EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
BPK RESOURCES, INC.
BPK RESOURCES ACQUISITION CORP.
GRAPHITE TECHNOLOGY GROUP, INC.
XXXXX XXXXXX
AND
XXXXX X. OLIVE
Dated March 9, 2006
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER...................................................... 1
1.1 The Merger...................................................... 1
1.2 Conversion of Graphite Shares................................... 2
1.3 Dissenters' Rights.............................................. 5
1.4 Board and Shareholder Approval.................................. 5
1.5 Subsequent Actions.............................................. 6
ARTICLE II THE CLOSING..................................................... 6
2.1 Closing Date.................................................... 6
2.2 Closing Merger.................................................. 6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF GRAPHITE AND THE
PRINCIPAL SHAREHOLDERS.......................................... 8
3.1 Organization and Qualification.................................. 8
3.2 Authorization; Validity and Effect of Agreement................. 9
3.3 Company Subsidiaries............................................ 9
3.4 No Conflict; Required Filings and Consents...................... 10
3.5 Capitalization; Ownership of Graphite Shares.................... 10
3.6 Financial Statements............................................ 11
3.7 Properties and Assets........................................... 11
3.8 Intellectual Property........................................... 12
3.9 No Undisclosed Liabilities...................................... 13
3.10 Related Party Transactions...................................... 13
3.11 Litigation...................................................... 14
3.12 Taxes........................................................... 14
3.13 Insurance....................................................... 14
3.14 Compliance...................................................... 15
3.15 Material Contracts.............................................. 15
3.16 Labor Relations................................................. 15
3.17 Environmental Matters........................................... 16
3.18 Absence of Certain Changes or Events............................ 16
3.19 Investment Intent............................................... 17
3.20 Employee Benefit Matters........................................ 17
3.21 Brokers and Finders Fees........................................ 18
3.22 Company Information............................................. 18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BPK AND MERGER SUB............ 19
4.1 Organization and Qualification.................................. 19
4.2 Authorization; Validity and Effect of Agreement................. 19
4.3 No Conflict; Required Filings and Consents...................... 20
4.4 Capitalization.................................................. 20
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4.5 SEC Reports and Financial Statements............................ 21
4.6 Transaction Fees................................................ 21
4.7 No Undisclosed Liabilities...................................... 21
ARTICLE V CERTAIN COVENANTS............................................... 21
5.1 Conduct of Business by Graphite and the Subsidiaries............ 21
5.2 Access to Information........................................... 23
5.3 Confidentiality; No Solicitation................................ 23
5.4 Best Efforts; Consents.......................................... 24
5.5 Further Assurances.............................................. 24
5.6 Public Announcements............................................ 25
5.7 Notification of Certain Matters................................. 25
5.8 Prohibition on Trading in Company Securities.................... 25
5.9 [Intentionally Omitted]......................................... 25
5.10 Investment Letters.............................................. 25
5.11 Audited Financial Statements.................................... 26
5.12 Additional Company Information................................. 26
5.13 Graphite Options and Warrants................................... 26
5.14 BPK and Graphite Capitalization................................. 26
5.15 Registration Rights............................................. 27
5.16 Board of Directors.............................................. 27
5.17 [Intentionally Omitted]......................................... 27
5.18 Lock-Up......................................................... 27
ARTICLE VI CONDITIONS TO CONSUMMATION OF THE MERGER........................ 27
6.1 Conditions to Obligations of Graphite and the Principal
Shareholders.................................................... 27
6.2 Conditions to Obligations of BPK and Merger Sub................. 28
6.3 Other Conditions to Obligations of Graphite, the Principal
Shareholders, BPK and Merger Sub................................ 29
ARTICLE VII................................................................. 30
ARTICLE VIII................................................................ 32
TERMINATION................................................................. 32
8.1 Termination..................................................... 32
8.2 Procedure and Effect of Termination............................. 33
ARTICLE IX MISCELLANEOUS................................................... 34
9.1 Entire Agreement................................................ 34
9.2 Amendment and Modifications..................................... 34
9.3 Extensions and Waivers.......................................... 34
9.4 Successors and Assigns.......................................... 34
9.5 Survival of Representations, Warranties and Covenants........... 34
9.6 Headings; Definitions........................................... 35
9.7 Severability.................................................... 35
9.8 Specific Performance............................................ 35
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9.9 Expenses........................................................ 35
9.10 Notices......................................................... 35
9.11 Governing Law................................................... 36
9.12 Arbitration..................................................... 36
9.13 Counterparts.................................................... 36
9.14 Certain Definitions............................................. 36
Exhibits
--------
Appendix A Series D Convertible Preferred Stock Certificate of
Designation
Appendix B Series E Convertible Preferred Stock Certificate of
Designation
Exhibit 3.1 Articles of Incorporation and Bylaws of Graphite
Exhibit 3.3 Articles of Incorporation and Bylaws of Subsidiaries
Exhibit 3.6 GAAP Financial Statements
Exhibit 3.22 Business Plan
Exhibit 5.10 Form of Investment Letter
Exhibit 5.15 Registration Rights Provisions
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Schedules
---------
Schedule I Allocation of Merger Consideration to Graphite Shareholders
Schedule 3.3 Subsidiaries of Graphite
Schedule 3.5(a) Graphite Shareholders and Capitalization of Graphite
Schedule 3.5(b) Subsidiaries and Capitalization of Subsidiaries
Schedule 3.7 Instruments Related to Real Property
Schedule 3.8 Exceptions to Ownership of Intellectual Property
Schedule 3.9 Undisclosed Liabilities
Schedule 3.10 Related Party Transactions
Schedule 3.11 Litigation
Schedule 3.13 Insurance
Schedule 3.14 Exceptions to Compliance With Governmental Authorities
Schedule 3.15 Material Contracts
Schedule 3.16 Labor Relations
Schedule 3.18 Certain Changes or Events
Schedule 3.23 Real Property
Schedule 5.1 Exceptions to Conduct of Business in Ordinary Course
Schedule 5.18 Exceptions to the Lock-Up Restrictions
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), is made and entered
into this 9th day of March, 2006, by and among BPK RESOURCES, INC., a Nevada
corporation ("BPK"), BPK RESOURCES ACQUISITION CORP., a Delaware corporation
("Merger Sub"), GRAPHITE TECHNOLOGY GROUP, INC., a Delaware corporation
("Graphite"), XXXXX XXXXXX and XXXXX X. OLIVE, the principal shareholders of
Graphite (collectively, the "Principal Shareholders").
Recitals
WHEREAS, the Boards of Directors of BPK, Merger Sub and Graphite have
approved, and deem it advisable and in the best interests of their respective
companies and stockholders to consummate a merger of Merger Sub with and into
Graphite (the "Merger"), with Graphite as the surviving company in the Merger
upon the terms and subject to the conditions set forth in this Agreement; and
WHEREAS, pursuant to the terms of this Agreement, upon consummation of the
Merger, (i) each issued and outstanding share (individually, a "Graphite Common
Share"; and collectively, the "Graphite Common Shares") of common stock, $.001
par value per share, of Graphite ("Graphite Common Stock"), shall represent the
right to receive shares of common stock, $.001 par value per share, of BPK (the
"BPK Common Stock") and shares of Series D Convertible Preferred Stock, $.001
par value per share, of BPK (the "Series D Convertible Preferred Stock") and
(ii) each issued and outstanding share of (A) Series A Preferred Stock, $.001
par value per share, of Graphite (individually, a "Series A Preferred Share";
and collectively, the "Series A Preferred Shares"), and (B) Series B Preferred
Stock, $.001 par value per share, of Graphite (individually, a "Series B
Preferred Share"; and collectively, the "Series B Preferred Shares"), shall
represent the right to receive shares of Series E Convertible Preferred Stock,
$.001 par value per share, of BPK (the "Series E Convertible Preferred Stock").
The Series A Preferred Shares and the Series B Preferred Shares shall be
referred to herein collectively, as the "Graphite Preferred Shares". Each
Graphite Common Share and Graphite Preferred Share shall be referred herein
individually as a "Graphite Share"; and collectively, as the "Graphite Shares".
NOW, THEREFORE, in consideration of the foregoing premises and
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger.
(a) The Merger. At the Effective Time (as defined in Section
1.1(b)), the Merger shall be effected and Merger Sub shall be merged with and
into Graphite, upon the terms and subject to the conditions set forth in this
Agreement and in accordance with the Delaware General Corporation Law ("DGCL"),
whereupon the separate corporate existence of Merger Sub shall cease and
Graphite shall continue as the surviving company in the Merger (the "Surviving
Company").
(b) Effective Time. On the Closing Date (as defined in Section 2.1),
the parties shall file certificates of merger ("Certificates of Merger") with
the Secretary of State of the State of Delaware and make all other filings or
recordings required by the DGCL in connection with the Merger. The Merger shall
become effective at such time as the Certificates of Merger are duly filed and
accepted with the Secretary of State of the State of Delaware, or at such later
time as BPK, Merger Sub and Graphite shall agree and specify in the Certificates
of Merger (the time the Merger becomes effective being the "Effective Time").
(c) Effects of the Merger. At the Effective Time, the Merger shall
have the effects set forth in this Agreement and the DGCL. Without limiting the
foregoing, and subject thereto, at the Effective Time, all of the property,
rights, powers, privileges and franchises of Graphite and Merger Sub shall be
vested in the Surviving Company, and all of the debts, liabilities and duties of
Graphite and Merger Sub shall become the debts, liabilities and duties of the
Surviving Company.
(d) Certificate of Incorporation and Bylaws.
(i) The certificate of incorporation of Graphite as in effect
immediately prior to the Effective Time shall be the certificate of
incorporation of the Surviving Company until thereafter amended as provided
therein or by applicable law.
(ii) The bylaws of Graphite as in effect immediately prior to
the Effective Time shall be the bylaws of the Surviving Company until thereafter
amended as provided therein or by applicable law.
(e) Officers and Directors. The officers and directors of Graphite
immediately prior to the Effective Time shall be the officers and directors of
the Surviving Company, and shall hold office in accordance with the certificate
of incorporation and bylaws of the Surviving Company until the earlier of the
applicable officer's or director's resignation or removal or until his or her
respective successor is duly elected and qualified, as the case may be.
1.2 Conversion of Graphite Shares.
(a) Conversion of Graphite Shares. At the Effective Time, by virtue
of the Merger and without any action on the part of the shareholders of Graphite
("Graphite Shareholders"):
(i) Merger Sub Common Stock. Each issued and outstanding share
of common stock, $.001 par value per share, of Merger Sub shall be converted
into and become one (1) validly issued, fully paid and non-assessable share of
common stock, $.001 par value per share, in the Surviving Company;
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(ii) Cancellation of Treasury Securities and BPK-Owned
Securities. All Graphite Shares that are owned by Graphite as treasury
securities, all Graphite Shares owned by any subsidiary of Graphite, and any
Graphite Shares owned by BPK, Merger Sub or any other wholly-owned subsidiary of
BPK, shall be canceled and retired and shall cease to exist and no consideration
shall be delivered in exchange therefor; and
(iii) Conversion of Graphite Common Shares. All of the
Graphite Common Shares issued and outstanding at the Effective Time shall be
converted into the right to receive: (A) an aggregate of Forty Million
(40,000,000) newly issued shares of BPK Common Stock (the "BPK Common Shares");
and (B) an aggregate of Five Hundred Eighty-Five Thousand (585,000) newly issued
shares of Series D Convertible Preferred Stock (the "BPK Series D Preferred
Shares"), which shares shall initially be convertible into an aggregate of
Fifty-Eight Million Five Hundred Thousand (58,500,000) shares of BPK Common
Stock. All such Graphite Common Shares, when so converted, shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such Graphite Common
Share shall cease to have any rights with respect thereto, except the right to
receive BPK Common Shares and BPK Series D Preferred Shares therefor upon the
surrender of such certificate in accordance with Section 1.2(b) hereof, without
interest or dividends.
