PLAN OF REORGANIZATION AND MERGER

     PLAN OF  REORGANIZATION  AND MERGER  ("Agreement"),  dated as of August 18,
1999, among IDM ENVIRONMENTAL  CORP., a New Jersey  corporation (the "Company"),
IDM/FUSION  HOLDINGS,  INC., a Delaware  corporation  ("Holdings") and a direct,
wholly-owned  subsidiary  of the Company,  and IDM MERGER  SUBSIDIARY.,  INC., a
Delaware  corporation  ("Mergeco")  and a  direct,  wholly-owned  subsidiary  of
Holdings.

                                    RECITALS

     WHEREAS,  as of the close of business on August 18,  1999,  the  authorized
capital stock of the Company  consisted of 7,500,000 shares of common stock, par
value $.01 per share ("Company Common Stock"), and 1,000,000 shares of preferred
stock, par value $1.00 per share ("Company  Preferred Stock").  As of August 18,
1999 (i) 3,331,085  shares of Company Common Stock were issued and  outstanding;
(ii) 47,500 shares of Company  Common Stock were reserved for issuance under the
Company's 1993 Stock Option Plan (the "1993 Plan"),  of which 40,110 shares were
subject to outstanding options; (iii) 50,000 shares of Company Common Stock were
reserved  for issuance  pursuant to Company's  1995 Stock Option Plan (the "1995
Plan"),  of which  46,900  shares  were  subject to  outstanding  options;  (iv)
1,700,000 shares of Company Common Stock were reserved for issuance  pursuant to
Company's 1998 Stock Option Plan (the "1998 Plan"),  including  1,600,000 shares
reserved for  issuance  under the 1998 Plan which are subject to approval by the
Company  stockholders  relating to an amendment to increase the shares  reserved
under the 1998 Plan in said amount,  of which  1,040,880  shares were subject to
outstanding  options;  (v) 350,000  shares were reserved for issuance to various
consultants in payment for past and future services,  and (vi) shares of Company
Common Stock were reserved and subject to issuance  under various other options,
warrants  and  convertible  notes (the  "Other  Derivative  Securities")  in the
amounts listed in Schedule 1 attached hereto.  As of the date hereof,  no shares
of Company  Common Stock were held in treasury,  no shares of Company  Preferred
Stock are issued and outstanding  and 200,000 shares of Company  Preferred Stock
are reserved for issuance  upon exercise of the Company  Rights  pursuant to the
Company Rights Agreement.

     WHEREAS,  as of the date hereof,  the authorized  capital stock of Holdings
consists of 200 shares of common stock, no par value ("Holdings  Common Stock"),
of which 1 share is issued and outstanding and no shares are held in treasury.

     WHEREAS,  the  designations,   rights,  powers  and  preferences,  and  the
qualifications,  limitations and  restrictions  thereof,  of the Holdings Common
Stock are the same as those of the Company Common Stock.

     WHEREAS,  the  Certificate  of  Incorporation  and the  By-laws of Holdings
immediately  after the  Effective  Time (as  hereinafter  defined)  will contain
provisions  identical to the Amended Certificate of Incorporation and By-laws of
the Company immediately before the Effective Time.

     WHEREAS,  the directors of the Company  immediately prior to the Merger (as
hereinafter defined) will be the directors of Holdings as of the Effective Time.

     WHEREAS,  Holdings and Mergeco are newly formed corporations  organized for
the purpose of participating in the transactions herein contemplated.

     WHEREAS,  the Company desires to create a new holding company  structure by
merging  Mergeco with and into the Company with the Company  being the surviving
corporation (sometimes hereinafter referred to as the "Surviving  Corporation"),
and converting each outstanding  share of Company Common Stock into one share of
Holdings Common Stock, all in accordance with the terms of this Agreement.

     WHEREAS, the Boards of Directors of Holdings , Mergeco and the Company have
approved this Agreement and the merger of Mergeco with and into the Company upon
the  terms and  subject  to the  conditions  set  forth in this  Agreement  (the
"Merger")  and has  directed  that  the  Merger  be  submitted  to a vote of the
stockholders of the Company at a special meeting to be called for the purpose of
approving the Merger.

     NOW,  THEREFORE,  in  consideration  of the premises and the  covenants and
agreements  contained  in this  Agreement,  and  intending  to be legally  bound
hereby, the Company, Holdings and Mergeco hereby agree as follows:

                                       1
<PAGE>

                                    ARTICLE I
                                   THE MERGER

     Section 1.1 The Merger. In accordance with the Delaware General Corporation
Law ("DGCL") and the New Jersey  Business  Corporation Act ("NJBCA") and subject
to and upon the terms and conditions of this  Agreement,  Mergeco shall,  at the
Effective  Time,  be merged with and into the Company,  the  separate  corporate
existence of Mergeco shall cease and the Company shall continue as the surviving
corporation.  The  Company  as the  surviving  corporation  after the  Merger is
hereinafter  sometimes  referred  to as  the  "Surviving  Corporation."  At  the
Effective  Time,  the effect of the Merger  shall be as provided in the DGCL and
NJBCA.

