OPTION AGREEMENT
THIS AGREEMENT is made as of the 31st day of March, 2005
AMONG:
GREENWORKS CORPORATION, a company formed pursuant to the laws
of the State of Delaware and having an office for business
located at 111 Howard Street, Suite 108, Mount Arlington, New
Jersey 07856 ("GreenWorks")
AND:
GREENWORKS ENGINEERING CORPORATION, a company formed pursuant
to the laws of the State of Delaware and having an office for
business located at 111 Howard Street, Suite 108, Mount
Arlington, New Jersey 07856 ("GEC")
AND:
ACUTUS CAPITAL, L.L.C., a company formed pursuant to the laws
of the State of New Jersey and having an office for business
located at 411 Hackensack Avenue, Hackensack, New Jersey 07601
("Acutus")
WHEREAS:
A. Acutus owns 1,140,769 shares of GreenWorks common stock (the "Acutus
GreenWorks Shares"); and,
B. Acutus desires to purchase and acquire and GreenWorks and GEC desire
to sell, convey, assign and transfer, or cause to be sold, conveyed,
assigned and transferred, to Acutus, an option to acquire certain
shares of common stock in GEC pursuant to this Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the
premises and the mutual covenants, agreements, representations and
warranties contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
THE OPTION
Section 1.1 Option Purchase and Sale
GreenWorks and GEC hereby grant to Acutus an option (the "Option") to
acquire 1,000,000 shares of GreenWorks Engineering Corporation ("GEC")
common stock in return for the Acutus GreenWorks Shares upon the request of
and in the sole discretion of Acutus.
In the event of the death or incapacity of Kevin Kreisler, Acutus shall, at
its option, either (a) acquire 1,575,000 shares of GEC common stock in
return for the Acutus GreenWorks Shares or (b) receive an adjustment to its
aggregate equity holdings in the Company such that Acutus shall have 4.99%
of the issued and outstanding common stock in the Company, with moving
forward anti-dilution rights up to December 31, 2006
Section 1.2 Term of Option
Subject to the terms and conditions set forth herein, this Option shall be
exercisable during a term of ten (10) years commencing on the date hereof.
Section 1.3 Adjustment
Until and unless the Option granted hereby is exercised, Acutus' equity
ownership in GreenWorks shall be adjusted quarterly such that Seller's
holdings in GreenWorks shall be and remain equal to four point nine nine
percent (4.99%) of the issued and outstanding common stock of GreenWorks
until December 31, 2006, at which point these Adjustment Rights shall
lapse.
Section 1.4 Reservation of Stock
GreenWorks and GEC covenant that during the term this Option is
exercisable, GreenWorks and GEC will reserve from their authorized and
unissued common stock a sufficient number of shares to provide for the
issuance of common stock upon the exercise of this Option and, from time to
time, will take all steps necessary to amend its Certificate of
Incorporation (the "Certificate") to provide sufficient reserves of shares
of common stock issuable upon exercise of the Option. GreenWorks and GEC
agree that this Option shall constitute full authority to its officers and
agents, including transfer agents, who are charged with the duty of
executing stock certificates to execute and issue the necessary
certificates for shares of common stock upon the exercise of this Option.
ARTICLE II
EXERCISE OF OPTION
Section 2.1 Exercise
(a) Manner of Exercise. The rights represented by this Option are
exercisable by Acutus, in their entirety or not at all, from time to time,
during the term hereof as described above, by the surrender of this Option
and the Notice of Exercise annexed hereto as Exhibit G duly completed and
executed on behalf of Acutus, at the office of GreenWorks (or such other
office or agency of the Company as it may designate by notice in writing to
Acutus at the address of Acutus as noted herein), upon payment of the
Exercise Shares.
(b) Time of Exercise. This Option shall be deemed to have been
exercised immediately prior to the close of business on the date of its
surrender as herein. As promptly as practicable on or after such date and in
any event within ten (10) days thereafter, GreenWorks and/or GEC at its
and/or their expense shall issue and deliver to Acutus a certificate or
certificates for the number of shares issuable upon such exercise.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACUTUS
Acutus represents and warrants that as of the date hereof and as of the
Closing Date, the following representations shall be true and correct and
in full force and effect:
Section 3.1 Organization and Good Standing
Acutus is a limited liability company duly organized, validly existing and
in good standing under the laws of the State of New Jersey. Acutus is duly
qualified to do business.
