SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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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): October 31, 1996
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THE NEW WORLD POWER CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 0-18260 52-1659436
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
The Farmhouse, 558 Lime Rock Road, Lime Rock, Connecticut 06039
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(Address of principal executive offices)
Registrant's telephone number, including area code: (860) 435-4000
N/A
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(Former name or former address, if changed since last report.)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT
The New World Power Corporation ("New World") and Dominion Bridge
Corporation ("Dominion Bridge") entered into a definitive agreement on October
31, 1996 with respect to a joint venture to develop New World's wind,
hydroelectric and alternative energy projects.
The joint venture will complete the development of New World's existing
portfolio of renewable power projects, including wind farms, hydroelectric
facilities and other alternative energy installations. New World will transfer
to Dominion Bridge 50% of its interest in the aforementioned projects, and
Dominion Bridge will contribute cash up to $2.5 million, as well as additional
management expertise to guide in completion of the development work on these
projects.
Pursuant to a Conversion Agreement entered into in connection with the
Joint Venture Agreement, Dominion Bridge has the right to convert its interest
in the joint venture into up to one million shares of common stock of New World
(after giving effect to the 5:1 reverse stock split effected on November 4,
1996). Upon conversion it is anticipated that Dominion Bridge would become New
World's largest shareholder with approximately 31%. According to the terms of
the transaction, at that time Dominion Bridge would have the right to name two
additional directors to New World's Board of Directors, giving it a total of
three out of seven board seats. Dominion Bridge will also have the right to
exercise warrants to purchase up to one million shares of common stock of New
World (after giving effect to the 5:1 reverse stock split effected on November
4, 1996), which would give Dominion Bridge ownership of approximately 47%.
Nicolas Matossian, President and CEO of Dominion Bridge, and Vitold
Jordan, President of Dominion Bridge Technologies Inc., a wholly owned
subsidiary of Dominion Bridge, have recently become consultants to and Interim
CEO of New World, respectively.
Separately, at Dominion Bridge's request, Mr. Gerard Prevost, formerly
President of Quebec Hydro's international investment arm, has been elected a
member of New World's Board of Directors. Mr. Prevost replaces John D. Kuhns,
who did not seek re-election. Upon the payment of New World's existing debt
through assets sales and refinancings, Dominion Bridge intends to nominate Mr.
Prevost to become President and CEO of New World.
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ITEM 5. OTHER EVENTS
The New World Power Corporation received stockholder approval at its
October 31, 1996 adjournment of its 1996 Annual Meeting for a 5:1 reverse stock
split. The Company symbol will be "NWPCD" for 20 days following the split. The
stock split will be effective November 4, 1996. The Company's common stock will
now be listed on the Nasdaq SmallCap Market.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
Exhibit 4.1 Registration Rights Agreement, dated October
31, 1996, between The New World Power
Corporation and DB Power, Inc.
Exhibit 4.2 Form of Warrant to purchase Common Stock of
The New World Power Corporation.
Exhibit 99.1 Joint Venture Agreement, dated as of October
31, 1996, between The New World Power
Corporation and DB Power, Inc.
Exhibit 99.2 Conversion Agreement, dated as of October
31, 1996, between The New World Power
Corporation and DB Power, Inc.
Exhibit 99.3 Standstill Agreement, dated October 31,
1996, between The New World Power
Corporation and DB Power, Inc.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
The New World Power Corporation
Dated: November 7, 1996 By: /s/ Frederic A. Mayer
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Frederic A. Mayer
Acting Chief Financial Officer
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REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT made and entered into as
of this 31st day of October, 1996, by and between NEW WORLD POWER CORPORATION,
a Delaware corporation (the "Company"), and DB POWER, INC., a Delaware
corporation (the "Holder").
BACKGROUND
Pursuant to a Conversion Agreement dated October 31,
1996 (the "Conversion Agreement"), by and among the Company and Holder, the
Company may issue certain shares of its Common Stock, $.01 par value per share
("Common Stock"), and other certain Warrants ("Warrants") which are exercisable
into shares of Common Stock of the Company.
In order to induce Holder and the Company to enter into
the foregoing transactions, the Company has agreed to provide Holder with the
rights set forth in this Agreement.
ARTICLE 1. CERTAIN DEFINITIONS.
In addition to the other terms defined in this
Agreement, the following terms shall be defined as follows:
"BROKERS' TRANSACTIONS" has the meaning ascribed to such
term pursuant to Rule 144 under the Securities Act.
"BUSINESS DAY" means any day on which the New York Stock
Exchange ("NYSE") is open for trading.
"COMMON STOCK" means any outstanding shares of Common
Stock of the Company, as well as any Shares issuable upon the exercise of the
Warrants.
"COMPANY" means New World Power Corporation, a Delaware
corporation.
"DEMAND REGISTRATIONS" mean all registrations of
Registrable Securities covered by Section 2(a).
"EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended, and the rules and regulations of the SEC thereunder, all as
the same shall be in effect at the relevant time.
"HOLDER" means DB Power, Inc., a Delaware corporation,
for so long as (and to the extent that) it owns any Registrable Securities,
and each of its successors, assigns, and direct and indirect transferees who
become registered owners of Registrable Securities or securities exercisable,
exchangeable or convertible into Registrable Securities.
"MANDATORY REGISTRATION STATEMENT" means a Mandatory
Registration Statement of the Company pursuant to the provisions of Section 2(b)
of this Agreement which covers Common
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Stock on an appropriate form then permitted by the SEC to be used for such
registration and the sales contemplated to be made thereby under Rule 415 under
the Securities Act, or any similar rule that may be adopted by the SEC, and all
amendments and supplements to such Registration Statement, including pre and
post-effective amendments thereto, in each case including the prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"MANDATORY REGISTRATION" means a registration of Common
Stock effected pursuant to Section 2(b) hereof.
"OUTSTANDING" means with respect to any securities as of
any date, all such securities therefore issued (except any such securities
therefore canceled or held by the Company or any successor thereto whether in
its treasury or not) or any affiliate of the Company or any successor thereto
shall not be deemed "Outstanding" for the purpose of this Agreement.
"PERSON" means an individual, a partnership (general or
limited), corporation, limited liability company, joint venture, business trust,
cooperative, association or other form of business organization, whether or not
regarded as a legal entity under applicable law, a trust (inter vivos or
testamentary), an estate of a deceased, insane or incompetent person, a
quasi-governmental entity, a government or any agency, authority, political
subdivision or other instrumentality thereof, or any other entity.
"REGISTRABLE SECURITY(IES)" means all or any portion of
any shares of Common Stock issued pursuant to the Conversion Agreement , shares
of Common Stock issued upon exercise of the Warrants, and any additional shares
of Common Stock or other equity securities of the Company issued or issuable
after the date hereof in respect of any such securities (or other equity
securities issued in respect thereof) by way of a stock dividend or stock split,
in connection with a combination, exchange, reorganization, recapitalization or
reclassification of Company securities, or pursuant to a merger, division,
consolidation or other similar business transaction or combination involving the
Company; provided that: as to any particular Registrable Securities, such
securities shall cease to constitute Registrable Securities (i) when a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of thereunder, or (ii) when and to the extent such securities are
permitted to be distributed pursuant to Rule 144 (or any successor provision to
such Rule) under the Securities Act or are otherwise freely transferable to the
public without further registration under the Securities Act, or (iii) when such
securities shall have ceased to be Outstanding and, in the case of clause (ii),
the Company shall, if requested by the Holder or Holders thereof, have delivered
to such Holder or Holders the written opinion of independent counsel to the
Company to such effect. Any time this Agreement requires the vote or consent of
the Holder of a "majority" or other stated percentage of the Registrable
Securities, the term Registrable Securities shall, solely for purposes of
calculating such vote, be deemed to include the Registrable Securities then
issuable under the Warrants and any other securities exercisable or exchangeable
for, or convertible into, Registrable Securities.
"REGISTRATION EXPENSES" means all expenses incident to
the Company's performance of or compliance with the registration requirements
set forth in this Agreement
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including, without limitation, the following: (i) the fees, disbursements and
expenses of the Company's counsel(s), accountants, and experts in connection
with the registration under the Securities Act of Registrable Securities; (ii)
all expenses in connection with the preparation, printing and filing of the
registration statement, any preliminary prospectus or final prospectus, any
other offering documents and amendments and supplements thereto, and the mailing
and delivery of copies thereof to the underwriters and dealers, if any; (iii)
the cost of printing or producing any agreement(s) among underwriters,
underwriting agreement(s) and blue sky or legal investment memoranda, any
selling agreements, and any other documents in connection with the offering,
sale or delivery of Registrable Securities to be disposed of; (iv) any other
expenses in connection with the qualification of Registrable Securities for
offer and sale under state securities laws, including the fees and disbursements
of counsel for the underwriters in connection with such qualification and in
connection with any blue sky and legal investment surveys; (v) the filing fees
incident to securing any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of Registrable Securities to
be disposed of and any blue sky registration or filing fees, and (vi) the fees
and expenses incurred in connection with the listing of Registrable Securities
on each securities exchange (or NASDAQ National Market System) on which Company
securities of the same class are then listed; PROVIDED, HOWEVER, that
Registration Expenses with respect to any registration pursuant to this
Agreement shall not include (x) expenses of any Holder's counsel, or (y) any
underwriting discounts or commissions attributable to Registrable Securities,
each of which shall be borne by the Holder.
"SEC" means the United States Securities and Exchange
Commission, or such other federal agency at the time having the principal
responsibility for administering the Securities Act.
"SECURITIES ACT" means the Securities Act or 1933, as
amended, and the rules and regulations of the SEC thereunder, all as the same
shall be in effect at the relevant time.
ARTICLE 2. DEMAND REGISTRATION, MANDATORY REGISTRATION.
(a) Demand Registration
(i) Commencing immediately, Holder or
Holders may request at any time (by written notice delivered to the Company)
that the Company register under the Securities Act all or any portion of the
Registrable Securities held by (or then issuable to) such Holder or Holders (the
"Requesting Holders") for sale in the manner specified in such notice . In each
such case, such notice shall specify the number of Registrable Securities for
which registration is requested, the proposed manner of disposition of such
securities, and the minimum price per share at which the Requesting Holders
would be willing to sell such securities in an underwritten offering. The
Company shall, within five (5) Business Days after its receipt of any Requesting
Holders' notice under this Section 2(a)(i), give written notice of such request
to all other Holders of Registrable Securities and afford them the opportunity
of including in the requested registration statement such of their Registrable
Securities as they shall specify in a written notice given to the Company within
twenty (20) days after their receipt of the Company's notice. Within ten (10)
Business Days after the expiration of such twenty (20) day period, the Company
shall notify all Holders requesting registration of (A) the aggregate number of
Registrable Securities proposed
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to be registered by all Holders, (B) the proposed filing date of the
registration statement, and (C) such other information concerning the offering
as any Holder may have reasonably requested. If the Holders of a majority in
aggregate amount of the Registrable Securities to be included in such offering
shall have requested that such offering be underwritten, the managing
underwriter for such offering shall be chosen by the holders of a majority in
aggregate amount of the Registrable Securities being registered, with the
consent of the Company, which consent shall not be unreasonably withheld, not
less than thirty-five (35) days prior to the proposed filing date stated in the
Company's notice, and the Company shall thereupon promptly notify such Holders
as to the identity of the managing underwriter, if any, for the offering. On or
before the 30th day prior to such anticipated filing date, any Holder may give
written notice to the Company and the managing underwriter specifying either
that (A) Registrable Securities of such Holder are to be included in the
underwriting, on the same terms and conditions as the securities otherwise being
sold through the underwriters under such registration or (B) such Registrable
Securities are to be registered pursuant to such registration statement and sold
in the open market without any underwriting, on terms and conditions comparable
to those normally applicable to offerings in reasonably similar circumstances,
regardless of the method of disposition originally specified in Holder's request
for registration.
(ii) Company shall use its best efforts to
file with the SEC within ninety (90) days after the Company's receipt of the
initial Requesting Holders' written notice pursuant to Section 2(a)(i), a
registration statement for the public offering and sale, in accordance with the
method of disposition specified by such Holders, of the number of Registrable
Securities specified in such notice, and thereafter use its best efforts to
cause such registration statement to become effective as quickly thereafter as
is practicable, provided that the Company may delay the filing of such
registration statement for up to an additional sixty (60) days if the Company
determines that such a delay is necessary either: (i) to obtain additional
financial statements for inclusion in such registration statement as a result of
an acquisition or probable acquisition of a "significant subsidiary" as such
term is defined by the SEC in Regulation S-X; or (ii) in order to complete or
otherwise bring to fruition a material business combination or proposed material
corporate transaction which in a pending status would render difficult the
completion of a registration statement in accordance with applicable SEC
regulations. Such registration statement may be on Form S-1 or another
appropriate form (including Form S-3) that the Company is eligible to use and
that its reasonably acceptable to the managing underwriter; PROVIDED, HOWEVER,
that if Form S-3 is used, upon the request of the managing underwriter, the
prospectus included in the registration statement shall be amplified to include
such additional information as such underwriter may reasonably request regarding
the Company, its business and management (including, without limitation, the
information called for by Items 101, 102, 103, 201, 202, 301 and 303 of
Regulation S-K under the Securities Act).