(iv) Conversion of Graphite Preferred Shares. Each Graphite
Preferred Share issued and outstanding at the Effective Time shall be converted
into the right to receive one (1) share of Series E Convertible Preferred Stock
for an aggregate of Fourteen Thousand Five Hundred Forty-Six (14,546) newly
issued shares of Series E Convertible Preferred Stock (the "BPK Series E
Preferred Shares"; and collectively, with the BPK Series D Preferred Shares, the
"BPK Preferred Shares"), which shares shall initially be convertible into an
aggregate of Three Million Five Hundred (3,500,000) shares of BPK Common Stock.
All such Graphite Preferred Shares, when so converted, shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each holder of a certificate representing any such Graphite Preferred
Share shall cease to have any rights with respect thereto, except the right to
receive BPK Series E Preferred Shares therefor upon the surrender of such
certificate in accordance with Section 1.2(b) hereof, without interest or
dividends.
(v) Terms of BPK Preferred Stock. The Series D Convertible
Preferred Stock shall have the terms and designations set forth in the
Certificate of Designation attached hereto as Appendix A. The Series E
Convertible Preferred Stock shall have the terms and designations set forth in
the Certificate of Designation attached hereto as Appendix B.
(b) Exchange of Certificates. Each Graphite Shareholder shall
deliver to BPK any certificate evidencing a Graphite Common Share and receive in
exchange therefor: (i) that number of BPK Common Shares equal to the product of
Forty Million (40,000,000) and a fraction, the numerator of which is the number
of Graphite Shares held by such Graphite Shareholder at the Effective Time and
the denominator of which is the total number of Graphite Shares issued and
outstanding at the Effective Time (such fraction, the "Graphite Ownership
Percentage"); and (ii) that number of BPK Series D Preferred Shares equal to the
product of Five Hundred Eighty-Five Thousand (585,000) and the Graphite
Ownership Percentage. Each Graphite Shareholder holding shares of Graphite
Preferred Stock shall deliver to BPK any certificate evidencing a Graphite
Preferred Share and receive in exchange therefor one (1) share of Series E
Convertible Preferred Stock for each Graphite Preferred Share. If, after the
Effective Time, certificates for the Graphite Shares that were outstanding
immediately prior to the Effective Time shall be delivered to Graphite or BPK,
such Graphite Shares shall be exchanged for (x) BPK Common Shares and BPK Series
D Preferred Shares to be received in connection with the Merger as provided in
Section 1.2(a)(iii) or (y) BPK Series E Preferred Shares to be received in
connection with the Merger as provided in Section 1.2(a)(iv).
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(c) Distributions With Respect to Unexchanged Shares. No interest or
dividends or other distributions with respect to BPK Common Shares or BPK
Preferred Shares with a record date after the Effective Time shall be paid to
the holder of any unsurrendered certificate with respect to the Graphite Shares
represented thereby, and no cash payment in lieu of fractional Graphite Shares
shall be paid to any such holder.
(d) No Further Ownership Rights in Graphite Shares. From and after
the Effective Time, the holders of certificates evidencing ownership of Graphite
Shares outstanding immediately prior to the Effective Time shall cease to have
any rights with respect to such Graphite Shares, except as otherwise provided
for herein or by applicable law.
(e) No Fractional Shares. No certificates or scrip representing
fractional BPK Common Shares or BPK Preferred Shares shall be issued upon the
surrender for exchange of certificates representing Graphite Shares, no dividend
or distribution of BPK shall relate to such fractional interests and such
fractional interests will not entitle the owner thereof to vote or to any rights
of a shareholder of BPK. Each Graphite Shareholder who would otherwise have been
entitled to receive a fraction of a BPK Common Share or BPK Preferred Share
(after taking into account all certificates delivered by such Graphite
Shareholder) shall receive that number of BPK Common Shares or BPK Preferred
Shares that such holder would have received if such fractional share was rounded
up to the nearest whole number.
(f) Lost, Stolen or Destroyed Certificates. In the event any
certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such certificate to be lost,
stolen or destroyed and, if required by BPK, the posting by such Person of a
bond in such reasonable amount as BPK may direct as indemnity against any claim
that may be made against it with respect to such certificate, BPK will issue in
exchange for such lost, stolen or destroyed certificate BPK Common Shares or BPK
Preferred Shares to which such Person is entitled pursuant to this Agreement.
(g) Transfer Books. The Graphite Share transfer books of Graphite
shall be closed immediately at the Effective Time and thereafter there shall be
no further registration of transfers of Graphite Shares on the records of
Graphite. If, after the Effective Time, certificates are presented to the
Surviving Company for any reason, they shall be cancelled and exchanged as
provided in this Section 1.2.
(h) Adjustments. If at any time during the period between the date
of this Agreement and the Effective Time, any change in the number of issued and
outstanding shares of BPK Common Stock shall occur, by reason of any
reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares, or any stock dividend thereon with a record date during
such period, the number of BPK Common Shares and BPK Preferred Shares shall be
adjusted appropriately.
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1.3 Dissenters' Rights.
Notwithstanding any provision of this Agreement to the contrary, any
Graphite Shares that are issued and outstanding immediately prior to the
Effective Time and that are held by a Graphite Shareholder that has not voted in
favor of the Merger or consented thereto in writing and who has properly
delivered a written notice of demand for appraisal of such Graphite Shares in
accordance with Section 262 of the DGCL, if Section 262 of the DGCL provides for
appraisal rights for such Graphite Shares in the Merger (the "Dissenting
Graphite Shares"), shall not be converted into the right to receive BPK Common
Shares and BPK Preferred Shares unless and until such Graphite Shareholder fails
to perfect or effectively withdraws or loses its right to appraisal and payment
under Section 262 of the DGCL. Graphite shall give BPK: (i) prompt notice of any
notice or demands for appraisal or payment for Graphite Shares received by
Graphite, and (ii) the opportunity to participate in and direct all negotiations
and proceedings with respect to any such demands or notices. Graphite shall not,
without the prior written consent of BPK, make any payment with respect to, or
settle, offer to settle or otherwise negotiate, any such demands.
1.4 Board and Shareholder Approval
(a) Graphite's Board of Directors shall approve this Agreement and
the Merger, recommend that the Graphite Shareholders approve this Agreement and
the Merger, and submit this Agreement and the Merger to the Graphite
Shareholders for approval. Promptly after executing this Agreement, Graphite,
acting through its Board of Directors, shall duly call, give notice of, convene,
and hold a special meeting of Graphite Shareholders for the purpose of
considering and approving this Agreement and the Merger in accordance with all
applicable requirements of the DGCL. At such meeting, each Principal Shareholder
shall vote all shares of Graphite Common Stock, Graphite Preferred Stock and any
other shares of capital stock of Graphite entitled to vote at such meeting, to
approve this Agreement and the Merger in accordance with all applicable
requirements of the DGCL. Graphite shall provide a copy of this Agreement to all
Graphite Shareholders together with the form of Investment Letter attached
hereto as Exhibit 5.10 informing each that this Agreement and the Merger has
been approved by the Board of Directors of Graphite.
(b) Graphite and Merger Sub shall cause to occur all corporate
action necessary on behalf of either of them to approve and effect the Merger
and the other transactions contemplated hereby and shall approve the Merger and
this Agreement in accordance with all applicable revisions of the DGCL. The
Board of Directors of the Merger Sub shall approve the Merger and this
Agreement, declare its advisability and submit it for approval to the Sole
Shareholder of Merger Sub by written consent in accordance with all applicable
provisions of the DGCL. The Board of Directors of BPK shall approve the Merger
and the Agreement in accordance with all applicable provisions of the Nevada
General Corporation Law ("NGCL") and as the sole shareholder of Merger Sub,
shall consent in writing to approve the Merger and this Agreement in accordance
with all applicable revisions of the DGCL.
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1.5 Subsequent Actions.
If, at any time after the Effective Time, the Surviving Company
shall determine, in its sole discretion, or shall be advised, that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Company its right, title or interest in, to or under any of the
property, rights, powers, privileges, franchises or other assets of either of
Graphite or Merger Sub acquired or to be acquired by the Surviving Company as a
result of, or in connection with, the Merger or otherwise to carry out this
Agreement, then the officers of the Surviving Company shall be authorized to
execute and deliver, and shall execute and deliver, in the name and on behalf of
either Graphite or Merger Sub, all such deeds, bills of sale, assignments,
assurances, and to take and do, in the name and on behalf of each such
corporation or otherwise, all such other actions and things as may be necessary
or desirable, to vest, perfect or confirm any and all right, title or interest
in, to and under such property, rights, powers, privileges, franchises or other
assets in the Surviving Company or otherwise to carry out the transactions
contemplated by this Agreement.
ARTICLE II
THE CLOSING
2.1 Closing Date.
Subject to satisfaction or waiver of all conditions precedent set
forth in Article VI of this Agreement, the closing of the Merger (the "Closing")
shall take place at the offices of Graphite at 10:00 a.m., local time on (a) the
later of: (i) the first Business Day following the day upon which all
appropriate BPK and Merger Sub corporate action and Graphite action has been
taken in accordance with Articles I and V, respectively, of this Agreement; or
(ii) the day on which the last of the conditions precedent set forth in Article
VI of this Agreement is fulfilled or waived; or (b) at such other time, date and
place as the parties may agree, but in no event shall such date be later than
March 31, 2006 (the "Outside Date"), unless such date is extended by the
requirements of law or the mutual agreement of the parties.
2.2 Closing Merger.
At the Closing, the following transactions shall occur, all of such
transactions being deemed to occur simultaneously:
(a) Graphite shall deliver or cause to be delivered to BPK and
Merger Sub the following documents and/or shall take the following actions:
(i) A true and complete list of all holders of record of
Graphite Shares issued and outstanding on and as of the Closing setting forth
the name, address, and number of Graphite Shares held by each and the number of
BPK Common Shares and BPK Preferred Shares to be issued or issuable, as
applicable, to each holder at Closing;
(ii) Certificates evidencing all of the Graphite Shares;
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(iii) Any agreements between the Graphite Shareholders and
Graphite relating to the Graphite Shares;
(iv) The officer's certificate described in Section 6.2(c);
(v) An incumbency certificate signed by all of the executive
officers of Graphite dated at or about the Closing Date;
(vi) A certificate of good standing from the Secretary of
State of the State of Delaware, dated at or about the Closing Date, to the
effect that Graphite is in good standing under the laws of the State of
Delaware;
(vii) Certificate of incorporation of Graphite certified by
the Secretary of State of the State of Delaware at or about the Closing Date and
bylaws of Graphite certified by the Secretary of Graphite at or about the
Closing Date;
(viii) Resolutions of the board of directors and shareholders
of Graphite dated at or about the Closing Date authorizing the Merger, certified
by the Secretary of Graphite;
(ix) The investment letters described in Section 5.10;
(x) The Audited Financial Statements (as defined in Section
5.11);
(xi) The Additional Company Information (as defined in Section
5.12);
(xii) The Registration Rights Agreement executed by the
Principal Shareholders described in Section 5.15;
(xiii) All consents, authorizations, orders or approvals
required in order to execute and deliver this Agreement and to effectuate the
transactions contemplated hereby in form, scope and substance reasonably
satisfactory to BPK; and
(xiv) All approvals, consents, permits and waivers of
Governmental Authorities and any Person necessary for the consummation of the
transactions contemplated by this Agreement and no such approval, consent,
permit or waiver of any Governmental Authority or such other third party shall
contain any term or condition that BPK in its reasonable discretions determines
to be unduly burdensome.
