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
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
"Xxxxx 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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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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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.
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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 Xxxxx
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).
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(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
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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
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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 Xxxxxx Xxxxxxx 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 Xxxxxx Xxxxxxx
is acceptable to it. In the interim, Xxxxxx Xxxxxx 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
000 Xxxx Xxxx Xxxx
Xxxx Xxxx Xxxxxxxxxxx 00000
Attn: Chief Executive Officer
With a Copy to:
Xxxx X. Xxxxx, Esquire
Olsham Xxxxxxxx Frome & Xxxxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
and to DBP:
000 Xxx Xxxxx Xxxx
Xxxxxxx, Xxxxxx
Xxxxxx X0X 0X0
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Attn: Chief Executive Officer
With a Copy to:
Xxxxxx X. Xxxxx, Esquire
Xxxxxxxx Ingersoll Professional Corporation
Two Xxxxx Square, 00xx Xxxxx
00xx & Xxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000-0000
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
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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.
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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
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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: XXXXXX X. XXXXXXXXX
-------------------------------
Xxxxxx X. Xxxxxxxxx
President
THE NEW WORLD POWER CORPORATION
By: /S/ XXXX X. XXXXX
-------------------------------
Xxxx X. Xxxxx
Chairman
/S/ XXXXXX XXXXXX
-------------------------------
Xxxxxx Xxxxxx
Interim CEO
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