(iii) The Company shall not have any
obligation hereunder to register any Registrable Securities under this Section
2(a) unless it shall have received requests from Holders to register at least
40% of the total Registrable Securities. Further, the Holder(s) shall only have
the right to exercise their rights of demand under this Section 2(a)(i) on two
occasions.
(iv) Notwithstanding anything to the
contrary contained herein, the Company's obligation in Section 2(a)(i) above
shall extend only to the inclusion of the Registrable
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Securities in a registration statement filed under the Securities Act. The
Company shall have no obligation to assure the terms and conditions of
distribution, to obtain a commitment from an underwriter relative to the sale of
the Registrable Securities or to otherwise assume any responsibility for the
manner, price or terms of the distribution of the Registrable Securities.
(v) The Company shall not include in any
Demand Registration requested by the Holders of Registrable Securities pursuant
to Section 2(a)(i) above any securities which are not Registrable Securities
without the prior written consent of the Holders of at least a majority of the
Registrable Securities initially requesting such registration. If a Demand
Registration is an underwritten offering and the managing underwriters advise
the Company in writing that in their opinion the number of Registrable
Securities and, if permitted hereunder, other securities requested to be
included in such offering exceeds the number of Registrable Securities and other
securities, if any, which can be sold in an orderly manner in such offering
within a price range acceptable to the Holders of a majority of the Registrable
Securities requesting registration, the Company shall include in such
registration (i) first, the number of Registrable Securities requested to be
included which in the opinion of such underwriters can be sold in an orderly
manner within the price range of such offering, pro rata among the respective
Holders thereof on the basis of the amount of Registrable Securities owned by
each such Holder, and (ii) second, if all the of the Registrable Securities
requested to be included under clause (i) have been included, the number of
other securities, if any, requested to be included which in the opinion of such
underwriters can be sold in an orderly manner within the price range of such
offering, pro rata among the respective Holders thereof on the basis of the
amount of such other securities owned by each such Holder.
(vi) The Company shall not be obligated to
effect any Demand Registration within 180 days after the effective date of a
previous underwritten Demand Registration or a previous registration in which
the Holders of Registrable Securities were given piggyback rights pursuant to
Section 3 and in which there was no reduction in the number of Registrable
Securities requested to be included. The Company may postpone once for up to six
months and once for up to nine months the filing or the effectiveness of a
registration statement for a Demand Registration if the Company determines that
such Demand Registration would reasonably be expected to have an adverse effect
on any proposal or plan by the Company or any of its subsidiaries to engage in
any financing, acquisition of assets or any merger, consolidation, tender offer
or other similar transaction; provided that in such event, the Holders of
Registrable Securities initially requesting such Demand Registration shall be
entitled to withdraw such request and, if such request is withdrawn, such Demand
Registration shall not count as one of the Demand Registrations permitted to
Holders of Registrable Securities hereunder and the Company shall pay all
Registration Expenses in connection with such registration; and provided further
that the Company may exercise such right only once in any 12-month period.
(b) Mandatory Registration
(i) The Company shall file to register for
resale under the Securities Act the Registrable Securities held by (or then
issuable to) the Holders for sale pursuant to a Mandatory Registration not later
than the expiration date of the Warrants. The Company will use its best efforts
to have the Mandatory Registration declared effective as soon thereafter as is
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practicable, and to keep such Mandatory Registration (or, if applicable, a
successor Mandatory Registration filed pursuant to Section 2(b)(ii) below)
continuously effective for the earlier of a period of three years or until all
securities included in such Mandatory Registration have ceased to be Registrable
Securities (the "Lapse Date").
(ii) If the Company is precluded by Rule 415
or any other applicable rule under the Securities Act from including all
Registrable Securities in any Mandatory Registration Statement or from keeping
any Mandatory Registration Statement continuously effective from the filing date
thereof through the Lapse Date, the Company shall file such additional or
further Mandatory Registrations, as may be required, so that, subject to the
other provisions of this Agreement, all Registrable Securities requested to be
included are included on a continuously effective Mandatory Registration
Statement for substantially all of the period from the filing date of the first
Mandatory Registration Statement through the Lapse Date.
ARTICLE 3. PIGGYBACK REGISTRATIONS.
(a) RIGHT TO PIGGYBACK. If at any time after the
execution of this Registration Rights Agreement, the Company proposes to file a
registration statement under the Securities Act (except with respect to
registration statements on Forms S-4, S-8, or any other form not available for
registering the Registrable Securities for sale to the public), with respect to
an offering of Common Stock for its own account or for the account of another
person, then the Company shall in each case give written notice of such proposed
filing to the Holders of Registrable Securities at least 30 days before the
anticipated filing date of the registration statement with respect thereto (the
"Piggyback Registration"), and shall, subject to Section 2(b) and 2(c) below,
include in such Piggyback Registration such amount of Registrable Securities as
each such Holder may request within 15 days of the receipt of such notice.
(b) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback
Registration is an underwritten primary registration on behalf of the Company,
and the managing underwriters advise the Company in writing that in their
opinion the number of securities requested to be included in such registration
exceeds the number which can be sold in an orderly manner in such offering
within a price range acceptable to the Company, the Company shall include in
such registration (i) first, the securities the Company proposes to sell, (ii)
second, the Registrable Securities requested to be included in such registration
to the extent that the number of shares to be registered will not, in the
opinion of the managing underwriters, adversely affect the offering of the
securities pursuant to clause (i), pro rata among the Holders of such
Registrable Securities on the basis of the number of shares owned by such Holder
and (iii) third, provided that all Registrable Securities requested to be
included in the registration statement have been so included, any other
securities requested to be included in such registration.
(c) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback
Registration is an underwritten secondary registration on behalf of holders of
the Company's securities other than the Holders of Registrable Securities, and
the managing underwriters advise the Company in writing that in their opinion
the number of securities requested to be included in such registration exceeds
the number which can be sold in an orderly manner in such offering within a
price range acceptable to the holders initially requesting such registration,
the Company shall include in such
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registration (i) first, the securities requested to be included therein by the
holders requesting such registration, (ii) second, the Registrable Securities
requested to be included in such registration, to the extent that the number of
shares to be registered will not, in the opinion of the managing underwriters,
adversely affect the offering of the securities pursuant to clause (i), pro rata
among the Holders of such securities on the basis of the number of shares so
requested to be included therein owned by each such Holder, and (iii) third,
other securities requested to be included in such registration.
ARTICLE 4. HOLDBACK AGREEMENTS.
(a) Each Holder of Registrable Securities shall not
effect any public sale or distribution (including sales pursuant to Rule 144) of
equity securities of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, during the 30 days prior to and
the 180-day period beginning on the effective date of any underwritten primary
registration undertaken by the Company (except as part of such underwritten
registration), unless the underwriters managing the registered public offering
otherwise agree.
(b) The Company (i) shall not effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the 30 days prior to and
during the 90-day period beginning on the effective date of any underwritten
Demand Registration on behalf of the Holders of Registrable Securities (except
as part of such underwritten registration or pursuant to registrations on Form
S-8 or S-4 or any successor form), unless the underwriters managing the
registered public offering otherwise agree.
ARTICLE 5. REGISTRATION PROCEDURES.
Whenever the Holders of Registrable Securities have
requested that any Registrable Securities be registered pursuant to this
Agreement, the Company shall use its best efforts to effect the registration of
the resale of such Registrable Securities and pursuant thereto the Company shall
as soon as practicable:
(a) prepare and file with the Securities and Exchange
Commission a registration statement with respect to the resale of such
Registrable Securities and use its best efforts to cause such registration
statement to become effective (provided that before filing a registration
statement or prospectus or any amendments or supplements thereto, the Company
shall furnish to the counsel selected by the Holders of a majority of the
Registrable Securities covered by such registration statement copies of all such
documents proposed to be filed, which documents shall be subject to the review
and consent of such counsel);
(b) notify each Holder of Registrable Securities of the
effectiveness of each registration statement filed hereunder and prepare and
file with the Securities and Exchange Commission such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for a period
of not less than 180 days and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such registration
statement during such
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period in accordance with the intended methods of disposition by the sellers
thereof set forth in such registration statement;
(c) furnish to each seller of Registrable Securities
such number of copies of such registration statement, each amendment and
supplement thereto, the prospectus included in such registration statement
(including each preliminary prospectus) and such other documents as such seller
may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such seller;
(d) use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as any Holder reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable such seller
to consummate the disposition of the Registrable Securities owned by the sellers
in such jurisdictions (provided that the Company shall not be required to (i)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph, (ii) subject itself
to taxation in any such jurisdiction or (iii) consent to general service of
process in any such jurisdiction);
(e) notify each seller of such Registrable Securities,
at any time when a prospectus relating thereto is required to be delivered under
the Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Company shall
prepare a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not contain an untrue statement of a material fact or omit to state any
fact necessary to make the statements therein not misleading;
(f) cause all such Registrable Securities to be listed
on each securities exchange on which similar securities issued by the Company
are then listed;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;
(h) enter into such customary underwriting agreements
(containing terms acceptable to the Company) as the Holders of a majority of the
Registrable Securities being sold or the underwriters, if any, reasonably
request; and
(i) make available for inspection during normal business
hours by any seller of Registrable Securities, any underwriter participating in
any disposition pursuant to such registration statement and any attorney,
accountant or other agent retained by any such seller or underwriter, all
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors, employees and independent
accountants to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such registration
statement.
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ARTICLE 6. REGISTRATION EXPENSES.
All Registration Expenses in connection with any of the
registration events identified within this Agreement shall be borne by the
Company. All other expenses shall be borne by the Holders.
ARTICLE 7 INDEMNIFICATION.
(a) The Company agrees to indemnify, to the extent
permitted by law, each Holder of Registrable Securities, its officers and
directors and each Person who controls such Holder (within the meaning of the
Securities Act) against all losses, claims, damages, liabilities and expenses
caused by any untrue statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as the same are caused by or contained in any information furnished to
the Company by such Holder for use therein or by such Holder's failure to
deliver a copy of the registration statement or prospectus or any amendments or
supplements thereto after the Company has furnished such holder with a
sufficient number of copies of the same. In connection with an underwritten
offering, the Company shall provide reasonable and customary indemnification to
such underwriters, their officers and directors and each Person who controls
such underwriters (within the meaning of the Securities Act) to the same extent
as provided above with respect to the indemnification of the Holders of
Registrable Securities.
(b) In connection with any registration statement in
which a Holder of Registrable Securities is participating, each such Holder
shall furnish to the Company in writing such information and affidavits as the
Company reasonably requests for use in connection with any such registration
statement or prospectus and, to the extent permitted by law, shall indemnify the
Company, its directors and officers and each Person who controls the Company
(within the meaning of the Securities Act) against any losses, claims,. damages,
liabilities and expenses resulting from any untrue or alleged untrue statement
of material fact contained in the registration statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto or any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only to the extent
that such untrue statement or omission is contained in any information or
affidavit so furnished by such Holder; provided that the obligation to indemnify
shall be individual, not joint and several, for each Holder and shall be limited
to the net amount of proceeds received by such Holder from the sale of
Registrable Securities pursuant to such registration statement.
(c) Any Person entitled to indemnification hereunder
shall (i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification (provided that the failure to give
prompt notice shall not impair any Person's right to indemnification hereunder
to the extent such failure has not prejudiced the indemnifying party) and (ii)
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist with respect to such
claim, permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party. If such defense is
assumed, the indemnifying party shall not be subject to any
-9-
<PAGE>
liability for any settlement made by the indemnified party without its consent
(but such consent shall not be unreasonably withheld). An indemnifying party who
is not entitled to, or elects not to, assume the defense of a claim shall not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim.
(d) The indemnification provided for under this
Agreement shall remain in full force and effect regardless of any investigation
made by or on behalf of the indemnified party or any officer, director or
controlling Person of such indemnified party and shall survive the transfer of
securities. The Company also agrees to make such provisions, as are reasonably
requested by any indemnified party, for contribution to such party in the event
the Company's indemnification is unavailable for any reason.
ARTICLE 8 OBLIGATION OF HOLDERS.
(a) In connection with each registration hereunder, each
selling Holder will furnish to the Company in writing such information with
respect to such seller and the securities held by such seller, and the proposed
distribution by them as shall be reasonably requested by the Company in order to
assure compliance with federal and applicable state securities laws, as a
condition precedent to including such seller's Registrable Securities in the
registration statement. Each selling Holder also shall agree to promptly notify
the Company of any changes in such information included in the registration
statement or prospectus as a result of which there is an untrue statement of
material fact or an omission to state any material fact required or necessary to
be stated therein in order to make the statements contained therein not
misleading in light of the circumstances then existing.