(b) BPK and Merger Sub shall deliver or cause to be delivered to
Graphite the following documents and shall take the following actions:
(i) Certificates evidencing all of BPK Common Shares and BPK
Preferred Shares;
(ii) The officer's certificates described in Section 6.1(c);
(iii) the executed irrevocable proxies referenced in Section
6.1(e);
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(iv) An incumbency certificate signed by all of the executive
officers of BPK dated at or about the Closing Date;
(v) An incumbency certificate signed by all of the executive
officers of Merger Sub dated at or about the Closing Date;
(vi) A certificate of good standing from the Secretary of
State of the State of Nevada, dated at or about the Closing Date, to the effect
that BPK is in good standing under the laws of said state;
(vii) A certificate of good standing from the Secretary of
State of the State of Delaware, dated at or about the Closing Date, to the
effect that Merger Sub is in good standing under the laws of said state;
(viii) Articles of incorporation of BPK certified by the
Secretary of State of the State of Nevada at or about the Closing Date and the
bylaws of BPK certified by the Secretary of BPK at or about the Closing Date;
(ix) Certificate of incorporation of Merger Sub certified by
the Secretary of State of the State of Delaware at or about the Closing Date and
bylaws of Merger Sub certified by the Secretary of Merger Sub at or about the
Closing Date;
(x) Resolutions of the board of directors of BPK dated at or
about the Closing Date authorizing the Merger, certified by the Secretary of
BPK;
(xi) Resolutions of the board of directors and shareholders of
Merger Sub dated at or about the Closing Date authorizing the Merger, certified
by the Secretary of Merger Sub; and
(c) Each of the parties to this Agreement shall have otherwise
executed whatever documents and agreements, provided whatever consents or
approvals and shall have taken all such other actions as are required under this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
GRAPHITE AND THE PRINCIPAL SHAREHOLDERS
Graphite and the Principal Shareholders, jointly and severally,
hereby make the following representations and warranties to BPK and Merger Sub.
3.1 Organization and Qualification.
Graphite is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, with the corporate power
and authority to own and operate its businesses as presently conducted, except
where the failure to be or have any of the foregoing would not have a Material
Adverse Effect. Graphite is duly qualified as a foreign company or other entity
to do business and is in good standing in each jurisdiction where the character
of its properties owned or held under lease or the nature of its activities
makes such qualification necessary, except for such failures to be so qualified
or in good standing as would not, individually or in the aggregate, have a
Material Adverse Effect. True, correct and complete copies of the articles of
incorporation and bylaws of Graphite, as amended the date, are attached hereto
as Exhibit 3.1.
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3.2 Authorization; Validity and Effect of Agreement.
(a) Graphite has the requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the Merger. The execution and delivery of this Agreement by Graphite
and the performance by Graphite of its obligations hereunder and the
consummation of the Merger have been duly authorized by its board of directors
and shareholders and all other necessary company action on the part of Graphite
and no other company proceedings on the part of Graphite are necessary to
authorize this Agreement and the Merger. This Agreement has been duly and
validly executed and delivered by Graphite and, assuming that it has been duly
authorized, executed and delivered by the other parties hereto, constitutes a
legal, valid and binding obligation of Graphite, enforceable against it in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(b) Each Principal Shareholder has the full capacity, power and
authority to enter into this Agreement and the other agreements contemplated
hereby to which such Principal Shareholder is a party and to consummate the
transactions contemplated hereby and thereby and to comply with the terms,
conditions and provisions hereof and hereof. This Agreement and the other
agreements contemplated hereby to which a Principal Shareholder is a party has
been duly authorized, executed and delivered by such Principal Shareholder and
are the legal, valid and binding obligations of such Principal Shareholder,
enforceable against such Principal Shareholder in accordance with its terms. No
notices to, declaration, filing or registration with, approvals or consents of,
or assignments by, any Persons (including Governmental Authorities) are
necessary to be made or obtained by Graphite or the Principal Shareholders in
connection with the execution, delivery or performance by Graphite or any of the
Principal Shareholders of this Agreement.
3.3 Company Subsidiaries.
Attached hereto as Schedule 3.3 is a complete and accurate list of
Graphite's subsidiaries (the "Subsidiaries"). The Subsidiaries are duly
organized, validly existing and in good standing under the laws of their
respective jurisdictions of organization, with the requisite corporate power and
authority to own and operate their respective businesses as presently conducted,
except where the failure to be or have any of the foregoing would not have a
Material Adverse Effect. The Subsidiaries are duly qualified as foreign
companies or other entities to do business and are in good standing in each
jurisdiction where the character of their respective properties owned or held
under lease or the nature of their respective activities makes such
qualification necessary, except for such failures to be so qualified or in good
standing as would not, individually or in the aggregate, have a Material Adverse
Effect. True, correct and complete copies of the articles of incorporation and
bylaws of each of the Subsidiaries, as amended to date, are attached hereto as
Exhibit 3.3.
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3.4 No Conflict; Required Filings and Consents.
Neither the execution and delivery of this Agreement by Graphite nor
the performance by Graphite of its obligations hereunder, nor the consummation
of the Merger, shall: (i) conflict with Graphite's certificate of incorporation
or bylaws; (ii) conflict with any Subsidiary's articles of incorporation or
bylaws; (iii) violate any statute, law, ordinance, rule or regulation applicable
to Graphite, any of its Subsidiaries or any of their respective assets or
properties; or (iv) violate, breach, be in conflict with or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or permit the termination of any provision of, or result in the
termination of, the acceleration of the maturity of, or the acceleration of the
performance of any obligation of Graphite or its Subsidiaries under, or result
in the creation or imposition of any Liens upon any properties, assets or
business of Graphite or its Subsidiaries under, any Material Contract or any
order, judgment or decree to which Graphite or any of its Subsidiaries is a
party or by which Graphite, any of its Subsidiaries or any of their respective
assets or properties is bound or encumbered except, in the case of clauses (ii),
(iii) & (iv), for such violations, breaches, conflicts, defaults or other
occurrences which, individually or in the aggregate, would not have a Material
Adverse Effect.
3.5 Capitalization; Ownership of Graphite Shares.
(a) Attached hereto as Schedule 3.5(a) is a complete and accurate
list of (i) the Graphite Shareholders and (ii) the number and class of issued
and outstanding Graphite Shares. The authorized capital stock of Graphite
consists of 25 million shares of Graphite Common Stock and one million shares of
preferred stock ("Graphite Preferred Stock"). There are currently issued and
outstanding (x) 14,789,790 shares of Graphite Common Stock, (y) 4,546 shares of
Series A Preferred Stock, and (z) 10,000 shares of Series B Preferred Stock. The
Graphite Shares represent all of the outstanding equity interests in Graphite.
All of the Graphite Shares have been validly authorized and issued and are fully
paid and non-assessable, and Graphite has reserved on its books and records, for
future issuance, the shares of Common Stock issuable upon the conversion of the
Graphite Preferred Shares. Except for this Agreement or as set forth on Schedule
3.5(a), there are no outstanding options, warrants, agreements, conversion
rights, preemptive rights, or other rights to subscribe for, purchase or
otherwise acquire any Graphite Common Stock or Graphite Preferred Stock. There
are no voting trusts or other agreements or understandings to which Graphite is
a party with respect to the voting of Graphite Common Stock or Graphite
Preferred Stock, and there is no indebtedness of Graphite having general voting
rights issued and outstanding. Except for this Agreement or as set forth on
Schedule 3.5(a), there are no outstanding obligations of any Person to
repurchase, redeem or otherwise acquire outstanding Graphite Common Stock or
Graphite Preferred Stock. Except as set forth in this Agreement or as set forth
on Schedule 3.5(a), Graphite has no Graphite Common Stock or Graphite Preferred
Stock reserved for issuance.
(b) Attached hereto as Schedule 3.5(b) is a complete and accurate
list of the authorized and outstanding equity interests of the Subsidiaries. All
equity interests of the Subsidiaries outstanding as of the date of this
Agreement have been duly authorized and validly issued, are fully paid and
non-assessable, and are free of preemptive rights.
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(c) The Principal Shareholders own and hold, beneficially and of
record, the entire right, title, and interest in and to the Graphite Shares set
forth opposite such Principal Shareholder's name on Schedule I, free and clear
of all Rights and Encumbrances. Each Principal Shareholder has full power and
authority to vote the Shares owned by him or her and to approve the transactions
contemplated by this Agreement. Except as set forth in the Shareholders'
Schedules, each Shareholder has the full power and authority to vote, transfer
and dispose of the Shares owned by him or her, free and clear of any Right or
Encumbrance of any kind or nature whatsoever other than restrictions under the
Securities Act and applicable state securities laws. At the Closing, the
Purchaser will acquire good title to the Shares, free and clear of all Rights
and Encumbrances. Other than the transactions contemplated by this Agreement,
there is no outstanding vote, plan, pending proposal, or other right of any
Person to acquire, or to cause the redemption of, the Shares or to effect the
merger or consolidation of the Company with or into any other Person.
3.6 Financial Statements.
True and complete copies of Graphite's consolidated balance sheet at
March 31, 2005 and at December 31, 2005, and consolidated income statements and
statements of cash flows for the fiscal year ended March 31, 2005 and for the
nine-month period ended December 31, 2005, are attached hereto as Exhibit 3.6
(collectively, the "GAAP Financial Statements"). The GAAP Financial Statements
(including the notes thereto) present fairly in all material respects the
financial position and results of operations and cash flows of Graphite and its
Subsidiaries at the dates or for the periods set forth therein, in each case in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as otherwise indicated therein). The GAAP Financial Statements
were prepared from and in accordance with the books and records of Graphite and
its Subsidiaries, as applicable.
3.7 Properties and Assets.
Graphite and its Subsidiaries have good and marketable title to,
valid leasehold interests in, or the legal right to use, and hold free and clear
of all Liens and Encumbrances, all of the assets, properties and leasehold
interests reflected in the Financial Statements (the "Assets"), except for those
sold or otherwise disposed of since the date of the Financial Statements in the
ordinary course of business consistent with past practice and not in violation
of this Agreement. All Assets of Graphite and its Subsidiaries that are used in
the operations of their respective businesses are in good operating condition
and repair, subject to normal wear and tear. Graphite and its Subsidiaries have
delivered to BPK or otherwise made available, correct and complete copies of all
leases, subleases and other material agreements or other material instruments
relating to all real property used in conducting the businesses of Graphite and
the Subsidiaries to which Graphite or the Subsidiaries is a party (collectively,
the "Real Property"), all of which are identified on Schedule 3.7. There are no
pending or, to Graphite's or any of the Subsidiaries' knowledge, threatened
condemnation proceedings relating to any of the Real Property. Except as set
forth on Schedule 3.7, none of the real property improvements (including
leasehold improvements), equipment and other Assets owned or used by Graphite or
its Subsidiaries is subject to any commitment or other arrangement for their
sale or use by any Affiliate of Graphite or its Subsidiaries, or by third
parties. To the Knowledge of each Principal Shareholder, the leased real estate
is free and clear of any zoning or use or building restriction or any pending,
proposed or threatened zoning or use or building restriction which would
interfere with the present or any intended use by Graphite of any of such leased
real estate. Said leases are valid and binding and in full force and effect, and
Graphite is not in default thereunder as to the payment of rent or otherwise.
