
"Stock" has the meaning specified in the recitals of the Agreement.
"Taxes" or "Tax" means any and all taxes, assessments, imposts, deductions,
charges, withholdings, claims and levies assessed or imposed by any Governmental
Authority and all Liabilities with respect thereto, including any penalties,
interest, additions to tax, sales, use, transfer, stock transfer, real property
transfer, recording, gains, stamp, documentary, income, franchise, excise and
property taxes, charges and similar levies and fees.
"United States" and "U.S."mean the United States of America and its
territories and possessions.
A-iii