(b) In connection with each registration pursuant to
this Agreement, the Holders included therein will not effect sales thereof until
notified by the Company of the effectiveness of the registration statement, and
thereafter will suspend such sales after receipt of telegraphic or written
notice from the Company to suspend sales to permit the Company to correct or
update a registration statement or prospectus. At the end of any period during
which the Company is obligated to keep a registration statement current, the
Holders included in said registration statement shall discontinue sales of
shares pursuant to such registration statement upon receipt of notice from the
Company of its intention to remove from registration the shares covered by such
registration statement which remain unsold, and such Holders shall notify the
Company of the number of shares registered which remain unsold immediately upon
receipt of such notice from the Company.
ARTICLE 9 INFORMATION BLACKOUT.
(a) At any time when a registration statement effected
pursuant to this Agreement relating to Registrable Securities is effective, upon
written notice from the Company to the Holders that the Company has determined
in good faith that sale of Registrable Securities pursuant to the registration
statement would require disclosure of non-public material information not
otherwise required to be disclosed under applicable law (an "Information
Blackout"), all Holders shall suspend sales of Registrable Securities pursuant
to such registration statement until the earlier of:
-10-
<PAGE>
(i) sixty (60) days after the Company makes
such good faith determination; and
(ii) such time as the Company notifies the
Holders that such material information has been disclosed to the public or has
ceased to be material or that sales pursuant to such registration statement may
otherwise be resumed (the number of days from such suspension of sales by the
Holders until the day when such sale may be resumed hereunder is hereinafter
called a "Sales Blackout Period").
(b) Notwithstanding the foregoing, there shall be no
more than four (4) Information Blackouts during the term of this Agreement and
no Sales Blackout Period shall continue for more than sixty (60) consecutive
days.
ARTICLE 10 MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware without
regard to that state's conflict of laws provisions.
(b) COUNTERPARTS. This Agreement may be signed in
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
(c) AMENDMENTS AND WAIVERS. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given without the written consent of the Company and the Holders.
-11-
<PAGE>
(d) NOTICES. All notices, advices and communications
under this Agreement shall be deemed to have been given, (i) in the case of
personal delivery, on the date of such delivery and (ii) in the case of mailing,
on the third business day following the date of such mailing, addressed as
follows:
If to the Company:
The New World Power Corporation
558 Lime Rock Road
Lime Rock Connecticut 06039
Attn: Chief Executive Officer
With a Copy to:
Ilan K. Reich, Esquire
Olsham Grundman Frome & Rosenzweig LLP
505 Park Avenue
New York, New York 10022
and to the Holder:
500 Rue Notre Dame
Lachine, Quebec
Canada H8S 2B2
With a Copy to:
Joseph P. Galda, Esquire
Buchanan Ingersoll Professional Corporation
Two Logan Square, 12th Floor
18th & Arch Streets
Philadelphia, PA 19103-2771
Either of NWP or the Holder may from time to time change the address to which
notices to it are to be mailed hereunder by notice in accordance with the
provisions of this Article 10.
(e) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(f) ENTIRE AGREEMENT; SURVIVAL; TERMINATION. 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
-12-
<PAGE>
contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
IN WITNESS WHEREOF, intending to be legally bound
hereby, the parties have executed this Agreement as of the date first written
above.
THE NEW WORLD POWER CORPORATION
("Company")
By: /S/ JOHN D. KUHNS
--------------------------------
Name:John D. Kuhns
Title:Chairman
/S/ VITOLD JORDAN
--------------------------------
Vitold Jordan
Interim CEO
DB POWER, INC.
("Holder")
By: /S/ MICHEL L. MARENGERE
--------------------------------
Name:Michel L. Marengere
Title: President
-13-
<PAGE>
NOTICE SCHEDULE:
LIST OF HOLDERS:
-14-
WARRANT TO PURCHASE
COMMON STOCK OF
THE NEW WORLD POWER CORPORATION
Void after 5:00 p.m. Eastern Standard Time on October 31, 2001
This is to verify that, for value received, DB Power, Inc.
(hereinafter referred to as the "Holder) is entitled to purchase, subject to the
terms and conditions hereof, from The New World Power Corporation., a Delaware
corporation ("Company"), ________________ shares of Common Stock, par value $.01
per share of the Company (the "Common Stock"), at any time during the period
following the date hereof (the "Commencement Date") and ending at 5:00 p.m.
Eastern Standard Time on October 31, 2001 (the "Termination Date"), at an
exercise price of $0.95 per share of Common Stock if exercised prior to October
31, 1997, and $1.05 per share of Common Stock if exercised thereafter. The
number of shares of Common Stock purchasable upon exercise of this Warrant and
the exercise price per share shall be subject to adjustment from time to time
upon the occurrence of certain events as set forth below.
The shares of Common Stock or any other shares or other units of
stock or other securities or property, or any combination thereof then
receivable upon exercise of this Warrant, as adjusted from time to time, are
sometimes referred to hereinafter as "Exercise Shares." The exercise price per
share as from time to time in effect is referred to hereinafter as the "Exercise
Price."
1. EXERCISE OF WARRANT: ISSUANCE OF EXERCISE SHARES.
(a) EXERCISE OF WARRANT. This Warrant may be exercised in whole or
in part at any time or from time to time on or after the Commencement Date and
until and including the Termination Date, upon surrender on any business day to
the Company at its principal office, presently located at the address of the
Company set forth in Paragraph 8 hereof (or such other office of the Company, if
any, as shall theretofore have been designated by the Company by written notice
to the Holder), together with: (i) a completed and executed Notice of Warrant
Exercise in the form set forth in Appendix A hereto and made a part hereof and
(ii) payment of the full Exercise Price for the amount of Exercise Shares set
forth in the Notice of Warrant Exercise, in lawful money of the United States of
America by certified check or cashier's check, made payable to the order of the
Company.
In the event that this Warrant shall be duly exercised in part prior
to the Termination Date, the Company shall issue a new Warrant or Warrants of
like tenor evidencing the rights of the Holder thereof to purchase the balance
of the Exercise Shares purchasable under the Warrant so surrendered that shall
not have been purchased.
<PAGE>
No adjustments shall be made for any cash dividends on Exercise
Shares issuable upon exercise of the Warrant. The Company shall cancel Warrant
Certificates surrendered upon exercise of Warrants.
(b) ISSUANCE OF EXERCISE SHARES: DELIVERY OF WARRANT CERTIFICATE.
The Company shall, within ten (10) business days of the exercise of this Warrant
or as soon thereafter as is practicable, issue in the name of and cause to be
delivered to the Holder (or such other person or persons, if any, as the Holder
shall have designated in the Notice of Warrant Exercise) one or more
certificates representing the Exercise Shares to which the Holder (or such other
person or persons) shall be entitled upon such exercise under the terms hereof.
Such certificate or certificates shall be deemed to have been issued and the
Holder (or such other person or persons so designated) shall be deemed to have
become the record holder of the Exercise Shares as of the date of the due
exercise of this Warrant.
(c) EXERCISE SHARES FULLY PAID AND NON-ASSESSABLE. The Company
agrees and covenants that all Exercise Shares issuable upon the due exercise of
the Warrant represented by this Warrant Certificate will, upon issuance in
accordance with the terms hereof, be duly authorized, validly issued, fully paid
and nonassessable and free and clear of all taxes (other than taxes which,
pursuant to Paragraph 2 hereof, the Company shall not be obligated to pay) or
liens, charges, and security interests created by the Company with respect to
the issuance thereof.
(d) RESERVATION OF EXERCISE SHARES. The Company shall reserve and
keep available, out of the aggregate of its authorized but unissued shares of
capital stock, for the purpose of enabling it to satisfy any obligation to issue
Exercise Shares upon exercise of Warrants, through the Termination Date, the
number of Exercise Shares deliverable upon the full exercise of this Warrant and
all other Warrants of like tenor then outstanding. At any time following the
Commencement Date, before taking any action which would cause an adjustment
pursuant to Paragraph 5 increasing the number of shares of capital stock
constituting the Exercise Shares, the Company will take any corporate action
which may, in the opinion of its counsel, be necessary in order that the Company
have remaining, after such adjustment, a number of shares of such capital stock
unissued and unreserved for other purposes sufficient to permit the exercise of
all the then outstanding Warrants of like tenor immediately after such
adjustment. The Company shall also from time to time take action to increase the
authorized amount of its capital stock constituting the Exercise Shares if at
any time the number of shares of capital stock authorized but remaining unissued
and unreserved for other purposes shall be insufficient to permit the exercise
of the Warrants then outstanding.
At the time of or before taking any action which would cause an
adjustment pursuant to this Paragraph, reducing the Exercise price below the
then par value (if any) of the Exercise Shares issuable upon exercise of the
Warrants, the Company will take any corporate action which may, in the opinion
of its counsel, be necessary in order to assure that the par value per share of
the Exercise Shares is at all times equal to or less than the Exercise Price per
share and so that the Company may validly and legally issue fully paid and
non-assessable Exercise Shares at the Exercise Price, as so adjusted. The
Company shall also from time to time take such action if at any time the
Exercise Price is below the then par value of the Exercise Shares.
2
<PAGE>
(e) FRACTIONAL SHARES. The Company shall not be required to issue
fractional shares of capital stock upon the exercise of this Warrant or to
deliver Warrant Certificates which evidence fractional shares of capital stock.
In the event that any fraction of an Exercise Share would, except for the
provisions of this Subparagraph (e), be issuable upon the exercise of this
Warrant, the Company shall pay to the Holder exercising the Warrant an amount in
cash equal to such fraction multiplied by the Current Market Value of the
Exercise Share. For purposes of this Subparagraph (e), the Current Market Value
shall be determined as follows:
(i) if the Exercise Shares are listed or traded on a
national securities exchange or in the NASDAQ National Market System, the
closing price on the principal national securities exchange on which they are so
listed or traded or in the NASDAQ National Market System, as the case may be, on
the last business day prior to the date of the exercise of this Warrant. The
closing price referred to in this clause (ii) shall be the last reported sales
price or, in case no such reported sale takes place on such day, the average of
the reported closing bid and asked prices, in either case on the national
securities exchange on which the Exercise Shares are then listed or in the
NASDAQ Reporting System;
(ii) if the Exercise Shares are traded in the
over-the-counter market and not on any national securities exchange and not in
the NASDAQ Reporting System, the average of the mean between the last bid and
asked prices per share, as reported by the National Quotation Bureau, Inc., or
an equivalent generally accepted reporting service, for the last business day
prior to the date on which this Warrant is exercised, or if not so reported, the
average of the closing bid and asked prices for an Exercise Share as furnished
to the Company by any member of the National Association of Securities Dealers,
Inc., selected by the Company for that purpose; or
(iii) if no such closing price or closing bid and asked
prices are available, as determined in any reasonable manner as may be
prescribed by the Board of Directors of the Company.
2. PAYMENT OF TAXES. The Company need not pay any documentary stamp taxes, if
any, attributable to the initial issuance of Exercise Shares upon the exercise
of this Warrant. Furthermore, the Company shall not be required to pay any tax
or taxes which may be payable in respect of any transfer involved in the issue
of any Warrant Certificates or any certificates for Exercise Shares in a name
other than that of the Holder of a Warrant Certificate surrendered upon the
exercise of a Warrant, and the Company shall not be required to issue or deliver
such certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
3. MUTILATED OR MISSING WARRANT CERTIFICATES. In case any Warrant Certificate
shall be mutilated, lost, stolen or destroyed, the Company may in its discretion
issue, in exchange and substitution for and upon cancellation of the mutilated
Warrant Certificate, or in lieu of and in substitution for the Warrant
Certificate lost, stolen or destroyed, a new Warrant Certificate or Warrant
Certificates of like tenor and in the same aggregate denomination, but only (i)
in the case of loss, theft or destruction, upon receipt of evidence satisfactory
to the Company of such loss, theft or destruction of such Warrant Certificate
and indemnity or bond, if requested, also
3
<PAGE>
satisfactory to them and (ii) in the case of mutilation, upon surrender of the
mutilated Warrant. Applicants for such substitute Warrant Certificates shall
also comply with such other reasonable regulations and pay such other reasonable
charges as the Company or its counsel may prescribe.
4. RIGHTS OF HOLDER. The Holder shall not, solely by virtue of anything
contained in this Warrant Certificate, be entitled to any right whatsoever,
either in law or equity, of a stockholder of the Company, including without
limitation, the right to receive dividends or to vote or to consent or to
receive notice as a stockholder in respect of the meetings of stockholders or
the election of directors of the Company or any other matter.