The consummation of the transactions contemplated by this Agreement will not
constitute an event of default under any of said leases and the continuation,
validity and effectiveness of such leases will not be adversely affected by the
transactions contemplated by this Agreement.
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3.8 Intellectual Property.
(a) Schedule 3.8 lists all Intellectual Property used in or relied
upon and directly or indirectly in the conduct of Graphite's or any of
Subsidiaries' business or operations in the ordinary course consistent with past
practice (the "Company Intellectual Property"). Except as disclosed in Schedule
3.8: (i) Graphite or its Subsidiaries are the owners of all of the Company
Intellectual Property free and clear of any royalty or other payment obligation,
lien or charge, or have sufficient rights to use such Company Intellectual
Property under a valid and enforceable license agreement, (ii) there are no
agreements that restrict or limit the use of the Company Intellectual Property
by Graphite or its Subsidiaries, and (iii) to the extent that the Company
Intellectual Property owned or held by Graphite or its Subsidiaries are
registered with the applicable authorities, record title to such Company
Intellectual Property is registered or applied for in the name of Graphite or of
its Subsidiaries.
(b) Graphite's and Subsidiaries' rights to the Company Intellectual
Property are valid and enforceable, and the Intellectual Property and the
products and services of Graphite and its Subsidiaries do not infringe upon
intellectual property rights of any person or entity in any country. Except
where reasonable business decisions to allow rights to lapse have been made, all
maintenance taxes, annuities and renewal fees have been paid and all other
necessary actions to maintain the Company Intellectual Property rights have been
taken through the date hereof. There exists no impediment that would impair
Graphite's rights to conduct its business or the business of its Subsidiaries
after the Effective Time as it relates to the Company Intellectual Property.
(c) Graphite and its Subsidiaries have taken all reasonable and
appropriate steps to protect the Company Intellectual Property and, were
applicable, to preserve the confidentiality of the Company Intellectual
Property.
(d) Neither Graphite nor any of its Subsidiaries has received any
notice of claim that any of such Company Intellectual Property has expired, is
not valid or enforceable in any country or that it infringes upon or conflicts
with the intellectual property rights of any third party, and no such claim or
infringement or conflict, whenever filed or threatened, currently exists.
(e) Neither Graphite nor any of the Subsidiaries has given any
notice of infringement to any third party with respect to any of the Company
Intellectual Property or has become aware of facts or circumstances evidencing
the infringement by any third party of any of the Company Intellectual Property,
and no claim or controversy with respect to any such alleged infringement
currently exists.
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(f) The execution, delivery and performance of this Agreement by
Graphite and the consummation by Graphite of the Merger will not: (i) constitute
a breach by Graphite or the Subsidiaries of any instrument or agreement
governing any Company Intellectual Property owned by or licensed to Graphite or
any of the Subsidiaries, (ii) pursuant to the terms of any license or agreement
relating to any Company Intellectual Property, cause the modification of any
terms of any such license or agreement, including but not limited to the
modification of the effective rate of any royalties or other payments provided
for in any such license or agreement, (iii) cause the forfeiture or termination
of any Company Intellectual Property under the terms thereof, (iv) give rise to
a right of forfeiture or termination of any Company Intellectual Property under
the terms thereof, or (v) impair the right of Graphite, the Subsidiaries, the
Surviving Company or BPK to make, have made, offer for sale, use, sell, export
or license any Company Intellectual Property or portion thereof pursuant to the
terms thereof.
3.9 No Undisclosed Liabilities.
Except as disclosed in the Financial Statements or Schedule 3.9,
neither Graphite nor any of its subsidiaries has no material liabilities,
indebtedness or obligations, except those that have been incurred in the
ordinary course of business, whether known or unknown, absolute, accrued,
contingent or otherwise, and whether due or to become due, and to the Knowledge
of Graphite, there is no existing condition, situation or set of circumstances
that could reasonably be expected to result in such a liability, indebtedness or
obligation.
3.10 Related Party Transactions.
Except as provided on Schedule 3.10:
(a) There is no indebtedness between Graphite or any of its
Subsidiaries, on the one hand, and any officer, director or Affiliate (other
than Graphite or any of its Subsidiaries) of Graphite or the Subsidiaries, on
the other hand, other than usual and customary advances made in the ordinary
course of business;
(b) No officer, director or Affiliate of Graphite or any of its
Subsidiaries provides or causes to be provided any assets, services (other than
services as an, officer, manager, director or employee) or facilities to
Graphite or any of its Subsidiaries;
(c) Neither Graphite nor any of its Subsidiaries provides or causes
to be provided any assets, services or facilities to any officer, director or
Affiliate of Graphite or any of its Subsidiaries (other than as reasonably
necessary for them to perform their duties as officers, directors or employees);
(d) Neither Graphite nor any of its Subsidiaries beneficially owns,
directly or indirectly, any investment in or issued by any such officer,
director or Affiliate of Graphite or any of its Subsidiaries; and
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(e) No officer, director or Affiliate of Graphite or any of its
Subsidiaries has any direct or indirect ownership interest in any Person with
which Graphite or any of its Subsidiaries competes or has a business
relationship other than an ownership interest that represents less than five
percent (5%) of the outstanding equity interests in a publicly traded company.
3.11 Litigation.
Except for the matters set forth in Schedule 3.11, there is no
action, claim, suit, litigation, proceeding, or governmental investigation
("Action") instituted, pending or threatened against Graphite or any of its
Subsidiaries that, individually or in the aggregate, directly or indirectly,
would be reasonably likely to have a Material Adverse Effect, nor is there any
outstanding judgment, decree or injunction, in each case against Graphite or its
Subsidiaries, that, individually or in the aggregate, has or would be reasonably
likely to have a Material Adverse Effect.
3.12 Taxes.
Graphite and its Subsidiaries have timely filed (or have had timely
filed on their behalf) with the appropriate tax authorities all tax returns
required to be filed by them or on behalf of them, and each such tax return was
complete and accurate in all material respects, and Graphite and its
Subsidiaries have timely paid (or have had paid on their behalf) all material
Taxes due and owing by it, regardless of whether required to be shown or
reported on a tax return, including Taxes required to be withheld by it. No
deficiency for a material Tax has been asserted in writing or otherwise, to
Graphite's Knowledge, against Graphite or any Subsidiary or with respect to any
Assets, except for asserted deficiencies that either (i) have been resolved and
paid in full or (ii) are being contested in good faith. There are no material
Liens for Taxes upon the Assets.
3.13 Insurance.
Schedule 3.13 sets forth a list of all of Graphite's key-man life
insurance policies and other insurance policies material to the current and
proposed business of Graphite. Graphite maintains insurance covering its assets,
business, equipment, properties, operations, employees, officers, directors and
managers with such coverage, in such amounts, and with such deductibles and
premiums as are consistent with insurance coverage provided for other companies
of comparable size and in comparable industries. All of such policies are in
full force and effect and all premiums payable have been paid in full and
Graphite is in full compliance with the terms and conditions of such policies.
Graphite has not received any notice from any issuer of such policies of its
intention to cancel or refusal to renew any policy issued by it or of its
intention to renew any such policy based on a material increase in premium rates
other than in the ordinary course of business. None of such policies are subject
to cancellation by virtue of the consummation of the Merger. There is no claim
by Graphite pending under any of such policies as to which coverage has been
questioned or denied.
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3.14 Compliance.
Except as disclosed on Schedule 3.14, Graphite and its Subsidiaries
are in compliance with all foreign, federal, state and local laws and
regulations of any Governmental Authority applicable to its operations or with
respect to which compliance is a condition of engaging in the business thereof,
except to the extent that failure to comply would not, individually or in the
aggregate, have a Material Adverse Effect. Neither Graphite nor any of its
Subsidiaries have received any notice asserting a failure, or possible failure,
to comply with any such law or regulation, the subject of which notice has not
been resolved as required thereby or otherwise to the satisfaction of the party
sending the notice, except for such failure as would not, individually or in the
aggregate, have a Material Adverse Effect. Graphite and its Subsidiaries hold
all permits, licenses and franchises from Governmental Authorities required to
conduct its business as it is now being conducted, except for such failures to
have such permits, licenses and franchises that would not, individually or in
the aggregate, have a Material Adverse Effect.
3.15 Material Contracts.
Except as set forth in Schedule 3.15, neither Graphite nor any of
its Subsidiaries is a party to or bound by any Material Contract. The Material
Contracts constitute all of the material agreements and instruments that are
necessary and desirable to operate the business as currently conducted by
Graphite and its Subsidiaries and as contemplated to be conducted. True, correct
and complete copies of each Material Contract described and listed on Schedule
3.15 will be made available to BPK within ten (10) Business Days prior to the
Closing. All of the Material Contracts are valid, binding and enforceable
against the respective parties thereto in accordance with their respective
terms. All parties to all of the Material Contracts have performed all
obligations required to be performed to date under such Material Contracts, and
neither Graphite, its Subsidiaries, nor, to the best of its Knowledge, any other
party, is in default or in arrears under the terms thereof, and no condition
exists or event has occurred which, with the giving of notice or lapse of time
or both, would constitute a default thereunder. The consummation of this
Agreement and the Merger will not result in an impairment or termination of any
of the rights of Graphite or any of its Subsidiaries under any Material
Contract. None of the terms or provisions of any Material Contract materially
and adversely affects the business, prospects, financial condition or results of
operations of Graphite.
3.16 Labor Relations.
Except as described on Schedule 3.16, as of the date of this
Agreement (i) there are no activities or proceedings of any labor union to
organize any non-unionized employees of Graphite or any of its Subsidiaries;
(ii) there are no unfair labor practice charges and/or complaints pending
against Graphite or any of its Subsidiaries before the National Labor
Regulations Board, or any similar foreign labor relations governmental bodies,
or any current union representation questions involving employees of Graphite or
any of its Subsidiaries; and (iii) there is no strike, slowdown, work stoppage
or lockout, or threat thereof, by or with respect to any employees of Graphite
or any of its Subsidiaries. As of the date of this Agreement, neither Graphite
nor any of its Subsidiaries is a party to any collective bargaining agreements.
There are no controversies pending or threatened between Graphite and its
Subsidiaries and any of their respective employees, except for such
controversies that would not be reasonably likely to have a Material Adverse
Effect.
15
3.17 Environmental Matters.
Except for such matters that, individually or in the aggregate, are
not reasonably likely to have a Material Adverse Effect, Graphite and its
Subsidiaries (i) have obtained all applicable permits, licenses and other
authorizations that are required to be obtained under all applicable
Environmental Laws by Graphite and its Subsidiaries in connection with their
respective businesses; (ii) are in compliance with all terms and conditions of
such required permits, licenses and authorizations, and with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in or arising from applicable
Environmental Laws in connection with their respective businesses; (iii) have
not received notice of any part or present violations of Environmental Laws in
connection with their respective businesses, or of any spill, release, event,
incident, condition or action or failure to act in connection with their
respective businesses that is reasonably likely to prevent continued compliance
with such Environmental Laws, or which would give rise to any common law
environmental liability or liability under Environmental Laws, or which would
otherwise form the basis of any Action against Graphite or its Subsidiaries
based on or resulting from the manufacture, processing, use, treatment, storage,
disposal, transport, or handling, or the emission, discharge or release into the
environment, of any hazardous material by any Person in connection with
Graphite's or its Subsidiaries' respective businesses; and (iv) have taken all
actions required under applicable Environmental Laws to register any products or
materials required to be registered by Graphite or its Subsidiaries thereunder
in connection with their respective businesses.