Section 3.2 Authority, Approvals and Consents
Acutus has the corporate power and authority to enter into this Agreement
and to perform its obligations hereunder. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized and validly approved by the
managing member of Acutus and no other corporate or other proceedings on
the part of Acutus are necessary to authorize and approve this Agreement
and the transactions contemplated hereby. Acutus hereby expressly
represents that it has fully and properly complied with all aspects of
applicable New Jersey corporate law in entering into this Agreement and for
consummating the transactions contemplated hereunder. This Agreement has
been duly executed and delivered by, and constitutes a valid and binding
obligation of Acutus, enforceable against Acutus in accordance with its
terms.
Section 3.3 Consents and Approvals
No consent, approval, or authorization of, or declaration, filing, or
registration with, any Governmental Entity will be required to be made or
obtained by Acutus in connection with the execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated hereby.
Section 3.4 No Violations
Neither the execution, delivery, or performance of this Agreement by
Acutus, nor the consummation by Acutus of the transactions contemplated
hereby, nor compliance by Acutus with any of the provisions hereof will
(a) conflict with or result in any breach of any provisions of the
certificate of formation of the Acutus, (b) result in a violation, or
breach of, or constitute (with or without due notice or lapse of time) a
default (or give rise to any right of termination, cancellation, vesting,
payment, exercise, acceleration, suspension or revocation) under any of the
terms, conditions or provisions of any contract, agreement or any material
note, bond, mortgage, deed of trust, security interest, indenture, license,
contract, agreement, plan or other instrument or obligation to which Acutus
is a party or (c) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Acutus, except in the case of clauses (b)
or (c) for violations, breaches, defaults, terminations, cancellations,
accelerations, creations, impositions, suspensions or revocations that
would not be reasonably likely to have a Material Adverse Effect.
Section 3.5 Binding Nature
This Agreement shall be, when duly executed and delivered, a legally
binding obligation of the GreenShift enforceable in accordance with its
terms.
Section 3.6 Non-Merger and Survival
The representations and warranties of Acutus contained herein will be true
at and as of Closing in all material respects as though such
representations and warranties were made as of such time. Notwithstanding
the completion of the transactions contemplated hereby, the waiver of any
condition contained herein (unless such waiver expressly releases a party
from any such representation or warranty) or any investigation made by
Seller, the representations and warranties of Acutus shall survive the
Closing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Seller represents and warrants that as of the date hereof and as of the
Closing Date, the following representations shall be true and correct and
in full force and effect:
Section 4.1 Organization and Good Standing
GreenWorks and GEC are duly organized, validly existing and in good
standing under the laws of the State of Delaware. Seller and its
subsidiaries are duly qualified to do business and is in good standing as
a foreign corporation in each jurisdiction where qualification as a foreign
corporation or otherwise is required to conduct its business.
Section 4.2 Authority, Approvals and Consents
Seller has the corporate power and authority to enter into this Agreement
and to perform their obligations hereunder. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized and validly approved by the
Board of Directors of Seller and by their respective stockholders and no
other corporate or other proceedings on the part of Seller are necessary
to authorize and approve this Agreement and the transactions contemplated
hereby. Seller hereby expressly represents that they have fully and
properly complied with all aspects of applicable Delaware corporate law in
entering into this Agreement and for consummating the transactions
contemplated hereunder. This Agreement has been duly executed and
delivered by, and constitutes a valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms.
Section 4.3 Consents and Approvals
No consent, approval, or authorization of, or declaration, filing, or
registration with, any Governmental Entity will be required to be made or
obtained by Seller in connection with the execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated hereby.
Section 4.4 No Violations
Neither the execution, delivery, or performance of this Agreement by
Seller, nor the consummation by GreenWorks of the transactions
contemplated hereby, nor compliance by Seller with any of the provisions
hereof will (a) conflict with or result in any breach of any provisions of
the certificate of incorporation or bylaws of the Seller, (b) result in a
violation, or breach of, or constitute (with or without due notice or lapse
of time) a default (or give rise to any right of termination, cancellation,
vesting, payment, exercise, acceleration, suspension or revocation) under
any of the terms, conditions or provisions of any contract, agreement or
any material note, bond, mortgage, deed of trust, security interest,
indenture, license, contract, agreement, plan or other instrument or
obligation to which Seller is a party or (c) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Seller,
except in the case of clauses (b) or (c) for violations, breaches,
defaults, terminations, cancellations, accelerations, creations,
impositions, suspensions or revocations that would not be reasonably likely
to have a Material Adverse Effect.