5. ADJUSTMENT OF EXERCISE SHARES AND EXERCISE PRICE. The Exercise Price and the
number and kind of Exercise Shares purchasable upon the exercise of this Warrant
shall be subject to adjustment from time to time upon the happening of certain
events as hereinafter provided. The Exercise Price in effect at any time and the
number and kind of securities purchasable upon exercise of each Warrant shall be
subject to adjustment as follows:
(a) In the case the Company shall (i) pay a dividend or make a
distribution on its shares of Common Stock in shares of Common Stock, (ii)
subdivide or classify its outstanding Common Stock into a greater number of
shares, or (iii) combine or reclassify its outstanding Common Stock into a
smaller number of shares, the Exercise Price in effect at the time of the record
date for such dividend or distribution or of the effective date of such
subdivision, combination or reclassification shall be proportionally adjusted so
that the Holder of this Warrant exercised after such date shall be entitled to
receive the aggregate number and kind of shares which, if this Warrant had been
exercised by such Holder immediately prior to such date, he would have owned
upon such exercise and been entitled to receive upon such dividend, subdivision,
combination or reclassification. For example, if the Company declares a 1 for 5
reverse stock split and the Exercise Price immediately prior to such event was
$1.05 per share, the adjusted Exercise Price immediately after such event would
be $5.25 per share. Such adjustment shall be made successively whenever any
event listed above shall occur.
(b) Whenever the Exercise Price payable upon exercise of each
Warrant is adjusted pursuant to Subsection (a) above, the number of Exercise
Shares purchasable upon exercise of this Warrant shall simultaneously be
adjusted by multiplying the number of Exercise Shares initially issuable upon
exercise of this Warrant by the Exercise Price in effect on the date hereof and
dividing the product so obtained by the Exercise Price, as adjusted.
(c) No adjustment in the Exercise Price shall be required unless
such adjustment would require an increase or decrease of at least five cents
($0.05) in such price; provided, however, that any adjustments which by reason
of this Subsection (c) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment required to be made hereunder.
All calculations under this Paragraph 5 shall be made to the nearest cent or to
the nearest one-hundredth of a share, as the case may be.
(d) Whenever the Exercise Price is adjusted, as herein provided, the
Company shall promptly cause a notice setting forth the adjusted Exercise Price
and adjusted number of Exercise Shares issuable upon exercise of each Warrant to
be mailed to the Holders, at their last addresses
4
<PAGE>
appearing in the Warrant Register. The Company may retain a firm of independent
certified public accountants selected by the Board of Directors (who may be the
regular accountants employed by the Company) to make any computation required by
this Paragraph 5, and a certificate signed by such firm shall be conclusive
evidence of the correctness of such adjustment.
(e) Whenever the Exercise Price shall be adjusted as required by the
provisions of the foregoing Paragraph, the Company shall forthwith file in the
custody of its Secretary or an Assistant Secretary at its principal office and
with its stock transfer agent, if any, an officer's certificate showing the
adjusted Exercise Price determined as herein provided, setting forth in
reasonable detail the facts requiring such adjustment, including a statement of
the number of additional shares of Common Stock, if any, and such other facts as
shall be necessary to show the reason for and the manner of computing such
adjustment. Each such officer's certificate shall be made available at all
reasonable times for inspection by the Holders and the Company shall, forthwith
after each such adjustment, mail a copy by certified mail of such certificate to
the Holder.
6. RESTRICTIONS ON TRANSFERABILITY: RESTRICTIVE LEGEND. Neither this Warrant nor
the Exercise Shares shall be transferable except in accordance with the
provisions of this Paragraph.
(a) RESTRICTIONS ON TRANSFER: INDEMNIFICATION. Neither this Warrant
nor any Exercise Share may be offered for sale or sold, or otherwise transferred
or sold in any transaction which would constitute a sale thereof within the
meaning of the Securities Act of 1933, as amended (the "1933 Act"), unless (i)
such security has been registered for sale under the 1933 Act and registered or
qualified under applicable state securities laws relating to the offer and sale
of securities, or (ii) exemptions from the registration requirements of the 1933
Act and the registration or qualification requirements of all such state
securities laws are available and the Company shall have received an opinion of
counsel satisfactory to the Company that the proposed sale or other disposition
of such securities may be effected without registration under the 1933 Act and
would not result in any violation of any applicable state securities laws
relating to the registration or qualification of securities for sale, such
counsel and such opinion to be satisfactory to the Company.
The Holder agrees to indemnify and hold harmless the Company against
any loss, damage, claim or liability arising from the disposition of this
Warrant or any Exercise Share held by such holder or any interest therein in
violation of the provisions of this Paragraph 6.
(b) RESTRICTIVE LEGENDS. Unless and until otherwise permitted by
this Paragraph 6, this Warrant, each Warrant Certificate issued to the Holder or
to any transferee or assignee of this Warrant, and each Certificate representing
Exercise Shares issued upon exercise of this Warrant or to any transferee of the
person to whom the Exercise Shares were issued, shall bear a legend setting
forth the requirements of Subparagraph (a) of this Paragraph 6, together with
such other legend or legends as may otherwise be deemed necessary or appropriate
by counsel to the Company.
5
<PAGE>
(c) NOTICE OF PROPOSED TRANSFERS. Prior to any transfer, offer to
transfer or attempted transfer of this Warrant or any Exercise Share, the holder
of such security shall give written notice to the Company of such holder's
intention to effect such transfer. Each such notice shall (x) describe the
manner and circumstances of the proposed transfer in sufficient detail, and
shall contain an undertaking by the person giving such notice to furnish such
other information as may be required, to enable counsel to render the opinions
referred to below, and shall (y) designate the counsel for the person giving
such notice, such counsel to be reasonably satisfactory to the Company. The
person giving such notice shall submit a copy thereof to the counsel designated
in such notice and the Company shall submit a copy thereof to its counsel, and
the following provisions shall apply:
(i) If, in the opinion of each such counsel, the
proposed transfer of this Warrant or an Exercise Share, as appropriate, may be
effected without registration of such security under the 1933 Act, the Company
shall, as promptly as practicable, so notify the holder of such security and
such holder shall thereupon be entitled to transfer such security in accordance
with the terms of the notice delivered by such holder to the Company. Each
certificate evidencing the securities thus to be transferred (and each
certificate evidencing any untransferred balance of the securities evidenced by
such certificate) shall bear the restrictive legends referred to in subparagraph
(b) above, unless in the opinion of each such counsel such legend is not
required in order to insure compliance with the 1933 Act.
(ii) If, in the opinion of either of such counsel, the
proposed transfer of securities may not be effected without registration under
the 1933 Act, the Company shall, as promptly as practicable, so notify the
holder thereof. However, the Company shall have no obligation to register such
securities under the 1933 Act, except as otherwise provided herein.
The holder of the securities giving the notice under this
Subparagraph (c) shall not be entitled to transfer any of the securities until
receipt of notice from the Company under clause (i) of this Subparagraph (c) or
registration of such securities under the 1933 Act has become effective.
(d) REMOVAL OF LEGEND. The Company shall, at the request of any
registered holder of a Warrant or Exercise Share, exchange the certificate
representing such security for a certificate representing the same security not
bearing the restrictive legend required by Subparagraph (b) if, in the opinion
of counsel to the Company, such restrictive legend is no longer necessary.
7. REGISTRATION RIGHTS. The Exercise Shares shall be subject to the Registration
Rights Agreement between the Company and DB Power, Inc. dated as of October 31,
1996.
8. NOTICES. All notices, advices and communications under this Agreement shall
be deemed to have been given, (i) in the case of personal delivery, on the date
of such delivery and (ii) in the case of mailing, on the third business day
following the date of such mailing, addressed as follows:
6
<PAGE>
If to the Company:
The New World Power Corporation
558 Lime Rock Road
Lime Rock, CT 06039
Attention: Chief Executive Officer
With a Copy to:
Ilan K. Reich, Esquire
Olsham Grundman Frome & Rosenzweig LLP
505 Park Avenue
New York, NY 10022
and to the Holder:
Dominion Bridge Corporation
500 Rue Notre Dame
Lachine, Quebec
H8S 2B2
Attention: Chief Executive Officer
With a Copy to:
Joseph P. Galda, Esquire
Buchanan Ingersoll Professional Corporation
Two Logan Square, 12th Floor
18th & Arch Streets
Philadelphia, PA 19103-2771
Either of NWP or Dominion Bridge may from time to time change the
address to which notices to it are to be mailed hereunder by notice in
accordance with the provisions of this Paragraph 8.
9. SUPPLEMENTS AND AMENDMENTS. The Company may from time to time supplement or
amend this Warrant Certificate without the approval of any Holder of Warrants in
order to cure any ambiguity or to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provision, or to
make any other provisions in regard to matters or questions herein arising
hereunder which the Company may deem necessary or desirable and which shall not
materially adversely affect the interests of the Holder.
10. SUCCESSORS AND ASSIGNS. This Warrant shall inure to the benefit of and be
binding on the respective successors, assigns and legal representatives of the
Holder and the Company.
7
<PAGE>
11. SEVERABILITY. If for any reason any provision, paragraph or terms of this
Warrant Certificate is held to be invalid or unenforceable, all other valid
provisions herein shall remain in full force and effect and all terms,
provisions and paragraphs of this Warrant shall be deemed to be severable.
12. GOVERNING LAW. This Warrant shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of said state.
13. HEADINGS. Paragraph and subparagraph headings, used herein are included
herein for convenience of reference only shall not affect the construction of
this Warrant Certificate nor constitute a part of this Warrant Certificate for
any other purpose.
IN WITNESS WHEREOF, the Company has caused these presents to be duly
executed as of the _____ day of October, 1996.
The New World Power Corporation
By:
------------------------------
Title:
ATTEST:
By:
------------------------------
Title:
8
<PAGE>
APPENDIX A
NOTICE OF WARRANT EXERCISE
Pursuant to a Warrant by and between the undersigned and The New
World Power Corporation., a Delaware corporation (the "Company"), dated as of
October __, 1996, the undersigned hereby irrevocably elects to exercise its
warrant to the extent of purchasing ________ shares of Common Stock, $.01 par
value (the "Warrant Shares"), of the Company as provided for therein.
The undersigned hereby represents and agrees that the Warrant Shares
purchased pursuant hereto are being purchased for investment and not with a view
to the distribution or resale thereof, and that the undersigned understands that
said Warrant Shares have not been registered under the Securities Act of 1933,
as amended.
Payment of the full Purchase Price of the Warrant Shares is enclosed
herewith, in the form of a check made payable to the Company.
The undersigned requests that a certificate for the Warrant Shares
be issued in the name of:
____________________________________________________
____________________________________________________
____________________________________________________
(Please print name, address and social security number)
Dated:________________________________________________, ____
Address:____________________________________________________
____________________________________________________
____________________________________________________
Signature:__________________________________________________
9
JOINT VENTURE AGREEMENT
DB Power, Inc. ("DBP"), a Delaware corporation and an indirect,
wholly-owned subsidiary of Dominion Bridge Corporation, a Delaware corporation
("DBC"), and New World Power Corporation, a Delaware corporation ("NWP"), each
recognize the unique strengths of the other Party and hereby enter into this
joint venture agreement ("Agreement") to develop, construct, own and operate
power projects domestic/international as set forth herein.
Strengths: NWP brings power project development expertise,
power project financing expertise, power project
operational expertise, broad knowledge of the
domestic/international power markets and knowledge
of certain specific domestic/international power
project opportunities currently available.
DBP brings extensive power project construction
expertise, EPC turnkey contract capability,
bonding and performance and completion guarantee
capability, vendor relationships, infrastructure
development expertise, financial wherewithal,
steel fabrication expertise, and a broad knowledge
of the power markets domestically/internationally.
Power Projects: Subject to the conditions set forth in this
Agreement, the Parties mutually agreed to pursue
the joint development of the power projects listed
on Exhibit A hereto (the "Initial Projects") and
such other projects as shall be mutually agreed
(the Initial Projects and any additional projects
are hereinafter referred to as the "Projects").
For purposes of this Agreement, a "Project"
consists of a power purchase agreement and certain
permits, licenses, contracts and proprietary
information such as meteorological data or other
data relating to a wind, hydro or solar power
project and all other rights relating thereto.
NWP's Vermont subsidiary (the "Subsidiary") is
also identified as a "Project" on Exhibit A
hereto. The Parties agree that funding of the
Subsidiary as part of the Funding Commitment shall
be the last funding provided pursuant to this
Agreement. Prior to any such funding, DBP shall
conduct a customary due diligence review of the
assets and liabilities (including, without
limitation, environmental liabilities) and NWP
shall convert its shareholder loans to the
Subsidiary into equity. In connection with the
funding of the Subsidiary pursuant to this
Agreement NWP shall transfer 50% of the shares of
capital stock of the Subsidiary held by it to DWP.
<PAGE>
Joint Venture Management
and Decision-Making: Prior to the transfer of a Project to a Project
Entity as described below and/or with respect to
the Initial Projects, the transfer of 50% of NWP's
equity interest therein, all decisions with
respect to Projects shall rest with a five member
Management Committee, composed of two members
selected by DBP, two members selected by NWP and
the fifth member to be selected by the mutual
agreement of DBP and NWP. Four members of the
Management Committee must be present to constitute
a quorum and decisions shall be made based on the
affirmative vote of four of the five members of
the Management Committee. Members of the
Management Committee shall be entitled to
participate in discussion and voting via
conference telephone. The Management Committee
shall have meetings not less often than quarterly.