3.18 Absence of Certain Changes or Events.
Except as set forth on Schedule 3.18 or as otherwise contemplated by
this Agreement, since December 31, 2005, (i) there has been no change or
development in, or effect on, Graphite or any of its Subsidiaries that has or
could reasonably be expected to have a Material Adverse Effect, (ii) neither
Graphite nor any of its Subsidiaries has sold, transferred, disposed of, or
agreed to sell, transfer or dispose of, any material amount of Assets other than
in the ordinary course of business, (iii) neither Graphite nor any of its
Subsidiaries any has paid any dividends or distributed any Assets to any
officer, director or shareholder of Graphite, (iv) neither Graphite nor any of
its Subsidiaries has acquired any material amount of Assets except in the
ordinary course of business, nor acquired or merged with any other business, (v)
neither Graphite nor any of its Subsidiaries has waived or amended any of their
respective material contractual rights except in the ordinary course of
business, and (vi) neither Graphite nor any of its Subsidiaries has entered into
any agreement to take any action described in clauses (i) through (v) above.
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3.19 Investment Intent.
BPK Common Shares and BPK Preferred Shares being acquired by the
Principal Shareholders in connection with the Merger are being acquired for the
respective Principal Shareholders' own account for investment purposes only and
not with a view to, or with any present intention of, distributing or reselling
any of such shares. Each Principal Shareholder acknowledges and agrees that the
BPK Common Shares and BPK Preferred Shares have not been registered under the
Securities Act or under any state securities laws, and that BPK Common Shares or
BPK Preferred Shares may not be, directly or indirectly, sold, transferred,
offered for sale, pledged, hypothecated or otherwise disposed of without
registration under the Securities Act and applicable state securities laws,
except pursuant to an available exemption from such registration. The Principal
Shareholders also acknowledge and agree that neither the SEC nor any state
securities commission nor other Governmental Authority has (a) approved the
issuance of the BPK Common Shares or BPK Preferred Shares or passed upon or
endorsed the merits of the BPK Common Shares or BPK Preferred Shares, this
Agreement or the Merger; or (b) confirmed the accuracy of, determined the
adequacy of, or reviewed this Agreement. The Principal Shareholders have such
Knowledge, sophistication and experience in financial, tax and business matters
in general, and investments in securities in particular, that they are capable
of evaluating the merits and risks of this investment in BPK Common Shares and
BPK Preferred Shares, and each Principal Shareholder has made such
investigations in connection herewith as be deemed necessary or desirable so as
to make an informed investment decision without relying upon BPK for legal or
tax advice related to this investment.
3.20 Employee Benefit Matters.
Neither Graphite nor any Subsidiaries are a party to, or since their
respective inceptions have been a party to, any Employee Benefit Plans,
programs, arrangements or agreements, whether formal or informal, whether in
writing or otherwise, with respect to which Graphite or a Subsidiary has or may
have any obligation or that are maintained, contributed to or sponsored by
Graphite or the Subsidiary for the benefit of any current or former director,
officer or employee of Graphite or the Subsidiary. Neither Graphite nor any
Subsidiary has a current or projected liability in respect of post-employment or
post-retirement health, medical or life insurance benefits for any of its
retired, former or current employees. There is no contract, plan or arrangement,
written or otherwise, covering any employee or former employee of Graphite or
any Subsidiary that, individually or collectively, could give rise to the
payment of any amount that would not be deductible pursuant to the terms of
Section 280G of the Code and, except as contemplated by this Agreement, no
employee or former employee of Graphite or any Subsidiary will become entitled
to any bonus, retirement, severance, job security or similar benefit or
enhancement of such benefit (including acceleration of vesting or exercise of an
incentive award) as a result of the Merger. Neither Graphite nor any Subsidiary
has any express or implied commitment to: (i) create, incur liability with
respect to or cause to exist, any Employee Benefit Plan, program, arrangement or
agreement; or (ii) enter into any contract or agreement to provide compensation
or benefits to any individual.
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3.21 Brokers and Finders Fees.
Neither Graphite or any of its Subsidiaries nor any of their
respective officers, directors, employees or managers has employed any broker or
finder or incurred any liability for any investment banking fees, brokerage
fees, commissions or finders fees in connection with the Merger for which
Graphite or any of its Subsidiaries has or could have any liability.
3.22 Company Information
(a) Graphite and the Principal Shareholders have provided BPK with a
business plan (the "Business Plan") describing Graphite's assets, liabilities,
operations, financial condition, current and proposed business, principal
customers, the identity, business experience, education, and certain other
information regarding its directors and officers (including involvement in any
legal proceedings, or being the subject of any investigation by, or proceeding
of, any governmental authority or self regulatory organization such as the
NASD), capitalization, principal shareholders, any and all transactions or
relationships between Graphite and any of its directors, officers or principal
shareholders, any pending or threatened legal proceedings and any proposed
acquisitions. A true and correct copy of the Business Plan is attached hereto as
Exhibit 3.22. Graphite and the Principal Shareholders understand that the
Business Plan will be used by BPK in connection with the offer and sale of
securities of BPK, that BPK will rely upon the Business Plan without independent
investigation or verification thereof, that BPK will assume no responsibility
for the accuracy or completeness of the Business Plan, and that Graphite and the
Principal Shareholders will be solely responsible for the contents of the
Business Plan.
(b) Graphite and the Principals Shareholders represent and warrant
that the Business Plan is true and complete and is not misleading and does not
and will not, as of the date of the Closing hereunder, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. If at any time
prior to the Closing an event occurs as a result of which the Business Plan (as
then amended or supplemented) would or might include any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, Graphite will notify BPK promptly. Graphite and the Principal
Shareholders authorize BPK to provide the Business Plan to potential investors
and agree that they will not distribute or otherwise transmit the Business Plan
to any potential investors without the prior approval of BPK.
3.23 Real Property.
Graphite has the right to use all real property necessary for the
conduct of its business as presently conducted. Schedule 3.23 identifies all
such real property. Except as set forth in the Schedule 3.23, Graphite is not a
party to any leases of real property. The Company is the lessee under the real
estate leases described on Schedule 3.23. True, correct and complete copies of
said leases and any amendments, extensions and renewals thereof have heretofore
been delivered by the Company to the Purchaser. The Company enjoys quiet and
undisturbed possession under each of said leases. The Company's interest in each
of such leases is free and clear of any Encumbrances, is not subject to any
deeds of trust, assignments, subleases or rights of any third parties created by
the Company, other than the lessor thereof. To the Knowledge of the
Shareholders' Agent, the leased real estate is free and clear of any zoning or
use or building restriction or any pending, proposed or Threatened zoning or use
or building restriction which would interfere with the present or any intended
use by the Company of any of such leased real estate. Said leases are valid and
binding and in full force and effect, and the Company is not in default
thereunder as to the payment of rent or otherwise. The consummation of the
transactions contemplated by this Agreement will not constitute an event of
default under any of said leases and the continuation, validity and
effectiveness of such leases will not be adversely affected by the transactions
contemplated by this Agreement.
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3.24 Termination of Business Relationships.
No supplier of Graphite which cannot be replaced on commercially
reasonable terms has evidenced to Graphite or the Principal Shareholders any
intention to cancel or terminate its business relationship with Graphite. No key
employee of Graphite has notified Graphite or the Principal Shareholders of his
or her intent or desire to terminate employment with Graphite.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BPK AND MERGER SUB
BPK and Merger Sub hereby make the following representations and
warranties to Graphite and the Principal Shareholders:
4.1 Organization and Qualification.
BPK and Merger Sub are duly organized, validly existing and in good
standing under the laws of their respective jurisdiction of organization, with
the corporate power and authority to own and operate their respective business
as presently conducted, except where the failure to be or have any of the
foregoing would not have a Material Adverse Effect. BPK and Merger Sub are duly
qualified as foreign corporations or other entities to do business and are in
good standing in each jurisdiction where the character of their properties owned
or held under lease or the nature of their activities makes such qualification
necessary, except for such failures to be so qualified or in good standing as
would not have a Material Adverse Effect.
4.2 Authorization; Validity and Effect of Agreement.
BPK and Merger Sub have the requisite corporate power and authority
to execute, deliver and perform their respective obligations under this
Agreement and to consummate the Merger. The execution and delivery of this
Agreement by BPK and Merger Sub and the performance by BPK and Merger Sub of
their respective obligations hereunder and the consummation of the Merger have
been duly authorized by their respective boards of directors and all other
necessary corporate action on the part of BPK and Merger Sub and no other
corporate proceedings on the part of BPK or Merger Sub are necessary to
authorize this Agreement and the Merger. This Agreement has been duly and
validly executed and delivered by BPK and Merger Sub and, assuming that it has
been duly authorized, executed and delivered by the other parties hereto,
constitutes a legal, valid and binding obligation of BPK and Merger Sub, in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
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4.3 No Conflict; Required Filings and Consents.
Neither the execution and delivery of this Agreement by BPK or
Merger Sub nor the performance by BPK or Merger Sub of their respective
obligations hereunder, nor the consummation of the Merger, will: (i) conflict
with BPK's articles of incorporation or bylaws; (ii) conflict with Merger Sub's
articles of incorporation or bylaws; (iii) violate any statute, law, ordinance,
rule or regulation, applicable to BPK or any of the properties or assets of BPK;
or (iv) violate, breach, be in conflict with or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under, or permit the termination of any provision of, or result in the
termination of, the acceleration of the maturity of, or the acceleration of the
performance of any obligation of BPK or Merger Sub, or result in the creation or
imposition of any Lien upon any properties, assets or business of BPK or Merger
Sub under, any Material Contract or any order, judgment or decree to which BPK
is a party or by which it or any of its assets or properties is bound or
encumbered except, in the case of clauses (ii), (iii) and (iv), for such
violations, breaches, conflicts, defaults or other occurrences which,
individually or in the aggregate, would not have a material adverse effect on
its obligation to perform its covenants under this Agreement.
4.4 Capitalization.
(a) The authorized capital stock of BPK consists of 100,000,000
shares of common stock, $.001 par value per share, and 10,000,000 shares of
preferred stock, $.001 par value per share. There are issued and outstanding (i)
54,259,503 shares of BPK Common Stock, (ii) options to acquire 600,000 shares of
BPK Common Stock, with a weighted average exercise price of $0.1367 per share,
(iii) shares reserved to be issued in connection with convertible loans to
acquire 9,615,385 shares of BPK Common Stock, (iv) warrants to acquire
10,994,995 shares of BPK Common Stock, with a weighted average exercise price of
$0.2472 per share, and (iv) 829,755 shares of Series B Convertible Preferred
Stock. All shares of capital stock of BPK outstanding as of the date of this
Agreement have been duly authorized and validly issued, are fully paid and
non-assessable, and are free of preemptive rights. After issuing the BPK Common
Shares, the number of authorized and unissued shares of BPK Common Stock will be
insufficient to cover the full amount issuable upon conversion of the BPK
Preferred Shares issuable hereunder.
(b) The authorized capital stock of Merger Sub consists solely of
1,000 shares of common stock, $.001 par value per share, of which 100 shares are
issued and outstanding and owned of record and beneficially by BPK. All shares
of capital stock of Merger Sub outstanding as of the date of this Agreement have
been duly authorized and validly issued, are fully paid and non-assessable, and
are free of preemptive rights.
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4.5 SEC Reports and Financial Statements.