Section 4.5 Binding Nature
This Agreement shall be, when duly executed and delivered, a legally
binding obligation of the Seller enforceable in accordance with its terms.
Section 4.6 Non-Merger and Survival
The representations and warranties of Seller contained herein will be true
at and as of Closing in all material respects as though such
representations and warranties were made as of such time. Notwithstanding
the completion of the transactions contemplated hereby, the waiver of any
condition contained herein (unless such waiver expressly releases a party
from any such representation or warranty) or any investigation made by
Purchaser, the representations and warranties of Seller shall survive the
Closing.
ARTICLE V
GENERAL PROVISIONS
Section 5.1 Expenses
Each of the Parties hereto shall pay its own fees and expenses (including
the fees of any attorneys, accountants, or others engaged by such Party) in
connection with this Agreement and the transactions contemplated hereby
whether or not the transactions contemplated hereby are consummated.
Section 5.2 Paragraph Headings and Language Interpretations
The paragraph headings contained herein are for reference only and shall
not be considered substantive provisions of this Agreement. The use of a
singular or plural form shall include the other form, and the use of a
masculine, feminine or neuter gender shall include the other genders, as
applicable.
Section 5.3 Notices
All notices, claims, demands, and other communications hereunder shall be
in writing and shall be deemed given upon (a) confirmation of receipt of a
facsimile transmission, (b) confirmed delivery by a standard overnight
carrier or when delivered by hand, or (c) the expiration of five (5)
business days after the day when mailed by registered or certified mail
(postage prepaid, return receipt requested), addressed to the respective
parties at the following addresses (or such other address for a party as
shall be specified by like notice):
(a) If to the Purchaser, to:
Acutus Capital, L.L.C.
411 Hackensack Avenue
Hackensack, New Jersey 07601
Attn: James Sonageri, Managing Member
and,
(b) If to the Seller, to:
GreenWorks Corporation
111 Howard Street, Suite 108
Mount Arlington, New Jersey 07856
Attn: James Grainer, President and Chief Financial Officer
Section 5.4 Assignment
This Option and all of the provisions hereof shall be binding upon and
inure to the benefit of the Parties hereto and their respective successors
and permitted assigns; provided, however, that neither this Option nor any
of the rights, interests, or obligations hereunder may be assigned by any
of the Parties hereto without the prior written consent of the other Party.
Section 6.5 Entire Agreement
This Agreement (including the Schedules and any Exhibits hereto) embodies
the entire agreement and understanding of the Parties with respect to the
transactions contemplated hereby and supersedes all prior written or oral
commitments, arrangements, understandings and agreements with respect
thereto. There are no restrictions, agreements, promises, warranties,
covenants or undertakings with respect to the transactions contemplated
hereby other than those expressly sat forth herein.
Section 6.6 Modifications, Amendments and Waivers
At any time prior to the Closing, to the extent permitted by law, (i)
Purchaser and Seller may, by written agreement, modify, amend or supplement
any term or provision of this Agreement and (ii) any term or provision of
this Agreement may be waived in writing by the Party which is entitled to
the benefits thereof.
Section 6.7 Counterparts
This Agreement may be executed in two (2) or more counterparts, all of
which shall be considered one (1) and the same agreement and each of which
shall be deemed an original. Each Party shall receive a fully signed copy
of this Agreement.
Section 6.8 Governing Law
This Agreement shall be governed by the laws of the State of New Jersey and
the United States of America (regardless of the laws that might be
applicable under principles of conflicts of law or international law) as to
all matters including, but not limited to, matters of validity,
construction, effect and performance.
Section 6.9 Accounting Terms
All accounting terms used herein which are not expressly defined in this
Agreement shall have the respective meanings given to them in accordance
with generally accepted accounting principles on the date hereof.
Section 6.10 Severability
If any one (1) or more of provisions of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity, legality or enforceability
of the remaining provisions of this Agreement shall not be affected
thereby. To the extent permitted by applicable law, each party waives any
provision of law which renders any provision of this Agreement invalid,
illegal or unenforceable in any respect.
Section 6.11 Specific Performance
Purchaser and Seller recognize that any breach of the terms this Agreement
may give rise to irreparable harm for which money damages would not be an
adequate remedy, and accordingly agree that any non-breaching party shall
be entitled to enforce the terms of this Agreement by a decree of specific
performance without the necessity of proving the inadequacy as a remedy of
money damages. If specific performance is elected as a remedy hereunder,
the electing Party shall be deemed to have waive any claim for other
damages, except reasonable attorneys fees, costs of suit and expenses
related to the enforcement of specific performance.