The Executive Director shall prepare, and the
Management Committee shall approve, and review as
necessary, annual budgets for Joint Venture
activities. All decisions with respect to Projects
undertaken or to be undertaken by the Joint
Venture shall be coordinated at the day to day
level by the Executive Director and the Operating
Manager. Subject to the authority of the
Management Committee and within the constraints of
budgets adopted by the Management Committee, the
Executive Director shall have the authority to
approve single expenditures of the joint venture
to third parties which do not exceed $25,000 or
$500,000 in the aggregate over a one year period.
Expenditures to DBP and its affiliates and those
over these amounts shall be approved by the
Management Committee.
The individuals serving as Executive Director and
the Operating Manager shall be selected annually
for a term of one year by the Management Committee
and may be removed by the Management Committee for
incompetence or dereliction of duty, but shall
otherwise remain in those positions for the
duration of their term.
Development Costs: Each of the Initial Projects shall be reviewed
prior to any expenditure by the Joint Venture
Management Committee. The Parties acknowledge that
NWP has incurred development costs with respect to
the Initial Projects prior to July 31, 1996 of
$2.5 million. Subject to the approval requirements
for expenditures provided below, in consideration
of DBP's receiving a 50% equity interest in the
Initial Projects DBP shall pay with respect to the
Initial Projects specified on Exhibit A hereto up
to $2.5 million (the "Initial Funding Commitment")
to equal the amount of development costs for which
NWP has received credit pursuant to
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the first sentence of this paragraph; provided,
however, (i) that the Initial Funding Commitment
shall be reduced by the amount of unexpended
development costs to be funded by DBP with respect
to Initial Projects which are abandoned by the
Management Committee and (ii) in no event shall
the Initial Funding Commitment be less than
$500,000 (including Development Costs of
approximately $130,000 incurred prior by DBP prior
to the date of this Agreement). Within five days
of the execution of this Agreement, DBP shall
deposit into an escrow account $400,000 to be
earmarked exclusively for the development of the
Texas Project. The Initial Funding Commitment
shall be satisfied by the payment by DBP of costs
related to Projects in accordance with the Project
budget. Except as DBP shall determine in its sole
discretion, prior to any funding of a Project
pursuant to this Agreement, NWP shall execute
bills of sale and such instruments of transfer as
DBP shall reasonably request so as to effect DBP's
purchase of a 50% interest in each such Project.
Except as set above with respect to DBP's
commitment of development costs with respect to
the Initial Projects, the Parties shall share all
project development costs equally, with NWP being
responsible for the development costs which will
be incurred prior to acceptance of a Project by
the Joint Venture, DBP being responsible for the
next portion of development costs equal to NWP's
initial contribution and the Parties being
responsible for the remaining development costs on
a 50/50 basis. Development costs shall only be
incurred at the direction of the Management
Committee and until a Party declines, in its sole
discretion, to participate in the development of
such project, or a Party or the Joint Venture or a
Project Entity abandons or transfers its interest
in a Project, or a Party is otherwise required to
discontinue its participation in a Project.
Development costs include out-of-pocket,
third-party expenses reasonably incurred by the
Parties in furtherance of development of a Project
as well as the cost associated with employees and
consultants of the Parties who perform work to
develop a power project, as provided below.
In no event shall the reimbursable costs for
employees and consultants of a Party or an
affiliate thereof be credited in excess of an
hourly rate which exceeds 1.4 times the hourly
equivalent wage in the case of an employee or 1.1
times the hourly fee of a consultant retained by
such Party, in each case for the actual time
period involved by such staff in Joint Venture
development activities. Each Party shall be
required to submit detailed time sheets setting
forth the tasks performed by the employees and/or
consultants in respect of Joint Venture
activities. It is anticipated
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<PAGE>
that NWP employees and consultants will perform a
majority of the development activities. DBP shall
have the ability, however, to dedicate up to one
full-time equivalent employee to Joint Venture
activities, subject to agreement by the Parties as
appropriate concerning time commitment and cost
reimbursement arrangements with respect thereto.
Each Party shall submit bills (and provide all
reasonably requested supporting documentation) for
development costs incurred after July 31, 1996 on
a monthly basis and each Party's share of such
costs shall be payable within 30 days of
submission of such bills. Semiannually, the
Parties shall review and reconcile any development
costs incurred hereunder. Verified development
costs shall be recovered at project financial
closing unless converted to equity or subordinated
debt in the projects.
Turnkey Construction: Where the ability to select the turnkey contractor
is within the Joint Venture's control, the
Management Committee shall provide to DBP or an
affiliate thereof the first opportunity to
negotiate a turnkey construction contract for each
such Project, provided that the contract meets
customary industry standards and the pricing of
such preferred contract is on terms no less
favorable to the project than as are obtainable
from an unrelated party. DBP or such affiliate
shall provide completion and performance
guarantees and appropriate security (e.g. letter
of credit, guarantee, bond) reasonably required,
if at all, by project finance lenders or other
third party Project participants to secure
performance of its contractual obligations. Prior
to entering into the turnkey contract, NWP and DBP
or such affiliate shall jointly (i) agree upon the
technical/systems/vendors to be utilized, taking
into account market conditions and project
financing requirements (it being recognized that
where possible Groupe MIL shall be utilized to
provide turbines and towers) and (ii) price and
select items of equipment whose value exceeds
$250,000.
Project Entity: After a Project has reached an appropriate stage
of development, DBP and NWP shall endeavor to
create a Project Entity (e.g., corporation,
limited liability company, partnership), which
shall be reasonably acceptable to both Parties to
undertake the further development and financing of
such Project. The Parties recognize that the Big
Springs, Texas Project has been transferred to a
Project Entity. The Project Entity organizational
documents shall reflect the equity participation
of the Parties as are negotiated with the project
finance providers and the fact that DBP shall act
as the managing general partner or in an analogous
operating or
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managing role for such Project Entity, subject to
mutually acceptable management or shareholder
approval rights. The provisions set forth in this
Joint Venture Agreement relating to the terms and
conditions of each Project Entity may be varied by
mutual agreement of the Parties; in the event of
any conflict between this Agreement and any
agreement relating to a Project Entity, the
agreement relating to the Project Entity shall
control.
Project Financing: DBP, or an affiliate thereof reasonably acceptable
to NWP, shall advise each Project Entity with
respect to financing alternatives, including the
selection of underwriters, placement agents,
lenders and equity investors. For such services,
DBP or such affiliate, shall be entitled to an
advisory fee of 1.5% of the gross amount of such
financing. The advisory fee payable to DBP or its
affiliate shall be in lieu of other third party
financial advisory fees, but not in lieu of other
financing fees such as commissions and placement
fees.
Capital Contributions: Unless otherwise negotiated by the Parties, NWP
and DBP shall each provide equity or other
sponsor-provided funding required from the Parties
for financing a Project developed by the Joint
Venture or a Project Entity in proportion to their
equity participation in a Project. If agreed by
the Parties and acceptable to project lenders,
equity contributions may be made in the form of
cash or construction or engineering or other
services performed. Development costs, including
those incurred by NWP on the Initial Projects
through July 31, 1996, not recovered through fees
at Project financial closing shall be considered
equity contributions of the Parties to the extent
agreed by the Parties and permitted by the
applicable project financing parties, and
accountants. The Parties acknowledge that any
commitment by either Party to invest equity will
be conditioned upon obtaining acceptable rates of
return and other acceptable provisions in its sole
discretion.
Profit/Loss/
Distributions: Except as otherwise provided in the organizational
documents for Project Entities relating to Initial
Projects, all profits, losses and other
distributions (including fees and other similar
compensation) arising from Joint Venture or
Project Entity activities after repayment of
development costs (other than profits and losses
arising under separate construction and operation
and maintenance contracts) shall be allocated
50/50 to NWP and DBP or otherwise in accordance
with each Party's equity contribution in the
specific Project Entity to which such development
costs have been assigned by the Management
Committee.
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Operations &
Maintenance: The Management Committee shall determine the
operator of all Projects developed by the Joint
Venture or a Project Entity under an agreement
acceptable to the Parties and Project lenders
which provides reasonable oversight to the Parties
over operational expenses and activities. The
operator shall provide appropriate security (e.g.
letter of credit, guarantee, bond) reasonably
required by lenders or other third parties to
secure performance of its contractual obligations
as operator.
Accounting: The Executive Director shall cause to be
maintained, on behalf of the Joint Venture,
records of development costs and such other
matters as are reasonably required in connection
with Joint Venture activities. The records of the
Executive Director and each Project Entity shall
be accurate in all material respects and shall
fairly present the position and results of the
Joint Venture and each Project Entity and shall be
prepared on an accrual basis in accordance with
U.S.A. generally accepted accounting principles
consistently applied. The Executive Director shall
retain a public accountant mutually acceptable to
NWP and DBP.
Discontinuance: Except for binding obligations under executed
contracts in connection with a specific Project
executed after the date of this Agreement,
including construction or operation and
maintenance agreements, with respect to any
Project, either Party may elect to discontinue its
participation or any Project or Project Entity by
delivering written notice to the other 15 days in
advance of its discontinuance provided that the
discontinuing party shall use all reasonable
efforts to ensure that such discontinuance shall
not be made in a manner which would unduly disrupt
any near term pending proposals and/or
negotiations such that the remaining Party is
injured and cannot continue with the
proposal/negotiations. Upon delivery of such
notice, the Parties shall for no additional
consideration, execute appropriate assignment,
assumption, indemnity and release documents which
transfer, as of the date of discontinuance, to the
remaining Party (or an affiliate thereof as
designated by such remaining Party) all
obligations and rights in the respective project
or Project Entity, whichever is applicable. Such
discontinuance by a Party shall be immediately
effective as an assignment of its interest in any
power project; however, the discontinuing Party
shall pay its share of development costs incurred
by the Joint Venture or Project Entity on or
before the date of discontinuance, although such
expenses may become due later. The discontinuing
Party shall be entitled to
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<PAGE>
be repaid its share of the development costs with
respect to any discontinued Project out of the
construction or project financing therefor, but
only after payments to the remaining party (and
any new equity participants) equal to 150 percent
of all development costs incurred with respect to
the Project; however, the discontinuing Party
shall not have any lien on the Project.
Right of First Offer: After the interest in a Project has been
transferred to DBP pursuant to this Agreement, and
notwithstanding any provision of this Agreement to
the contrary, either Party ("Selling Party") may
sell or transfer its interest in any Project or
Project Entity (but not the Joint Venture) to a
third party, provided it first notifies the other
Party ("Offeree Party") of its intention to sell
and sends to the Offeree Party a notice of the
terms and conditions under which it proposes to
sell; and provided further that the Selling Party
shall first offer to sell all its interest in any
project or Project Entity to the Offeree Party for
the price, and on the same terms, as stated in
such notice. The Offeree Party shall have 30 days
after receiving such offer to accept it. If the
Offeree Party does not agree to purchase the
Selling Party's interest in any project or Project
Entity within the 30-day period set forth above,
the Selling Party may sell its interest in any
project or Project Entity on the terms first
proposed in the written offer sent to the Offeree
Party; provided, however, that no Party may
transfer its interest in any project or Project
Entity to another unless (x) the transferee agrees
in writing to be bound by the same terms and
conditions of this Agreement (as it applies to
such Project or Project Entity) and becomes a
party hereto, (y) demonstration to the Offeree
Party that it is financially able to assume the
Selling Party's obligations; and (z) is otherwise
satisfactory to the Offeree Party on its sole
discretion.
Compliance with Law: In performing their respective activities
hereunder, each Party agrees to comply with all
applicable United States and other applicable
laws. In this regard, each Party agrees that
neither it nor its employees, agents or
subcontractors shall make any payment or give
anything of value to any government official to
influence a government decision, or to gain any
other governmental advantage for the Parties, the
Joint Venture, any project or a Project Entity in
connection with the activities performed
hereunder.
Assignment: Except for assignments to Affiliates and
assignments to lenders and others (which each
Party agrees to make as reasonably required for
project financing) and assignments pursuant to the
Right of First Offer set forth above, neither
Party may sell, transfer, assign or otherwise
encumber any portion of its interest in
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the Joint Venture, any Project, or any Project
Entity without the other Party's prior written
consent. For purposes of this Agreement,
"Affiliate" of a Party shall mean a person or
entity controlling, controlled by or under common
control with the Party and an "assignment" shall
include a "change in control" of a Party of a
nature that would be required to be reported in
response to Item 6(e) of Regulation 14A under the
Securities Exchange Act of 1934.
Nature of Joint Venture: The Joint Venture shall not be considered, and
this Agreement shall not be considered to have
formed, a partnership or other legal entity.
Except for DBP's and NWP's rights to incur project
development expenses within the scope of this
agreement, unless otherwise agreed, neither Party
shall be the agent or representative of, or have
the power to legally bind, the other Party in
connection with the activities of the Joint
Venture, and each Party shall be severally liable
for any obligations to third parties incurred in
connection with Joint Venture activities.