BPK has filed with the SEC, and has heretofore made available to
Graphite true and complete copies of, all forms, reports, schedules, statements
and other documents required to be filed by it under the Exchange Act or the
Securities Act (as such documents have been amended since the time of their
filing, collectively, the "BPK SEC Documents"). As of their respective dates or,
if amended, as of the date of the last such amendment, BPK SEC Documents,
including any financial statements or schedules included therein: (a) did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading, and (b) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case may be, and
the applicable rules and regulations of the SEC thereunder. Each of the
financial statements included in BPK SEC Documents have been prepared from, and
are in accordance with, the books and records of BPK, comply in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present the
financial positions and the results of operations and cash flows of BPK as of
the dates thereof or for the periods presented therein (subject, in the case of
unaudited statements, to normal year-end audit adjustments not material in
amount).
4.6 Transaction Fees.
Neither BPK or Merger Sub, nor any of their respective officers,
directors, employees or managers, has employed any broker, finder, advisor or
consultant, or incurred any liability for any investment banking fees, brokerage
fees, commissions or finders' fees, advisory fees or consulting fees in
connection with the Merger for which BPK or Merger Sub has or could have any
liability.
4.7 No Undisclosed Liabilities.
Except as disclosed in the BPK SEC Documents, neither BPK nor Merger
Sub has any material liabilities, indebtedness or obligations, except those that
have been incurred in the ordinary course of business, whether known or unknown,
absolute, accrued, contingent or otherwise, and whether due or to become due,
and to the Knowledge of BPK, there is no existing condition, situation or set of
circumstances that could reasonably be expected to result in such a liability,
indebtedness or obligation.
ARTICLE V
CERTAIN COVENANTS
5.1 Conduct of Business by Graphite and the Subsidiaries.
(a) Except (i) as expressly permitted by this Agreement, (ii) as
required by applicable law or any Material Contract to which Graphite or any of
its Subsidiaries is a party or by which any Asset is bound, (iii) with the
consent of BPK or (iv) as set forth on Schedule 5.1, during the period
commencing with the date of this Agreement and continuing until the Closing
Date, Graphite and its Subsidiaries shall conduct their business in all material
respects in the ordinary and usual course consistent with past practice and use
their commercially reasonable efforts to preserve intact their respective
business organizations and relationships with third parties and keep available
the services of their respective present officers and employees.
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(b) Without limiting the generality of Section 5.1(a), during the
period commencing with the date of this Agreement and continuing until the
Closing Date, neither Graphite nor any of its Subsidiaries shall:
(i) adopt or propose any change in their respective articles
of incorporation, bylaws or other constitutional documents, except for changes
which would not have Material Adverse Effect;
(ii) (A) issue, authorize or sell any equity or debt
securities, (B) issue, authorize or sell any securities convertible into, or
options with respect to, or warrants to purchase or rights to subscribe for, any
equity or debt securities, (C) split, combine, reclassify or make any other
change in their respective issued and outstanding equity or debt securities, (D)
redeem, purchase or otherwise acquire any of their respective equity or debt
securities, or (E) declare any dividend or make any distribution with respect to
their equity or debt securities;
(iii) (A) increase in any manner the compensation of, or enter
into any new bonus or incentive agreement or arrangement with, any of their
respective directors, officers, employees or managers other than increases in
compensation in the ordinary course of business and consistent with past
practice and that are not material in the aggregate, (B) pay or agree to pay any
pension, retirement allowance or other employee benefit to any director,
officer, employee or manager, whether past or present, other than as required by
applicable law, contracts or plan documents in effect on the date of this
Agreement, (C) enter into any new employment, severance, consulting, or other
compensation agreement with any director, officer, employee or manager or other
person other than in connection with any new hires or promotions in the ordinary
course and consistent with past practice, or (D) commit themselves to any
additional pension, profit-sharing, deferred compensation, group insurance,
severance pay, retirement or other employee benefit plan, fund or similar
arrangement, or adopt or amend or commit themselves to adopt or amend any of
such plans, funds or similar arrangements in existence on the date hereof;
(iv) (A) enter into, extend, renew or terminate any Material
Contract, or make any change in any Material Contracts, (B) reclassify any
assets or liabilities, or (C) do any other act that (x) would cause any
representation or warranty of Graphite in this Agreement to be or become untrue
in any material respect, or (y) could reasonably be expected to have a Material
Adverse Effect;
(v) (A) sell, transfer, lease or otherwise dispose of any
Assets other than in the ordinary course of business consistent with prior
practice, (B) create or permit to exist any new Lien or Encumbrance on any
Assets (iii) assume, incur or guarantee any obligation for borrowed money other
than in the ordinary course of business consistent with past practices, (iv)
enter into any joint venture, partnership or other similar arrangement, (v) make
any investment in or purchase any securities of any Person, (vi) incur any
indebtedness, issue or sell any new debt securities, enter into any new credit
facility or make any capital expenditures, or (vii) merge or consolidate with
any other Person or acquire any other Person or a business, division or product
line of any other Person (except as provided for in this Agreement);
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(vi) make any change in any method of accounting or accounting
practice except as required (a) by reason of a concurrent change in law, SEC
guidelines or GAAP, or (b) by reason of a change in Graphite's or any of its
Subsidiaries' method of accounting practices that, due to law, SEC guidelines or
requirements, or GAAP, requires a change in any method of accounting or
accounting practice; or
(vii) settle or compromise any material Tax liability, make or
change any material Tax election, or file any tax return other than a tax return
filed in the ordinary course of business and prepared in a manner consistent
with past practice;
5.2 Access to Information.
At all times prior to the Closing or the earlier termination of this
Agreement in accordance with the provisions of Article VIII, and in each case
subject to Section 5.3 below, each party hereto shall provide to the other party
(and the other party's authorized representatives) reasonable access during
normal business hours and upon reasonable prior notice to the premises,
properties, books, records, assets, liabilities, operations, contracts,
personnel, financial information and other data and information of or relating
to such party (including without limitation all written proprietary and trade
secret information and documents, and other written information and documents
relating to intellectual property rights and matters), and will cooperate with
the other party in conducting its due diligence investigation of such party,
provided that the party granted such access shall not interfere unreasonably
with the operation of the business conducted by the party granting access, and
provided that no such access need be granted to privileged information or any
agreements or documents subject to confidentiality agreements.
5.3 Confidentiality; No Solicitation.
(a) Confidentiality. Each party shall hold, and shall cause its
respective Affiliates and representatives to hold, all Confidential Information
made available to it in connection with the Merger in strict confidence, shall
not use such information except for the sole purpose of evaluating the Merger
and shall not disseminate or disclose any of such information other than to its
directors, officers, managers, employees, shareholders, interest holders,
Affiliates, agents and representatives, as applicable, who need to know such
information for the sole purpose of evaluating the Merger (each of whom shall be
informed in writing by the disclosing party of the confidential nature of such
information and directed by such party in writing to treat such information
confidentially). If this Agreement is terminated pursuant to the provisions of
Article VIII, each party shall immediately return to the other party all such
information, all copies thereof and all information prepared by the receiving
party based upon the same. The above limitations on use, dissemination and
disclosure shall not apply to Confidential Information that (i) is learned by
the disclosing party from a third party entitled to disclose it; (ii) becomes
known publicly other than through the disclosing party or any third party who
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received the same from the disclosing party, provided that the disclosing party
had no Knowledge that the disclosing party was subject to an obligation of
confidentiality; (iii) is required by law or court order to be disclosed by the
parties; or (iv) is disclosed with the express prior written consent thereto of
the other party. The parties shall undertake all necessary steps to ensure that
the secrecy and confidentiality of such information will be maintained in
accordance with the provisions of this subsection (a). Notwithstanding anything
contained herein to the contrary, in the event a party is required by court
order or subpoena to disclose information which is otherwise deemed to be
confidential or subject to the confidentiality obligations hereunder, prior to
such disclosure, the disclosing party shall: (i) promptly notify the
non-disclosing party and, if having received a court order or subpoena, deliver
a copy of the same to the non-disclosing party; (ii) cooperate with the
non-disclosing party, at the expense of the non-disclosing party, in obtaining a
protective or similar order with respect to such information; and (iii) provide
only that amount of information as the disclosing party is advised by its
counsel is necessary to strictly comply with such court order or subpoena.
(b) No Solicitation. Except as otherwise contemplated in this
Agreement, neither Graphite nor any Subsidiary shall, directly or indirectly,
solicit any inquiries or proposals for, or enter into or continue or resume any
discussions with respect to or enter into any negotiations or agreements
relating to, the sale or exchange of all or a substantial part of the Assets.
Graphite shall promptly notify BPK if any such proposal or offer, or any inquiry
or contact with any Person or entity with respect thereto, is made.
5.4 Best Efforts; Consents.
Subject to the terms and conditions herein provided, each of BPK,
Merger Sub and Graphite agrees to use all reasonable efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective as promptly as practicable
the Merger and to cooperate with the others in connection with the foregoing,
including using its reasonable efforts to (i) obtain all waivers, consents and
approvals from other parties to loan agreements, leases, mortgages and other
contracts necessary for the consummation of the Merger, (ii) make all filings
with, and obtain all consents, approvals and authorizations that are required to
be obtained from, Governmental Authorities, (iii) lift or rescind any
injunction, restraining order, decree or other order adversely affecting the
ability of the parties hereto to consummate the Merger, (iv) effect all
necessary registrations and filings and submissions of information requested by
Governmental Authorities, and (v) fulfill all conditions to this Agreement. Each
of BPK, Merger Sub and Graphite shall use all reasonable efforts to prevent the
entry, enactment or promulgation of any threatened or pending preliminary or
permanent injunction or other order, decree or ruling or statute, rule,
regulation or executive order that would adversely affect the ability of the
parties hereto to consummate the Merger.
5.5 Further Assurances.
Subject to Section 5.4, each of the parties hereto agrees to use its
reasonable best efforts before and after the Closing Date to take or cause to be
taken all action, to do or cause to be done, and to assist and cooperate with
the other party hereto in doing, all things necessary, proper or advisable under
applicable laws to consummate and make effective, in the most expeditious manner
practicable, the Merger, including, but not limited to: (i) the satisfaction of
the conditions precedent to the obligations of any of the parties hereto; (ii)
to the extent consistent with the obligations of the parties set forth in
Section 5.4, the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the performance of the
obligations hereunder; and (iii) the execution and delivery of such instruments,
and the taking of such other actions, as the other party hereto may reasonably
require in order to carry out the intent of this Agreement.
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5.6 Public Announcements.
BPK, Merger Sub and Graphite shall consult with each other before
issuing any press release or otherwise making any public statements with respect
to the Merger or this Agreement, and shall not issue any other press release or
make any other public statement without the prior written consent of the other
parties, except as may be required by law or, with respect to BPK, by
obligations pursuant to rule or regulation of the Exchange Act, the Securities
Act, any rule or regulation promulgated thereunder or any rule or regulation of
the National Association of Securities Dealers.
5.7 Notification of Certain Matters.
Each party hereto shall promptly notify the other party in writing
of any events, facts or occurrences that would result in any breach of any
representation or warranty or breach of any covenant by such party contained in
this Agreement.
5.8 Prohibition on Trading in Company Securities.
Graphite and the Principal Shareholders acknowledge that information
concerning the matters that are the subject matter of this Agreement may
constitute material non-public information under United States federal
securities laws, and that United States federal securities laws prohibit any
Person who has received material non-public information relating to BPK from
purchasing or selling securities of BPK, or from communicating such information
to any Person under circumstances in which it is reasonably foreseeable that
such Person is likely to purchase or sell securities of BPK. Accordingly, until
such time as any such non-public information has been adequately disseminated to
the public, neither Graphite nor any of the Principal Shareholders shall
purchase or sell any securities of BPK, or communicate such information to any
other Person.
5.9 [Intentionally Omitted].