     Section 1.2  Effective  Time.  The Merger shall become  effective  upon the
filing of a copy of this  Agreement  with the Secretary of State of the State of
Delaware and the Secretary of State of the State of New Jersey (the time of such
filing being referred to herein as the "Effective Time").

     Section  1.3 Amended  and  Restated  Certificate  of  Incorporation  of the
Surviving  Corporation.  From and after the  Effective  Time,  the  Amended  and
Restated  Certificate of Incorporation of the Company,  as in effect immediately
prior to the Effective Time,  shall be the certificate of  incorporation  of the
Surviving  Corporation  until thereafter  amended as provided by law;  provided,
however,  that, from and after the Effective Time,  Article III shall be amended
so as to read in its entirety as described in Schedule 2 attached hereto.

     Section 1.4 By-laws.  From and after the Effective Time, the By-laws of the
Company,  as in effect  immediately  prior to the Effective  Time,  shall be the
By-laws of the  Surviving  Corporation  until  thereafter  amended  as  provided
therein or by applicable law.

     Section 1.5 Directors.  The directors of the Company  immediately  prior to
the Effective Time shall be the initial  directors of the Surviving  Corporation
and will hold office from the  Effective  Time until their  successors  are duly
elected or appointed and qualified in the manner  provided in the Certificate of
Incorporation  and the  By-laws of the  Surviving  Corporation  or as  otherwise
provided by law.

     Section 1.6 Officers.  The officers of the Company immediately prior to the
Effective Time shall be the initial  officers of the Surviving  Corporation  and
will hold office from the Effective Time until their successors are duly elected
or  appointed  and  qualified  in the  manner  provided  in the  Certificate  of
Incorporation  and the  By-laws of the  Surviving  Corporation  or as  otherwise
provided by law.

     Section 1.7 Additional Actions. Subject to the terms of this Agreement, the
parties  hereto  shall  take all such  reasonable  and  lawful  action as may be
necessary or  appropriate  in order to  effectuate  the Merger.  If, at any time
after the Effective Time, the Surviving Corporation shall consider or be advised
that any deeds, bills of sale,  assignments,  assurances or any other actions or
things are  necessary  or desirable  to vest,  perfect or confirm,  of record or
otherwise,  in the Surviving  Corporation its right, title or interest in, to or
under any of the  rights,  properties  or assets  of  either of  Mergeco  or the
Company acquired or to be acquired by the Surviving  Corporation as a result of,
or in connection with, the Merger or otherwise to carry out this Agreement,  the
officers  of the  Surviving  Corporation  shall be  authorized  to  execute  and
deliver, in the name and on behalf of each of Mergeco and the Company,  all such
deeds, bills of sale, assignments and assurances and to take and do, in the name
and on behalf of each of Mergeco  and the Company or  otherwise,  all such other
actions and things as may be necessary or desirable to vest,  perfect or confirm
any and all right,  title and interest in, to and under such rights,  properties
or assets in the Surviving Corporation or otherwise to carry out this Agreement.

     Section 1.8 Conversion of Securities.  At the Effective  Time, by virtue of
the Merger and without any action on the part of Holdings,  Mergeco, the Company
or the holder of any of the following securities:

     (a) Each issued and  outstanding  share of Holdings  Common  Stock owned of
record by the Company immediately prior to the Effective Time shall be cancelled
and retired  without  payment of any  consideration  therefor and shall cease to
exist and no Company Common Stock or other  consideration  shall be delivered in
exchange for any such Holdings Common Stock.

                                       2
<PAGE>

     (b) Each share or fraction of a share of Company  Common  Stock  issued and
outstanding immediately prior to the Effective Time shall be converted into one,
or an equal fraction of one, duly issued,  fully paid and nonassessable share of
Holdings Common Stock.

     (c) Each  share of common  stock,  par value  $0.01 per  share,  of Mergeco
issued  and  outstanding  immediately  prior  to the  Effective  Time  shall  be
converted  into  and  thereafter  represent  one  duly  issued,  fully  paid and
nonassessable share of common stock, par value $0.01 per share, of the Surviving
Corporation.

     (d) From and after the Effective  Time,  holders of  certificates  formerly
evidencing  Company Common Stock shall cease to have any rights as  stockholders
of the Company, except as provided by law; provided,  however, that such holders
shall have the rights set forth in Section 1.9 herein.

     Section 1.9 No Surrender of  Certificates;  Stock  Transfer  Books.  At the
Effective  Time,  the  designations,   rights,   powers  and  preferences,   and
qualifications,  limitations and restrictions  thereof,  of the capital stock of
Holdings, will, in each case, be identical with those of the Company immediately
prior to the Effective  Time.  Accordingly,  until  thereafter  surrendered  for
transfer or exchange in the ordinary course, each outstanding  certificate that,
immediately  prior to the Effective Time,  evidenced Company Common Stock shall,
from the Effective  Time,  be deemed and treated for all  corporate  purposes to
evidence the ownership of the same number of shares of Holdings Common Stock.