Term: The initial term of the Joint Venture shall be
three years; but the term shall be automatically
extended for additional terms of one year provided
that no Party notifies the other Party within 60
days of the end of the term of its election to
terminate the Joint Venture and the end of such
term. The Joint Venture shall also extend
automatically for successive terms of one year at
the end of its term but only for the sole purpose
of considering identified power projects not yet
rejected or pursuing Projects for which a Project
Entity has not yet been formed. The term of each
Project Entity shall be as set forth in its
organizational documents which shall establish a
term at least as long as is required to complete
the development, construction and operation of its
respective Project. The term of the Right of First
Offer for any identified project or Project Entity
shall extend for a term equal to the applicable
Party's right to an equity participation in such
project or Project Entity. Notwithstanding the
foregoing, the term of this Joint Venture shall
terminate upon the bankruptcy or dissolution of
either Party or if no activity is undertaken by
the Joint Venture for a period of 180 days.
Furthermore, any given Project can be terminated
if no activity is undertaken with respect thereto
by the Joint Venture for a period of 120 days
after the approval by the Management Committee for
the commencement of activities.
DBC Guaranty: DBC hereby guarantees the payment of the Initial
Funding Commitment as provided herein.
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Cooperation: Since this Joint Venture Agreement is expected to
continue for some time and both Parties recognize
that the development of Projects can present
unique challenges or require special arrangements,
both Parties will attempt in good faith to
negotiate additional terms or modifications to
this Agreement in response to any such unique
circumstances which are encountered, consistent
with the intent of the Parties in forming this
Joint Venture.
This Agreement has been duly authorized and executed by each Party
and is intended to be a legally binding and enforceable agreement under, and
governed by, the laws of the State of New York, U.S.A. (without regard to
conflicts of law principles).
Dated as of October 31, 1996
DB POWER, INC. NEW WORLD POWER CORPORATION
By: /s/ MICHEL L. MARENGERE By: /s/ JOHN D. KUHNS
---------------------------- ----------------------------
Name: MICHEL L. MARENGERE Name:JOHN D. KUHNS
---------------------- ----------------------
Title:PRESIDENT Title:CHAIRMAN
---------------------- ----------------------
DOMINION BRIDGE CORPORATION
By: /s/ MICHEL L. MARENGERE /s/ VITOLD JORDAN
---------------------------- --------------------------------
Name: MICHEL L. MARENGERE VITOLD JORDAN
---------------------- INTERIM CEO
Title:CHAIRMAN
----------------------
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SCHEDULE A
The New World Power Corporation
POTENTIAL JOINT VENTURE PROJECTS
PROJECT NAME PROJECT DESCRIPTION
------------ -------------------
1 Texas 40 MW wind
2 Woodstock, Minnesota 10 MW wind
3 Rosier, Wisconsin 10 MW wind
4 Manatoulin Island 5 MW wind
5 Tierras Morenas 20 MW wind
6 La Vantosa 20 MW wind
7 Lerma 12 MW Hydro
8 Kerry 15 MW wind
9 Drumlough Hill 5 MW wind
10 Turkey 10 MW wind
11 Village-- St. Paul (Phase 1) 150 KW Hybrid
12 Village-- El Cuy 70 KW Hybrid
13 Village-- St. George 250 KW Hybrid
14 Ontario Hydro 2 10 MW wind
15 Anguilla 3.5 MW wind
16 Village-- Chiraco Summit 500 KW Hybrid
17 China Developments
18 Anderson Falls
19 NWP Technology Vermont Operations
CONVERSION AGREEMENT
CONVERSION AGREEMENT, dated as of October 31, 1996, between DB
POWER, INC., a Delaware corporation ("DBP"), and THE NEW WORLD POWER
CORPORATION, a Delaware corporation ("NWP").
W I T N E S S E T H:
WHEREAS, DBP and NWP have entered into an Joint Venture Agreement
("Joint Venture Agreement") dated as of October 31, 1996, relating to the joint
development of specified power projects whereby each of NWP and DBP will have
such rights and duties as provided for in the Joint Venture Agreement; and
WHEREAS, the Joint Venture Agreement provides for the provision by
DBP of funding for the Joint Venture in an aggregate amount of up to U.S. two
million five hundred thousand dollars (U.S. $2,500,000) (the "Funding
Commitment"), which may be satisfied by the contribution of cash, other property
or services as provided in the Joint Venture Agreement; and
WHEREAS, in order to induce DBP to enter into the Joint Venture
Agreement, NWP has agreed to grant to DBP an Unit Option (as hereinafter
defined), upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and in the Joint Venture Agreement, and for other
good and valuable consideration, the adequacy of which is hereby acknowledged,
the parties hereto, intending to be legally bound hereby, agree as follows:
1. DEFINITIONS.
(a) "Affiliate" shall mean, with respect to any Person,
(i) each Person that, directly or indirectly, owns or controls, whether of
record or beneficially, or as a trustee, guardian or other fiduciary, five
percent or more of the common stock having ordinary voting power in the election
of directors of such Person, (ii) each Person that controls, is controlled by or
is under common control with such Person or any Affiliate of such Person, or
(iii) each of such Person's officers, directors and general partners. For the
purpose of this definition, "control" of a Person shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting securities, by
contract or otherwise. For purposes of this definition, DBP shall not be deemed
to be an Affiliate of NWP or any of the Affiliates of NWP.
(b) "Capital Expenditures" shall mean all payments for
any fixed assets or improvements (whether paid in cash or accrued as
liabilities, and including in all events all amounts expended or capitalized
under capital leases and any expenditures financed by anybody during that
period), including, without limitation, computer software and computer software
licenses, or for replacements, substitutions or additions thereto, that have a
useful life of more
<PAGE>
than one year and which are required to be capitalized under Generally Accepted
Accounting Principles.
(c) "DBP Directors" shall mean the individuals, if any,
designated by DBP pursuant to this Agreement to be elected to the Board of
Directors of NWP.
(d) "Indebtedness" shall mean (i) all indebtedness of
NWP for borrowed money (including, without limitation, reimbursement and all
other obligations with respect to surety bonds, letters of credit and bankers'
acceptances, whether or not matured), but not including accounts payable and
other obligations to trade creditors and normal operating expenses characterized
as liabilities incurred in the ordinary course of business and (ii) all
obligations evidenced by notes, bonds, debentures or similar instruments (except
where such instruments evidence repayment of amounts referred to in the proviso
to the preceding clause).
(e) "Lien" shall mean any mortgage or deed of trust,
pledge, hypothecation, assignment, deposit arrangement, lien, charge, claim,
security interest, easement or encumbrance, preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any lease or title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement
perfecting a security interest under the Uniform Commercial Code).
(f) "Material Adverse Effect" shall mean any material
adverse effect on the business, assets, operations, or financial or other
condition of NWP or any of its Subsidiaries, taken as a whole.
(g) "Person" shall mean any individual, sole
proprietorship, partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability company, institution, public benefit
corporation, entity or government (whether Federal, state, county, city,
municipal or otherwise, including, without limitation, any instrumentality,
division, agency, body or department thereof).
(h) "Project Equity" shall mean the rights and interests
obtained by DBP pursuant to the Joint Venture Agreement by providing funding
pursuant to the Funding Commitment, including without limitation, equity
interests (e.g. share ownership, partnership interest, and the like) in Project
Entities and any rights with respect to Projects which have not been transferred
to Project Entities.
(i) "Subsidiary" shall mean, with respect to any Person,
(a) any corporation of which an aggregate of 50 percent or more of the
outstanding stock (irrespective of whether, at the time, stock of any other
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time, directly or
indirectly, owned legally or beneficially by such Person and/or one or more
Subsidiaries of such Person, and (b) any partnership in which such Person and/or
one or more Subsidiaries of such Person shall have an interest (whether in the
form of voting or participation in profits or capital contribution) of 50
percent or more.
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2. GRANT OF UNIT OPTION. NWP hereby grants to DBP an irrevocable
option (the "Unit Option") to purchase up to 5,000,000 Units (as hereinafter
defined), at a purchase price of $.50 ("Exercise Rate") per Unit, or a total
purchase price of $2,500,000 (the "Purchase Price"). Each Unit shall consist of
one (1) share of common stock of NWP, par value $.01 per share (the "Common
Stock"), and one (1) Common Stock Purchase Warrant (the "Warrants") having such
terms and provisions as contained in the form of Warrant attached hereto as
Exhibit A.
3. TERM OF UNIT OPTION.
3.1. BASIC TERM. Unless earlier redeemed as provided in Section 3.2,
the Unit Option shall be exercisable, in whole or in part, or in part from time
to time, at the sole discretion of DBP, during the term commencing upon the date
of execution of this Agreement and ending upon the fifth anniversary date of
such execution, and shall be void thereafter. While the exercise of the Unit
Option during its term is solely at the discretion of DBP, it is recognized that
DBP will enter into good faith discussions with NWP regarding complete exercise
of the Unit Option as soon as its indebtedness to the Sundial lenders (the
"Sundt Indebtedness") is fully retired and the amount outstanding to the
Flemings group lenders (the "Flemings Indebtedness") is reduced to less than
$2,000,000.
3.2. REDEMPTION. NWP shall have the right to redeem the Unit Option
on fifteen days' written notice at a price of $.01 per Unit, provided that all
of the following conditions are satisfied: (x) the most recent audited financial
statements and any unaudited quarterly financial statements of NWP since the
period covered by the audited financial statements as of the date of the notice
of redemption reflect a positive net income, (y) the average of the closing
prices of the Common Stock during the ninety days preceding the date of notice
equals or exceeds $1.00, and (z) the closing price of the Common Stock on the
date of the notice is at least $1.00 For the purpose of this paragraph, the
closing prices in the previous sentence shall be equitably adjusted to give
effect to stock splits, reclassifications and recapitalizations.
4. EXERCISE OF UNIT OPTION. If DBP wishes to exercise the Unit
Option, it shall do so by giving NWP notice to such effect, specifying the
number of Units it wishes to acquire upon exercise and a place and date not
earlier than one business day nor later than ten business days from the date
such notice is given for the closing of the exercise. If any such closing cannot
be consummated on the date specified by DBP in its notice of election to
exercise the Unit Option because any condition to the exercise has been
satisfied or as a result of any restriction arising under any applicable law or
regulation, the date for such closing shall be on such date within five days
following the satisfaction of all such conditions and the cessation of all such
restrictions as DBP may specify.
To the extent DBP or NWP has terminated the Joint Venture Agreement
in accordance with its terms, then, in such an event, DBP shall only have a
right to exercise the Unit Option in exchange for Project Equity, and not for
cash.
5. PAYMENT AND DELIVERY OF UNITS. At any closing hereunder, DBP
shall have deemed to make payment to NWP of the aggregate purchase price for the
Units to be purchased by delivering an executed agreement evidencing the release
and forfeiture of Project Equity in
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<PAGE>
Project Entities received with respect to funding provided pursuant to the
Funding Commitment, or if sufficient Project Equity to exercise the Unit Option
has not been received to exercise the Unit Option by release of Project Equity
in Project Entities, release of the rights to receive such Project Equity with
respect to funding provided to the date of exercise as provided in the Joint
Venture Agreement. The value of Project Equity for the purpose of this Agreement
shall be the amount of funding provided by DBP with respect to the applicable
Project less any proceeds received by DBP from the sale of interests in the
Project but not any income distribution received with respect to the Project
Equity. Provided that DBP is not in breach of the Joint Venture Agreement, DBP
may exercise the Unit Option in full, notwithstanding that the Funding
Commitment has not be completed in full, by paying the remainder of the Funding
Commitment in cash and transferring any remaining interest in the Joint Venture
to NWP. Upon payment therefor as described in the preceding sentences, NWP shall
deliver to DBP a certificate or certificates representing the Common Stock so
purchased by the Units and a warrant certificate representing the Warrants so
purchased, with such Common Stock and Warrants registered in the name of DBP or
its designee.
6. TRANSFER OF SECURITIES.
6.1. NON-TRANSFERABILITY OF UNIT OPTION. Without the prior written
consent of NWP, the Unit Option shall not be assigned, transferred, pledged or
hypothecated in any way, nor subject to execution, attachment or similar
process. Any attempted assignment, transfer, pledge, hypothecation or other
disposition of the Unit Option contrary to the provisions hereof, and the levy
of an execution, attachment, or similar process upon the Unit Option, shall be
null and void and without effect.
6.2. COMPLIANCE WITH SECURITIES LAWS; RESTRICTIONS ON TRANSFERS.
(a) The holder of the Unit Option, by acceptance hereof,
acknowledges that the Unit Option and any shares of Common Stock and Warrants
acquired upon exercise thereof (the "Securities") are being acquired solely for
the holder's own account and not as a nominee for any other party, and for
investment (unless such Securities are subject to resale pursuant to an
effective prospectus), and that the holder will not offer, sell or otherwise
dispose of the Securities except under circumstances that will not result in a
violation of applicable federal and state securities laws. Upon exercise of the
Unit Option, the holder shall, if requested by NWP, confirm in writing, in a
form satisfactory to NWP, that the Securities are being acquired solely for the
holder's own account and not as a nominee for any other party, for investment
(unless such shares are subject to resale pursuant to an effective prospectus),
and not with a view toward distribution or resale.