5.10 Investment Letters.
At or prior to Closing, Graphite shall deliver to BPK investment
letters in the form attached hereto as Exhibit 5.10 executed by each Graphite
Shareholder listed on Schedule 3.5(a).
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5.11 Audited Financial Statements.
At the Closing, Graphite shall deliver to BPK a consolidated balance
sheet at March 31, 2005 and consolidated income statements and statements of
cash flows for the fiscal years ended March 31, 2005 audited by an
SEC-registered independent accountant, and shall have its consolidated balance
sheets, income statements and statements of cash flows for each interim period
subsequent to March 31, 2005, reviewed by an SEC-registered independent
accountant (collectively, the "Audited Financial Statements"). The Audited
Financial Statements (including the notes thereto) shall present fairly in all
material respects the financial position and results of operations and cash
flows of Graphite at the dates or for the periods set forth therein, in each
case in accordance with GAAP applied on a consistent basis throughout the
periods involved and in accordance with all applicable SEC rules and regulations
(except as otherwise indicated therein). The Audited Financial Statements shall
be prepared from and in accordance with the books and records of Graphite.
Graphite shall cause its independent accountant to consent to BPK's use of and
reliance on the Audited Financial Statements as may be required in connection
with any filings made by BPK under the United States federal securities laws.
5.12 Additional Company Information.
At the Closing, Graphite shall deliver to BPK, written information
regarding Graphite, its business, properties, liquidity and capital resources,
officers, directors, principal shareholders, material pending litigation and any
and all such other matters as BPK shall request (collectively, the "Additional
Company Information") and that BPK is required to file with the SEC under
applicable United States federal securities laws including, but not limited to,
Items 2.01(f) and 5.01(a)(8) of SEC Form 8-K.
5.13 Graphite Options and Warrants.
Graphite covenants and agrees that:
(a) At and immediately prior to the Closing, with the exception of
this Agreement, there shall be no outstanding (i) options, warrants, agreements,
conversion rights, preemptive rights, or other rights to purchase or otherwise
acquire any Graphite Common Stock or Graphite Preferred Stock, or (ii)
obligations of any Person to repurchase, redeem or otherwise acquire any
Graphite Common Stock or Graphite Preferred Stock; and
(b) At and immediately prior to the Closing, there shall be no (i)
voting trusts or other agreements or understandings to which any Graphite
Shareholder shall be a party with respect to the voting of the Graphite Common
Stock or Graphite Preferred Stock, or (ii) issued and outstanding indebtedness
of Graphite having general voting rights.
5.14 BPK and Graphite Capitalization.
(a) Immediately prior to the Closing, Graphite shall provide BPK
with a revised capitalization table substantially in the form of Schedule 3.5(a)
and shall update Section 3.5(a) to reflect any changes in the capitalization of
Graphite occurring after the date hereof and prior to the Closing.
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(b) Immediately prior to the Closing, BPK shall update Section 4.4
to reflect any changes in the capitalization of BPK occurring after the date
hereof and prior to the Closing.
5.15 Registration Rights.
BPK Common Shares and shares of BPK Common Stock issuable upon
exercise of the BPK Preferred Shares to be issued to the Graphite Shareholders
shall have the registration rights set forth in Exhibit 5.15.
5.16 Board of Directors.
On or before the Closing, BPK shall take all necessary action to (i)
increase the size of its Board of Directors to seven and to appoint Xxxxxx
Xxxxx, Xxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxx Xxxxxxxx, Xxxxxx Xxxx, Xxxxx Xxxxx, and
Xxxxxx Xxxxxxx (the "Company Designees") to serve as directors of BPK, effective
as of the Closing; and (ii) obtain the resignation of all of its directors and
officers, effective as of the Closing. BPK shall comply with and immediately
take all actions required pursuant to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder in order to fulfill its obligations under this
Section 5.16, including mailing to its shareholders, the information required by
such Section 14(f) and Rule 14f-1 as is necessary to enable Graphite Designees
to be appointed to BPK's Board of Directors (the "Information Statement").
Graphite shall supply BPK with all information with respect to, and be solely
responsible for all information with respect to, Graphite, Graphite Designees
and its officers, directors and affiliates required by such Section 14(f) and
Rule 14f-1.
5.17 [Intentionally Omitted].
5.18 Lock-Up.
In addition to any prohibition on transfers or sales under
applicable federal or state securities laws, all founders, directors, officers
and consultants who are holders of capital stock of Graphite, including the
Principal Shareholders, shall not sell, transfer, encumber or otherwise dispose
of any of the BPK Common Shares or any shares of BPK Common Stock issued upon
conversion of the BPK Preferred Shares for a period of twelve (12) months
following the Closing. Schedule 5.18 attached hereto lists those Graphite
Shareholders not subject to the lock-up restrictions set forth in this Section
5.18, together with the number of BPK Common Shares, BPK Series D Preferred
Shares and BPK Series E Preferred Shares to be issued to such Graphite
Shareholders pursuant to this Agreement.
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
6.1 Conditions to Obligations of Graphite and the Principal
Shareholders.
The obligations of Graphite and the Principal Shareholders to
consummate the Merger shall be subject to the fulfillment, or written waiver by
Graphite or the Principal Shareholders, at or prior to the Closing, of each of
the following conditions:
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(a) The representations and warranties of BPK and Merger Sub set out
in this Agreement shall be true and correct in all material respects at and as
of the time of the Closing as though such representations and warranties were
made at and as of such time, except that the representations and warranties set
forth in Section 4.4 shall be updated as provided in Section 5.15(b);
(b) BPK and Merger Sub shall have performed and complied in all
material respects with all covenants, conditions, obligations and agreements
required by this Agreement to be performed or complied with by BPK and Merger
Sub, respectively, on or prior to the Closing Date;
(c) BPK shall have delivered to Graphite an officer's certificate of
each of BPK and Merger Sub to the effect that the conditions set forth in
Section 6.1(a) and (b) have been satisfied;
(d) BPK shall have delivered to Graphite any certificates evidencing
BPK Common Shares or BPK Preferred Shares in accordance with Section 2.2(b)(i).
(e) BPK shall have delivered to Graphite at the Closing a fully
executed irrevocable proxy from BP Investment Group LLC ("BPIG"), who currently
holds 27,692,305 shares of BPK Common Stock, in form and substance acceptable to
Graphite and its counsel, constituting and appointing Xxxxxx X. Xxxx proxy, with
full power of substitution in order to vote all shares of BPK's common stock
registered in BPIG's name on BPK's books and records as of the date hereof in
favor of either a reverse stock split of the issued and outstanding shares of
BPK Common Stock or increase in the number of shares of BPK Common Stock BPK is
authorized to issue and in favor of establishing options for management,
advisors, consultants and persons management may designate (the "Management
Options"), which in the aggregate shall represent the right to purchase the
number of shares of BPK Common Stock that, when and if all are exercised, would
result in the issuance of the number of shares of BPK Common Shares equivalent
to 20,000,000 shares of BPK Common Stock (the "Management Shares"), or that
number of Management Shares resulting from a reverse split of the issued and
outstanding shares of BPK Common Stock as and if the Management Shares were
issued prior to the reverse split of BPK Common Stock at any meeting of the
stockholders of BPK to consider such actions.
6.2 Conditions to Obligations of BPK and Merger Sub.
The obligations of BPK and Merger Sub to consummate the Merger shall
be subject to the fulfillment or written waiver by BPK or Merger Sub, at or
prior to the Closing, of each of the following conditions:
(a) The representations and warranties of Graphite and the Principal
Shareholders set out in this Agreement shall be true and correct in all material
respects at and as of the time of the Closing as though such representations and
warranties were made at and as of such time, except that the representations and
warranties set forth in Section 3.5 shall be updated as provided in Section
5.18(a);
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(b) Graphite and the Principal Shareholders shall have performed and
complied in all material respects with all covenants, conditions, obligations
and agreements required by this Agreement to be performed or complied with by
Graphite or the Principal Shareholders on or prior to the Closing Date;
(c) Graphite shall have delivered to BPK and Merger Sub a
certificate of the Secretary of Graphite and the Principal Shareholders to the
effect that the conditions set forth in Section 6.2(a) and (b) hereof have been
satisfied;
(d) Graphite shall have delivered to BPK and Merger Sub any
certificates evidencing the Graphite Shares and any agreement relating to the
Graphite Shares in accordance with 2.2(a)(i) & (ii);
(e) Graphite shall have delivered to BPK and Merger Sub the Audited
Financial Statements described in Section 5.11;
(f) Graphite shall have delivered to BPK and Merger Sub the
Additional Company Information described in Section 5.12;
(g) BPK and Merger Sub shall have completed a due diligence review
of the business, operations, financial condition and prospects of Graphite and
shall have been satisfied with the results of their due diligence review in
their sole and absolute discretion;
(h) The Graphite Shareholders shall have approved the Merger in
accordance with the DGCL; and
(i) No Graphite Shareholder shall assert any dissenters' rights
under the DGCL.
6.3 Other Conditions to Obligations of Graphite, the Principal
Shareholders, BPK and Merger Sub.
The obligations of BPK, Merger Sub and Graphite to consummate the
Merger shall be subject to the fulfillment, or written waiver by each of BPK,
Merger Sub and Graphite, at or prior to the Closing, of each of the following
conditions:
(a) All director, shareholder, lender, lessor and other parties'
consents and approvals, as well as all filings with, and all necessary consents
or approvals of, all federal, state and local governmental authorities and
agencies, as are required under this Agreement, applicable law or any applicable
contract or agreement (other than as contemplated by this Agreement) to complete
the Merger shall have been secured; and
(b) No statute, rule, regulation, executive order, decree,
preliminary or permanent injunction, or restraining order shall have been
enacted, entered, promulgated or enforced by any Governmental Authority that
prohibits or restricts the consummation of the Merger.
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ARTICLE VII
INDEMNIFICATION
7.1 Indemnification by the Principal Shareholders.
During the period commencing on the Closing Date and ending on the
date that is 12 months after the Closing Date, the Principal Shareholders shall
indemnify and hold harmless Parent and Merger Sub and their respective officers,
directors and shareholders (each an "Indemnified Party"), from and against any
and all demands, claims, actions or causes of action, judgments, assessments,
losses, liabilities, damages or penalties and reasonable attorneys' fees and
related disbursements (collectively, "Claims") suffered by such Indemnified
Party resulting from or arising out of any knowing (i) inaccuracy in or breach
of any of the representations or warranties made by Graphite or the Principal
Shareholders at the time they were made, and, except for representations and
warranties that speak as of a specific date or time (which need only be true and
correct as of such date or time), on and as of the Closing Date, (ii) breach or
nonfulfillment of any covenants or agreements made by Graphite or the Principal
Shareholders, and (iii) misrepresentation made by Graphite or the Principal
Shareholders, in each case as made herein or in the Schedules or Exhibits
annexed hereto or in any closing certificate, schedule or any ancillary
certificates or other documents or instruments furnished by Graphite or the
Principal Shareholders pursuant hereto or in connection with the Merger.
7.2 Indemnification Procedures for Third-Party Claim.
(a) Upon obtaining knowledge of any Claim by a third party that has
given rise to, or is expected to give rise to, a claim for indemnification
hereunder, BPK shall give written notice ("Notice of Claim") of such claim or
demand to the Principal Shareholders, specifying in reasonable detail such
information as the Indemnified Party may have with respect to such
indemnification claim (including copies of any summons, complaint or other
pleading that may have been served on it and any written claim, demand, invoice,
billing or other document evidencing or asserting the same). Subject to the
limitations set forth in Section 7.2(b) hereof, no failure or delay by BPK in
the performance of the foregoing shall reduce or otherwise affect the obligation
of the Principal Shareholders to indemnify and hold the Indemnified Party
harmless, except to the extent that such failure or delay shall have actually
adversely affected the Principal Shareholders' ability to defend against, settle
or satisfy any Claims for which the Indemnified Party is entitled to
indemnification hereunder.
