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 qualif