                                   ARTICLE II
                             ACTIONS TO BE TAKEN IN
                           CONNECTION WITH THE MERGER

     Section 2.1 Assumption of Plans. Holdings and the Company hereby agree that
they will, at the Effective Time, execute, acknowledge and deliver an assumption
agreement  pursuant to which Holdings will,  from and after the Effective  Time,
assume and agree to perform all  obligations of the Company  pursuant to (a) the
Company's  1993,  (b) the Company's  1995 Plan, (c) the Company's 1998 Plan, and
(d) the  Company's  Other  Derivative  Securities  listed on Schedule 1 attached
hereto.

     Section  2.2  Reservation  of Shares.  On or prior to the  Effective  Time,
Holdings will reserve  sufficient shares of Holdings Common Stock to provide for
the issuance of Holdings Common Stock upon exercise of options outstanding under
the 1993 Plan,  the 1995 Plan and the 1998 Plan,  and the exercise or conversion
of all Other Derivative Securities.

                                   ARTICLE III
                              CONDITIONS OF MERGER

     Section 3.1 Conditions  Precedent.  The  obligations of the parties to this
Agreement to consummate  the Merger and the  transactions  contemplated  by this
Agreement  shall be subject to fulfillment or waiver by the parties hereto at or
prior to the Effective Time of each of the following conditions:

     (a) No order, statute, rule, regulation, executive order, injunction, stay,
decree, judgment or restraining order that is in effect shall have been enacted,
entered,  promulgated  or enforced by any court or  governmental  or  regulatory
authority or  instrumentality  which prohibits or makes illegal the consummation
of the Merger or the transactions contemplated hereby.

     (b) Friedman Siegelbaum LLP , special tax counsel to the Company, shall not
have  withdrawn  its opinion that  holders of the Company  Common Stock will not
recognize gain or loss for United States federal income tax purposes as a result
of the Merger.

     (c) The Merger shall have  received  approval by the holders of the Company
Common  Stock  in  the  manner   required  by  the  Bylaws  and  Certificate  of
Incorporation of the Company and the NJBCA.

                                       3
<PAGE>

                                   ARTICLE IV
                                    COVENANTS

     Section 4.1 Further Actions.  Prior to the Effective Time, the Company,  in
its capacity as the sole  stockholder of Holdings,  will, if necessary to comply
with the NJBCA and the DGCL, take all actions reasonably  necessary to carry out
the purposes of this agreement.

     Section  4.3 The Plans and Other  Derivative  Securities.  The  Company and
Holdings  will take or cause to be taken all actions  necessary  or desirable in
order for Holdings to assume the 1993 Plan,  the 1995 Plan and the 1998 Plan and
the obligations under the Other Derivative Securities.

                                    ARTICLE V
                            TERMINATION AND AMENDMENT

     Section 5.1  Termination.  This  Agreement may be terminated and the Merger
contemplated  hereby may be abandoned at any time prior to the Effective Time by
action of the Board of  Directors  of the  Company,  the Board of  Directors  of
Holdings or the Board of Directors of Mergeco if such Board of Directors  should
determine  that for any reason the completion of the  transactions  provided for
herein would be inadvisable  or not in the best interest of such  corporation or
its  stockholders.  In the  event  of such  termination  and  abandonment,  this
Agreement  shall  become void and neither the  Company,  Holdings or Mergeco nor
their  respective  stockholders,  directors or officers shall have any liability
with respect to such termination and abandonment.

     Section 5.2  Amendment.  This  Agreement  may be  supplemented,  amended or
modified by the mutual consent of the Boards of Directors of the parties to this
Agreement to the fullest extent permitted by law.

                                   ARTICLE VI
                            MISCELLANEOUS PROVISIONS

     Section  6.1  Governing  Law.  This  Agreement  shall  be  governed  by and
construed and enforced under the laws of the State of New Jersey.

     Section 6.2  Counterparts.  This  Agreement  may be executed in one or more
counterparts,  each of which when executed shall be deemed to be an original but
all of which shall constitute one and the same agreement.

     Section 6.3 Entire Agreement.  This Agreement,  including the documents and
instruments referred to herein,  constitutes the entire agreement and supersedes
all other prior  agreements and  undertakings,  both written and oral, among the
parties, or any of them, with respect to the subject matter hereof.

     IN WITNESS  WHEREOF,  Holdings,  Mergeco and the  Company  have caused this
Agreement to be executed as of the date first written above by their  respective
officers thereunto duly authorized.


IDM ENVIRONMENTAL CORP.                           IDM MERGER SUBSIDIARY., INC.
a New Jersey corporation (the "Company")       a Delaware corporation ("Mergco")


By:   /S/ JOEL FREEDMAN                         By: /S/ JOEL FREEDMAN
     ------------------------                      ------------------------
     Joel Freedman, President                       Joel Freedman, President


IDM/FUSION HOLDINGS, INC.
a Delaware corporation ("Holdings")


By:  /S/ JOEL FREEDMAN
    -------------------------
     Joel Freedman, President