(b) The Securities may not be offered for sale or sold, or otherwise
transferred or sold in any transaction which would constitute a sale thereof
within the meaning of the Securities Act of 1933, as amended (the "1933 Act"),
unless (i) such security has been registered for sale under the 1933 Act and
registered or qualified under applicable state securities laws relating to the
offer and sale of securities, or (ii) exemptions from the registration
requirements of the 1933 Act and the registration or qualification requirements
of all such state securities laws are available and NWP shall have received an
opinion of counsel satisfactory to
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<PAGE>
NWP that the proposed sale or other disposition of such securities may be
effected without registration under the 1933 Act and would not result in any
violation of any applicable state securities laws relating to the registration
or qualification of securities for sale, such counsel and such opinion to be
satisfactory to NWP.
(c) All Securities issued upon exercise hereof shall be stamped or
imprinted with a legend in substantially the following form (in addition to any
legend required by state securities laws).
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY APPLICABLE STATE
SECURITIES LAWS. THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF REGISTRATION, OR THE AVAILABILITY OF EXEMPTION
FROM REGISTRATION, UNDER THE SECURITIES ACT OF 1933, AS AMENDED, BASED ON AN
OPINION LETTER OF COUNSEL SATISFACTORY TO THE COMPANY OR A NO-ACTION LETTER FROM
THE SECURITIES AND EXCHANGE COMMISSION."
(d) DBP recognizes that investing in the Unit Option and the
Securities involves a high degree of risk, and that it is in a financial
position to hold the Securities indefinitely and is able to bear the economic
risk and withstand a complete loss of its investment in the Securities. DBP is a
sophisticated investor and is capable of evaluating the merits and risks of
investing in NWP. DBP has had an opportunity to discuss NWP's business,
management and financial affairs with NWP's management, has been given full and
complete access to information concerning NWP, and has utilized such access to
its satisfaction for the purpose of obtaining information or verifying
information and has had the opportunity to inspect NWP's operation. DBP has had
the opportunity to ask questions of, and receive answers from the management of
NWP (and any person acting on its behalf) concerning the Unit Option and the
agreements and transactions contemplated hereby, and to obtain any additional
information as DBP may have requested in making its investment decision.
(e) DBP acknowledges and represents: (i) that it has been afforded
the opportunity to review and is familiar with the quarterly, annual and
periodic reports of NWP and has based its decision to invest solely on the
information contained therein and has not been furnished with any other
literature, prospectus or other information except as included in such reports;
(ii) it has no need for liquidity for its investment in the Securities; (v) it
maintains its domicile and is not a transient or temporary resident at the
address on the books and records of NWP; (iv) it understands that no federal or
state agency has approved or disapproved the Securities or made any finding or
determination as to the fairness of the Securities for investment; and (v) it
recognizes that the Common Stock is presently eligible for trading on the NASDAQ
Stock Market, however, that NWP has made no representations, warranties, or
assurances as to the future trading value of the Common Stock, whether a public
market will continue to exist for the resale of the Common Stock, or whether the
Common Stock can be sold at a price reflective of past trading history at any
time in the future.
5
<PAGE>
7. NEGATIVE COVENANTS.
NWP covenants and agrees that, without DBP's prior written consent,
which consent shall not be unreasonably withheld, from and after the date on
which NWP is no longer subject to the negative covenants in the Sundt
Indebtedness and the Flemings Indebtedness and until such time as the Unit
Option shall be exercised in full or earlier expires:
(b) AMENDMENT OF CERTIFICATE OF INCORPORATION; ANTITAKEOVER
MEASURES. NWP shall not amend its Certificate of incorporation to dilute DBP's
ownership interest or take any action with the purpose or effect of limiting
DBP's ability to fully exercise its rights as a stockholder of NWP, including,
without limitation, the adoption of a stockholder rights plan.
(c) ISSUANCE OF COMMON STOCK AND CONVERTIBLE SECURITIES. NWP shall
not issue any shares of Common Stock or securities into Common Stock (except for
Common Stock to be issued in connection with outstanding options and warrants on
the date of this Agreement and reasonable incentive and non-qualified stock
options granted pursuant to stock option plans in force on the date hereof) (the
"Offered Securities") without first offering DBP the opportunity to buy at least
50% of the Offered Securities as provided herein. NWP shall first notify DBP of
its intention to sell and send to DBP a notice of the terms and conditions under
which it proposes to sell. NWP shall first offer to sell to DBP the Offered
Securities for the price, and on the same terms, as stated in such notice. DBP
shall have 30 days after receiving such offer to accept it. If DBP does not
agree to purchase the Offered Securities within the 30-day period set forth
above, NWP may the Offered Securities on the terms first proposed in the written
offer sent to DBP.
(d) BUSINESS OF NWP. NWP shall not change the nature of its business
or acquire or make advances to any Person whose business is not substantially
related to alternative energy production.
(e) INDEBTEDNESS. Except as approved by the Joint Venture or
otherwise expressly permitted by this subparagraph (e) or for non-recourse
project financing, NWP shall not create, incur, assume or permit to exist any
Indebtedness in excess of 50% of its net assets, whether recourse or
nonrecourse.
(f) TRANSACTIONS WITH AFFILIATES. NWP shall not enter into or be a
party to any transaction with any Affiliates of NWP except in the ordinary
course of and pursuant to the reasonable requirements of NWP's business and upon
fair and reasonable terms that are no less favorable to NWP than would be
obtained at the time of such transaction in a comparable arm's-length
transaction with a Person not an Affiliate of NWP and in any event only if such
transaction is effected in accordance with all applicable laws and regulations
and is not in an amount in excess of $100,000. NWP shall not make any tax
sharing or similar payment to any Affiliate in excess of: (a) its separate
state, local and/or foreign income tax liability; plus (b) its pro rata share of
the consolidated Federal income tax liability as determined under Treas. Reg.
ss.1.1552-1(a)(1); plus (c) its pro rata share of any consolidated, combined or
unitary state, local and/or foreign income tax computed similarly as under
subparagraph (b).
6
<PAGE>
(g) LIENS. Except as approved by the Joint Venture or in connection
with non-recourse project financing, NWP shall not create or permit any Lien on
any of its properties or assets which would have a Material Adverse Effect.
(h) SALES OF ASSETS. NWP shall not sell, transfer, or otherwise
dispose of any assets or properties having a book value greater than $100,000;
PROVIDED, HOWEVER, that the foregoing shall not prohibit (i) the sale of assets
contemplated in the 1996 Business Plan of NWP or in the ordinary course of
business, consistent with past practice; (ii) the sale of surplus or obsolete
equipment and fixtures; and (iii) transfers resulting from any casualty or
condemnation of assets or properties.
(i) CANCELLATION OF INDEBTEDNESS. NWP shall not cancel any claim or
debt owing to it, except for reasonable consideration and in the ordinary course
of business, consistent with past practice.
(j) ERISA. NWP shall not, directly or indirectly, and shall not
permit any ERISA Affiliate to directly or indirectly by reason of an amendment
or amendments to, or the adoption of, one or more Title IV Plans, permit the
present value of all benefit liabilities, as defined in Title IV or ERISA (using
the actuarial assumptions utilized by the PBGC upon termination of a plan). to
exceed the fair market value of assets allocable to such benefits, all
determined as of the most recent valuation date for each such Title IV Plan, by
more than $100,000, or to increase such benefit liabilities to the extent
security must be provided to any Title IV Plan under Section 401(a)(29) of the
Internal Revenue Code. NWP shall not establish or become obligated to any new
welfare benefit plan, as defined in Section 3(1) of ERISA, or modify any
existing welfare benefit plan, for retirees, which would result in the present
value of future liabilities under any such plans to increase by more than
$100,000. NWP shall not establish or become obligated to any new unfunded
Pension Plan, which would result in the present value of future liabilities
under any such plans to increase by more than $100,000.
8. AFFIRMATIVE COVENANTS OF NWP. NWP shall use its best efforts to
maintain the listing of its Common Stock on NASDAQ, including, without
limitation, timely filing of all reports to be filed with the Securities and
Exchange Commission required by the Securities Exchange Act of 1934.
9. RESERVATION AND ISSUANCE OF STOCK.
(a) NWP covenants that during the term that the Unit Option is
exercisable, NWP will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of the Common Stock upon
the exercise of the Unit Option, and from time to time will take all steps
necessary to amend its Certificate of Incorporation to provide sufficient
reserves of shares of Common Stock issuable upon the exercise of the Unit
Option.
(b) NWP further covenants that all Common Stock issuable upon the
due exercise of the Unit Option will be free and clear from all taxes or liens,
charges and security interests created by NWP with respect to the issuance
thereof, however, NWP shall not be obligated or liable for the payment of any
taxes, liens or charges of DBP incurred in connection
7
<PAGE>
with the issuance of the Unit Option or the Securities. NWP agrees that its
issuance of the Unit Option shall constitute full authority to its officers who
are charged with the duty of executing stock certificates to execute and issue
the necessary certificates for the Securities upon the exercise of the Unit
Option. The Common Stock issuable upon the due exercise of the Unit Option,
will, upon issuance in accordance with the terms hereof, be duly authorized,
validly issued, fully paid and non-assessable.
10. COVENANTS REGARDING BOARD REPRESENTATION AND MANAGEMENT.
(a) NWP covenants and agrees that, effective upon and to the extent
of the exercise of the Unit Option, NWP shall cause and take any and all actions
necessary to nominate and appoint to the seven (7) member Board of Directors of
NWP (which number of directors shall not be increased by NWP) as shall be
designated by DBP, as follows:
EXERCISE OF UNIT OPTION NUMBER OF DIRECTORS
----------------------- -------------------
500,000 Units One
1,250,000 Units Two
2,500,000 Units Three
If DBP shall own a majority of the outstanding shares of Common
Stock of NWP, NWP shall cause a majority of the members of the Board of
Directors to be persons nominated by DBP.
(b) DBP covenants and agrees that with respect to the remaining
directors of the Board of NWP (the "Disinterested Directors"), DBP will vote its
shares at any annual or special meeting of shareholders (or any consent
solicitation) for the Disinterested Directors initially designated by NWP and
any person designated by the remaining Disinterested Directors to replace a
Disinterested Director in the event that any such Disinterested Director resigns
or is unable to serve. Without limiting the foregoing, the parties shall enter
into a standstill agreement in the form of Exhibit B hereto.
(c) At all times during the term of the Unit Option, DBP shall have
right to nominate the Chief Executive Officer of NWP, such person to be
reasonably satisfactory to NWP. The Chief Executive Officer shall report
exclusively to the Board of Directors of NWP and shall serve for a term of one
year, subject to removal only for cause. For the purposes of this Agreement,
cause shall mean any act or failure to act (or series or combination thereof) by
the Chief Executive Officer done with the intent to harm in any material respect
the interests of NWP or any Affiliate thereof: the commission by the Chief
Executive Officer of a felony; the perpetration by Chief Executive Officer of a
dishonest act or common law fraud against NWP or any Affiliate thereof; a
grossly negligent act or failure to act (or series or combination thereof) by
Chief Executive Officer detrimental in any material respect to the interests of
NWP or any
8
<PAGE>
Affiliate thereof; or the continued refusal to follow the directives of the
Board of Directors which are consistent with the Chief Executive Officer's
duties and responsibilities.
It is the present intention of DBP to select Gerard Prevost as the
Chief Executive Officer of NWP as soon as the major asset sales contemplated by
the 1996 Business Plan have been completed. NWP acknowledges that Gerard Prevost
is acceptable to it. In the interim, Vitold Jordan shall continue as Chief
Executive Officer of NWP pursuant to the Management Services Agreement between
Dominion Bridge Corporation and NWP.
It is agreed that the Chief Executive Officer of NWP shall have his
salary, bonus and incentive compensation arrangements aligned with the financial
performance and results of NWP, rather than that of DBP or its affiliates.
11. NOTICES.
(a) Whenever the Exercise Rate or number of Securities issuable upon
exercise hereunder shall be adjusted pursuant to Section 12 hereof, NWP shall
issue a certificate signed by its Chief Financial Officer setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated, and the Exercise
Rate and number of shares exercisable hereunder after giving effect to such
adjustment, and shall cause a copy of such certificate to be mailed (by
first-class mail, postage prepaid) to the holder of the Unit Option.
(b) All notices, advices and communications under this Agreement
shall be deemed to have been given, (i) in the case of personal delivery, on the
date of such delivery and (ii) in the case of mailing, on the third business day
following the date of such mailing, addressed as follows:
If to NWP:
The New World Power Corporation
558 Lime Rock Road
Lime Rock Connecticut 06039
Attn: Chief Executive Officer
With a Copy to:
Ilan K. Reich, Esquire
Olsham Grundman Frome & Rosenzweig LLP
505 Park Avenue
New York, New York 10022
and to DBP:
500 Rue Notre Dame
Lachine, Quebec
Canada H8S 2B2
9
<PAGE>
Attn: Chief Executive Officer
With a Copy to:
Joseph P. Galda, Esquire
Buchanan Ingersoll Professional Corporation
Two Logan Square, 12th Floor
18th & Arch Streets
Philadelphia, PA 19103-2771
Either of NWP or DBP may from time to time change the address to
which notices to it are to be mailed hereunder by notice in accordance with the
provisions of this Paragraph 11.