Section 6.12 Consent to Jurisdiction
Seller and Purchaser hereby submit and consent to the exclusive venue and
jurisdiction of the Superior Court of the State of New Jersey, County of
Bergen, in respect of the interpretation and enforcement of the provisions
of this Agreement, and hereby waive and agree not to assert as a defense in
any action, suit or proceeding for the interpretation or enforcement of
this Agreement, that it is not subject thereto or that such action, suit or
proceeding may not be brought or is not maintainable in said courts or that
this Agreement may not be enforced in or by said courts or that its
property is exempt or immune from execution, that the suit, action or
proceeding is brought in an inconvenient forum, or that the venue of the
suit, action or proceeding is improper. Seller and Purchaser agree that
service of process may be made in any manner permitted by the laws of the
State of New Jersey or the federal laws of the United States in any such
action, suit or proceeding against Seller or Purchaser with respect to this
Agreement. Service of process upon such authorized agent shall be
deemed, in every respect, effective service of process upon Seller or
Purchaser and shall remain effective until Seller or Purchaser shall
appoint another agent for service or process acceptable to the other
Party. Seller and Purchaser agree that final judgment (with all right of
appeal having expired or been waived) against it in any such action, suit
or proceeding shall be conclusive and that the other Party is entitled to
enforce such judgment in any other jurisdiction by suit on the judgment, a
certified copy of which shall be conclusive evidence of the fact and amount
of indebtedness arising from such judgment.
Section 6.13 THE PARTIES ACKNOWLEDGE THAT THEY HAVE EACH RECEIVED A
COPY OF THIS AGREEMENT, THAT THEY HAVE READ AND FULLY UNDERSTAND THIS
AGREEMENT, AND THAT THEY HAVE BEEN ADVISED TO SEEK AND HAVE EITHER SOUGHT
OR WAIVED INDEPENDENT LEGAL COUNSEL OF THEIR CHOICE TO AID IN THEIR
UNDERSTANDING HEREOF.
Section 6.14 Binding Effect
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, successors, legal
representatives and assigns.
Section 6.15 Parties in Interest
Nothing in this Agreement, express or implied, is intended to confer upon
any Person not a Party to this Agreement any rights or remedies of any
nature whatsoever under or by reason of this Agreement.
Section 6.16 Furnishing Information; Announcements
Sellers shall not issue any press releases or otherwise make any statement,
public or otherwise, to any third party with respect to the transactions
contemplated hereby without the prior written consent of Purchaser. Any
notification of Sellers' employees of the transactions contemplated
hereby shall be subject to prior approval by Purchaser. Any notices or
other information to be disseminated shall be submitted to Purchaser prior
to distribution or dissemination.
Section 6.17 Force Majeure
Neither Party hereto shall be liable for failure to perform any obligation
under this Agreement if such failure to perform is caused by the occurrence
of any contingency beyond the reasonable control of such Party, including,
without limitation, fire, flood, strike or other industrial disturbance,
failure of transport, accident, war, riot, insurrection, act of God or
order of governmental agency or act of terrorism. Performance shall be
resumed as soon as is possible after cessation of such cause. However, if
such inability to perform continues for more than Ninety (90) days, the
other Party may terminate this Agreement without penalty and without
further notice.
IN WITNESS WHEREOF the parties have executed this Agreement effective as of
the day and year first above written.
GREENWORKS CORPORATION
By: /s/James Grainer
---------------------------------------
JAMES GRAINER
President and Chief Financial Officer
GREENWORKS ENGINEERING CORPORATION
By: /s/ James Grainer
---------------------------------------
JAMES GRAINER
President and Chief Financial Officer
ACUTUS CAPITAL, L.L.C.
By: /s/ James Sonageri
---------------------------------------
JAMES SONAGERI
Managing Member
EXHIBIT G NOTICE OF EXERCISE
TO: GREENWORKS CORPORATION
GREENWORKS ENGINEERING CORPORATION
The undersigned hereby elects to exercise the attached Option, and tenders
herewith payment of the Acutus GreenWorks Shares with the attached duly
executed Stock Assignment, medallion signature guaranteed. Please issue a
certificate or certificates representing the below indicated shares
pursuant to the terms and conditions of the attached Option (check one item
below):
____ 1,000,000 common shares of GreenWorks Engineering Corporation
("GEC") or,
____ 1,575,000 common shares of GEC.
ACUTUS CAPITAL, L.L.C.
By: _______________________
JAMES SONAGERI
Managing Member