12. AMENDMENTS.
(a) Any term of this Agreement may be amended with the written
consent of the NWP and DBP. Any amendment effected in accordance with this
Section 12 shall be binding upon DBP, each future holder of the Unit Option and
NWP.
(b) No waivers of, or exceptions to, any term, condition or
provision of this Agreement, in any one or more instances, shall be deemed to
be, or construed as, a further or continuing waiver of any such term, condition
or provision.
13. ADJUSTMENTS. The number of Units acquirable hereunder upon
exercise hereunder and the Exercise Rate is subject to automatic adjustment from
time to time upon the occurrence of certain events, as follows:
13.1. REORGANIZATION, MERGER OR SALE OF ASSETS. If at any time while
the Unit Option, or any portion thereof, is outstanding and unexpired there
shall be (i) a reorganization (other than a combination, reclassification,
exchange or subdivision of shares otherwise provided for herein), (ii) a merger
or consolidation of NWP with or into another corporation in which NWP is not the
surviving entity, or a reverse triangular merger in which NWP is the surviving
entity but the shares of NWP's capital stock outstanding immediately prior to
the merger are converted by virtue of the merger into other property, whether in
the form of securities, cash or otherwise, or (iii) a sale or transfer of
substantially all of NWP's properties and assets as, or substantially as, an
entirety to any other person, then, as a part of such reorganization, merger,
consolidation, sale or transfer, lawful provision shall be made so that the
holder of the Unit Option shall thereafter be entitled to receive upon payment
of the Exercise Rate then in effect, the number of shares of stock or other
securities or property of the successor corporation resulting from such
reorganization, merger, consolidation, sale or transfer that a holder of the
shares deliverable upon exercise of the Unit Option would have been entitled to
receive in such reorganization, consolidation, merger, sale or transfer if the
Unit Option had been exercised immediately before such reorganization, merger,
consolidation, sale or transfer, all subject to further adjustment as provided
in this Section 13. The foregoing provisions of this Section 13.1 shall
similarly apply to successive reorganizations, consolidations, mergers, sales
and transfers and to the stock or securities of any other corporation that are
at the time receivable upon the
10
<PAGE>
exercise of the Unit Option. If the per-share consideration payable to DBP
hereof for shares in connection with any such transaction is in a form other
than cash or marketable securities, then the value of such consideration shall
be determined in good faith by NWP's Board of Directors. In all events,
appropriate adjustment (as determined in good faith by NWP's Board of Directors)
shall be made in the application of the provisions of the Unit Option with
respect to the rights and interests of DBP after the transaction, to the end
that the provisions of the Unit Option shall be applicable after that event, as
near as reasonably may be, in relation to any shares or other property
deliverable after that event upon exercise of the Unit Option.
13.2. RECLASSIFICATION. If NWP, at any time while the Unit Option,
or any portion thereof, remains outstanding and unexpired, by reclassification
of securities or otherwise, shall change any of the securities as to which
purchase rights under the Unit Option exist into the same or a different number
of securities of any other class or classes, the Unit Option shall thereafter
represent the right to acquire such number and kind of securities as would have
been issuable as the result of such change with respect to the securities that
were subject to the purchase rights under the Unit Option immediately prior to
such reclassification or other change and the Exercise Rate therefor shall be
appropriately adjusted, all subject to further adjustment as provided in this
Section 13.
13.3. SPLIT, SUBDIVISION OR COMBINATION OF SECURITIES. If NWP at any
time while the Unit Option, or any portion thereof, remains outstanding and
unexpired shall split, subdivide or combine the securities as to which purchase
rights under the Unit Option exist, into a different number of securities of the
same class, the Exercise Rate and the number of shares issuable upon exercise of
the Unit Option shall be proportionately adjusted.
13.4. ADJUSTMENTS FOR DIVIDENDS IN STOCK OR OTHER SECURITIES OR
PROPERTY. If while the Unit Option, or any portion hereof, remains outstanding
and unexpired the holders of the securities as to which purchase rights under
the Unit Option exist at the time shall have received, or, on or after the
record date fixed for the determination of eligible Stockholders, shall have
become entitled to receive, without payment therefor, other or additional stock
or other securities or property (other than cash) of NWP by way of dividend,
then and in each case, the Unit Option shall represent the right to acquire, in
addition to the number of shares of the security receivable upon exercise of the
Unit Option, and without payment of any additional consideration therefor, the
amount of such other or additional stock or other securities or property (other
than cash) of NWP that such holder would hold on the date of such exercise had
it been the holder of record of the security receivable upon exercise of the
Unit Option on the date hereof and had thereafter, during the period from the
date hereof to and including the date of such exercise, retained such shares
and/or all other additional stock, other securities or property available by the
Unit Option as aforesaid during such period.
13.5 NON AVOIDANCE. NWP will not, by any voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by NWP, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 13 and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
DBP of the Unit Option against impairment.
11
<PAGE>
14. REGISTRATION RIGHTS. DBP shall be entitled to the registration
rights set forth in that certain Registration Rights Agreement of even date
herewith by and between NWP and Dominion Bridge.
15. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
16. GOVERNING LAW. The corporate law of the State of Delaware shall
govern all issues and questions concerning the relative rights of NWP and its
stockholders. All other questions concerning the construction, validity,
interpretation and enforceability of this Option Agreement and the exhibits and
schedules hereto shall be governed by, and construed in accordance with, the
laws of the State of Delaware, without giving effect to any choice of law or
conflict of law rules or provisions (whether of the State of Delaware or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.
17. JURISDICTION. DBP and NWP agree to submit to personal
jurisdiction and to waive any objection as to venue in the federal or state
courts in the City of Hartford, Connecticut or New York City. Service of process
on NWP or DBP in any action arising out of or relating to this Agreement shall
be effective if mailed to such party at the address listed in Section 11 hereof.
18. ARBITRATION. If a dispute arises as to interpretation of this
Agreement, it shall be decided finally by three arbitrators in an arbitration
proceeding conforming to the Rules of the American Arbitration Association
applicable to commercial arbitration. The arbitrators shall be appointed as
follows: one by NWP, one by DBP and the third by the said two arbitrators, or,
if they cannot agree, then the third arbitrator shall be appointed by the
American Arbitration Association. The third arbitrator shall be chairman of the
panel and shall be impartial. The arbitration shall take place in Hartford,
Connecticut or New York City. The decision of a majority of the Arbitrators
shall be conclusively binding upon the parties and final, and such decision
shall be enforceable as a judgment in any court of competent jurisdiction. Each
party shall pay the fees and expenses of the arbitrator appointed by it, its
counsel and its witnesses. The parties shall share equally the fees and expenses
of the impartial arbitrator.
19. CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. The
execution, delivery and performance by NWP and DBP of this Agreement: (i) are
within each of NWP's and DBP's corporate power; (ii) have been duly authorized
by all necessary or proper corporate action; (iii) are not in contravention of
either NWP's or DBP's certificate of incorporation or by-laws; (iv) will not
violate in any material respect, any law or regulation, including any and all
Federal and state securities laws, or any order or decree of any court or
governmental instrumentality; and (v) will not, in any material respect,
conflict with or result in the breach or
12
<PAGE>
termination of, or constitute a default under any agreement or other material
instrument to which NWP is a party or by which NWP is bound.
20. SUCCESSORS AND ASSIGNS. This Exercise Agreement shall inure to
the benefit of and be binding on the respective successors, assigns and legal
representatives of DBP and NWP.
21. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
22. HEADINGS. The section headings herein are for convenience only
and shall not affect the construction hereof.
23. SURVIVAL. All representations, warranties and covenants
contained herein shall survive the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby, except as otherwise
provided herein. The termination of the Joint Venture Agreement in accordance
with its terms shall not affect the continued validity and status of this
Agreement.
24. TIME OF THE ESSENCE. The parties agree that time shall be of the
essence in the performance of obligations hereunder.
IN WITNESS WHEREOF, NWP and DBP have caused this Exercise Agreement
to be executed by each of their respective officers thereunto duly authorized.
Dated: October 31, 1996
DB POWER, INC.
By: MICHEL L. MARENGERE
-------------------------------
Michel L. Marengere
President
THE NEW WORLD POWER CORPORATION
By: /S/ JOHN D. KUHNS
-------------------------------
John D. Kuhns
Chairman
/S/ VITOLD JORDAN
-------------------------------
Vitold Jordan
Interim CEO
13
October 31, 1996
The New World Power Corporation
558 Lime Rock Road
Lime Rock, Connecticut 06039
Attention: Board of Directors
Re: STANDSTILL AGREEMENT
Gentlemen:
We are writing this letter to set forth our agreement regarding the
voting of shares of Common stock, $.01 par value per share (the "Common Stock"),
of The New World Power Corporation (the "Company") which may be acquired by us
pursuant to the Conversion Agreement of even date with this letter (the
"Conversion Agreement").
For a period of five years from the date of this letter agreement,
without the consent of the "Disinterested Directors" (as such term is defined in
the Conversion Agreement"), DB Power, Inc. and its affiliates ("Dominion
Bridge") shall not:
(i) Acquire, agree to acquire or make any offer or
proposal to acquire, directly or indirectly, by
purchase, tender or exchange offer or otherwise, any
securities of the Company (or direct or indirect rights
or options to acquire any securities of the Company),
except (i) that Dominion Bridge may acquire, pursuant to
the Conversion Agreement and securities issuable
thereunder, and in privately-negotiated transactions,
shares of Common Stock representing up to 60 percent of
the outstanding shares of Common Stock on a
fully-diluted basis and (ii) securities issued by the
Company by way of stock dividends or other distributions
made on a pro rata basis with respect to securities of
the Company;
(ii) Solicit proxies or consents or become a
"participant" in a "solicitation" (as such terms are
defined in Regulation 14A under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) of proxies
or consents with respect to securities of the Company
with regard to any matter;
(iii) Seek to control or influence the management, Board
of Directors or policies of the Company (except as
contemplated in the Conversion Agreement), or seek to
advise, encourage or influence any person with respect
to the voting of any
<PAGE>
October 31, 1996
Page -2-
securities of Company, or induce, attempt to induce or
in any manner assist any other person in initiating any
stockholder proposal or a tender or exchange offer for
securities of or any change of control of the Company,
or for the purpose of convening a stockholders' meeting
of the Company;
(iv) Acquire or agree to acquire, by purchase or
otherwise, more than 1 percent of any class of equity
securities of any entity which, prior to the time such
party acquires more than 1 percent of such class, is
publicly disclosed (by filing with the Securities and
Exchange Commission or otherwise) or is otherwise known
to be the beneficial owner of more than 5 percent of the
outstanding common stock of the Company;
(v) Deposit any securities of the Company in a voting
trust or subject any securities of the Company to any
arrangement or agreement with respect to the voting of
its securities; or
(vi) Form, join or in any way participate in a
partnership, limited partnership, syndicate or other
"group" (within the meaning of Section 13(d)(3) of the
Exchange Act) or otherwise act in concert with any other
person for the purpose of acquiring, holding, voting or
disposing of the securities of the Company or taking any
other actions restricted or prohibited under clauses (i)
through (v) of this paragraph, or announce an intention
to do, or enter into any arrangement or understanding
with others to do, any of the actions restricted or
prohibited under clauses (i) through (v) of this
paragraph.
In the event that a contested proxy solicitation is made with
respect to any matter to be submitted to the stockholders of the Company at any
annual or special meeting of the stockholders, or any consent solicitation,
Dominion Bridge shall vote the shares of Common Stock owned by it in the same
proportion as all other shares of Common Stock are voted; provided that this
paragraph shall not limit Dominion Bridge's ability to vote in accordance with
its own interest where no third party is conducting a solicitation.
Dominion Bridge shall not purchase any shares of Common Stock in the
open market or from public stockholders generally unless (x) the purchase price
of such shares (proportionately adjusted to give effect to any stock splits or
stock dividends as provided in the Conversion Agreement) shall be at least $1.00
or (y) such purchases are pursuant to a tender offer made to all
<PAGE>
October 31, 1996
Page -3-
stockholders or such purchases are determined reasonably by Dominion Bridge to
be necessary to support the price of the Common Stock on NASDAQ to ensure its
continued listing.
Very truly yours,
DB POWER, INC.
By: /s/ MICHEL L. MARENGERE
-----------------------------------
Authorized Officer
Michel L. Marengere
President
Accepted and agreed as of the date first
written above.
THE NEW WORLD POWER COMPANY
By: /s/ JOHN D. KUHNS
-----------------------------------
Authorized Officer
John D. Kuhns
Chairman
By: /s/ VITOLD JORDAN
-----------------------------------
Vitold Jordan
Interim CEO