(b) If the claim or demand set forth in the Notice of Claim given by
BPK pursuant to Section 7.2(a) hereof is a claim or demand asserted by a third
party, the Principal Shareholders shall have fifteen (15) days after the date on
which the Notice of Claim is delivered to notify Parent in writing of its
election to defend such third party claim or demand on behalf of the Indemnified
Party. If the Principal Shareholders elect to defend such third party claim or
demand, Parent shall make available to the Principal Shareholders and its agents
and representatives all records and other materials that are reasonably required
in the defense of such third party claim or demand and shall otherwise cooperate
with, and assist the Principal Shareholders in the defense of, such third party
claim or demand, and so long as the Principal Shareholders is defending such
third party claim in good faith, the Indemnified Party shall not pay, settle or
compromise such third party claim or demand. If the Principal Shareholders elect
to defend such third party claim or demand, the Indemnified Party shall have the
right to participate in the defense of such third party claim or demand at the
Principal Shareholders' expense. In the event, however, that such Indemnified
30
Party reasonably determines that representation by counsel to the Principal
Shareholders of both the Principal Shareholders and such Indemnified Party could
reasonably be expected to present counsel with a conflict of interest, then the
Indemnified Party may employ separate counsel to represent or defend it in any
such action or proceeding and the Principal Shareholders will pay the fees and
expenses of such counsel. If the Principal Shareholders does not elect to defend
such third party claim or demand or does not defend such third party claim or
demand in good faith, the Indemnified Party shall have the right, in addition to
any other right or remedy it may have hereunder, at the Principal Shareholders'
expense, to defend such third party claim or demand; provided, however, that (i)
such Indemnified Party shall not have any obligation to participate in the
defense of or defend any such third party claim or demand; (ii) such Indemnified
Party's defense of or its participation in the defense of any such third party
claim or demand shall not in any way diminish or lessen the obligations of the
Principal Shareholders under the agreements of indemnification set forth in this
Article VII; and (iii) such Indemnified Party may not settle any claim without
the consent of the Principal Shareholders, which consent shall not be
unreasonably withheld or delayed.
(c) The Company and the Principal Shareholders, and Parent, Merger
Sub and the other Indemnified Parties, if any, shall cooperate fully in all
aspects of any investigation, defense, pre-trial activities, trial, compromise,
settlement or discharge of any claim in respect of which indemnity is sought
pursuant to this Article VII, including, but not limited to, by providing the
other party with reasonable access to employees and officers (including as
witnesses) and other information.
(d) Except for third party claims being defended in good faith, the
Principal Shareholders shall satisfy its obligations under this Article VII in
respect of a valid claim for indemnification hereunder that is not contested by
the Company in good faith in cash within thirty (30) days after the date on
which Notice of Claim is delivered.
7.3 Indemnification Procedures for Non-Third Party Claims.
In the event any Indemnified Party should have an indemnification
claim against the Principal Shareholders under this Agreement that does not
involve a claim by a third party, the Indemnified Party shall promptly deliver
notice of such claim to the Principal Shareholders in writing and in reasonable
detail. The failure by any Indemnified Party to so notify the Principal
Shareholders shall not relieve the Principal Shareholders from any liability
that it may have to such Indemnified Party, except to the extent that Principal
Shareholders have been actually prejudiced by such failure. If the Principal
Shareholders do not notify the Indemnified Party within fifteen (15) Business
Days following its receipt of such notice that the Principal Shareholders
disputes such claim, such claim specified by the Principal Shareholders in such
notice shall be conclusively deemed a liability of the Principal Shareholders
under this Article VII and the Principal Shareholders shall pay the amount of
such liability to the Indemnified Party on demand, or in the case of any notice
in which the amount of the claim is estimated, on such later date when the
amount of such claim is finally determined. If the Principal Shareholders
dispute their liability with respect to such claim in a timely manner, the
Principal Shareholders and the Indemnified Party shall proceed in good faith to
negotiate a resolution of such dispute and, if not resolved through
negotiations, such dispute shall be submitted to arbitration pursuant to Section
9.12.
31
7.4 Limitations on Indemnification.
(a) No claim for indemnification under this Article VII shall be
asserted by an Indemnified Party, and no liability for such indemnify shall be
enforced against the Principal Shareholders, to the extent the Indemnified Party
has theretofore received indemnification or otherwise been compensated for such
Claim. In the event that an Indemnified Party shall later collect any such
amounts recovered under insurance policies with respect to any Claim for which
it has previously received payments under this Article VII from the Principal
Shareholders, such Indemnified Party shall promptly repay to the Principal
Shareholders such amount recovered; provided, however, that in no event shall
the amount repaid to the Principal Shareholders exceed the amount paid by the
Principal Shareholders under this Article VII.
(b) The liability of the Principal Shareholders under this Article
VII shall be limited to the BPK Common Shares issued to the Principal
Shareholders hereunder. The payment of any amounts due under this Article VII
shall be made by delivery of BPK Common Shares to BPK valued at 75% of the
average closing sales price of shares of BPK Common Stock during the thirty (30)
day period preceding delivery of such shares.
7.5 Exclusive Remedy.
The indemnification provisions of this Article VII (i) shall, in the
case of the representatives and warranties, be the exclusive remedy following
the Closing with respect to breaches thereof, (ii) shall apply without regard
to, and shall not be subject to, any limitation by reason of set-off, limitation
or otherwise, and (iii) are intended to be comprehensive and not to be limited
by any requirements of law concerning prominence of language or waiver of any
legal right under any law (including, without limitation, rights under any
workers compensation statute or similar statute conferring immunity from suit).
The obligations of the parties set forth in this Article VII shall be
conditioned upon the Closing having occurred.
ARTICLE VIII
TERMINATION
8.1 Termination.
This Agreement may be terminated at any time prior to the Closing:
(a) by mutual consent of BPK, Merger Sub, Graphite and the Principal
Shareholders;
(b) by any of BPK, Merger Sub, Graphite or the Principal
Shareholders if the Closing shall not have occurred on or before the Outside
Date;
32
(c) by BPK, Merger Sub, Graphite or the Principal Shareholders if
any Governmental Authority shall have issued an injunction, order, decree or
ruling or taken any other action restraining, enjoining or otherwise prohibiting
any material portion of the Merger and such injunction, order, decree, ruling or
other action shall have become final and nonappealable;
(d) by BPK, Merger Sub, Graphite or the Principal Shareholders upon
written notice to the other party if any of the conditions to the Closing set
forth in Section 6.3 shall have become incapable of fulfillment by the Outside
Date and shall not have been waived in writing by BPK, Merger Sub, Graphite, or
the Principal Shareholders, respectively.
(e) by BPK or Merger Sub upon written notice to Graphite if any of
the conditions to the Closing set forth in Section 6.2 shall have become
incapable of fulfillment by the Outside Date and shall not have been waived in
writing by BPK; or
(f) by Graphite or the Principal Shareholders upon written notice to
BPK if any of the conditions to the Closing set forth in Section 6.1 shall have
become incapable of fulfillment by the Outside Date and shall not have been
waived in writing by Graphite or the Principal Shareholders.
8.2 Procedure and Effect of Termination.
In the event of termination of this Agreement pursuant to Section
8.1 hereof, written notice thereof shall forthwith be given by the terminating
party to the other party, and, except as set forth below, this Agreement shall
terminate and be void and have no effect and the Merger shall be abandoned
without any further action by the parties hereto; provided, however, that if
such termination shall result from the failure of a party to perform a covenant,
obligation or agreement in this Agreement or from the breach by BPK, Merger Sub,
Graphite or the Principal Shareholders of any representation or warranty
contained herein, such party shall be fully liable for any and all damages
incurred or suffered by the other party as a result of such failure or breach.
If this Agreement is terminated as provided herein:
(a) each party hereto shall redeliver, and shall cause its agents
(including, without limitation, attorneys and accountants) to redeliver, all
documents, work papers and other material of each party hereto relating to the
Merger, whether obtained before or after the date hereof; and
(b) each party agrees that all Confidential Information received by
BPK and Merger Sub, on the one hand, or Graphite and the Principal Shareholders,
on the other hand, with respect to the other party, this Agreement or the Merger
shall be kept confidential notwithstanding the termination of this Agreement.
33
ARTICLE IX
MISCELLANEOUS
9.1 Entire Agreement.
This Agreement and the Schedules and Exhibits hereto contain the
entire agreement between the parties and supersede all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
9.2 Amendment and Modifications.
This Agreement may not be amended, modified or supplemented except
by an instrument or instruments in writing signed by the party against whom
enforcement of any such amendment, modification or supplement is sought.
9.3 Extensions and Waivers.
At any time prior to the Closing, the parties hereto entitled to the
benefits of a term or provision may (a) extend the time for the performance of
any of the obligations or other acts of the parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document, certificate or writing delivered pursuant hereto, or (c) waive
compliance with any obligation, covenant, agreement or condition contained
herein. Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument or instruments in writing
signed by the party against whom enforcement of any such extension or waiver is
sought. No failure or delay on the part of any party hereto in the exercise of
any right hereunder shall impair such right or be construed to be a waiver of,
or acquiescence in, any breach of any representation, warranty, covenant or
agreement.
9.4 Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, provided, however,
that no party hereto may assign its rights or delegate its obligations under
this Agreement without the express prior written consent of the other party
hereto. Except as provided in Article VII, nothing in this Agreement is intended
to confer upon any person not a party hereto (and their successors and assigns)
any rights, remedies, obligations or liabilities under or by reason of this
Agreement.
9.5 Survival of Representations, Warranties and Covenants.
The representations and warranties contained herein shall survive
the Closing and shall thereupon terminate twelve (12) months after the Closing,
except that (i) the representations contained in Sections 3.1, 3.2, 3.5, 3.9,
3.12, 3.17, 4.1, 4.2, and 4.4 shall survive indefinitely. All covenants and
agreements contained herein which by their terms contemplate actions following
the Closing shall survive the Closing and remain in full force and effect in
accordance with their terms. All other covenants and agreements contained herein
shall not survive the Closing and shall thereupon terminate.
34
9.6 Headings; Definitions.
The section and article headings contained in this Agreement are
inserted for convenience of reference only and will not affect the meaning or
interpretation of this Agreement. All references to sections or articles
contained herein mean sections or articles of this Agreement unless otherwise
stated. All capitalized terms defined herein are equally applicable to both the
singular and plural forms of such terms.
9.7 Severability.
If any provision of this Agreement or the application thereof to any
Person or circumstance is held to be invalid or unenforceable to any extent, the
remainder of this Agreement shall remain in full force and effect and shall be
reformed to render the Agreement valid and enforceable while reflecting to the
greatest extent permissible the intent of the parties.
9.8 Specific Performance.
The parties hereto agree that in the event Graphite fails to
consummate the Merger in accordance with the terms of this Agreement,
irreparable damage would occur, no adequate remedy at law would exist and
damages would be difficult to determine. It is accordingly agreed that BPK and
Merger Sub shall be entitled to specific performance in such event, without the
necessity of proving the inadequacy of money damages as a remedy, in addition to
any other remedy at law or in equity.
9.9 Expenses.
Whether or not the Merger is consummated, and except as otherwise
expressly set forth herein, all legal and other costs and expenses incurred in
connection with the Merger, including any legal and other costs and expenses
incurred in compliance with the terms of this Agreement, shall be paid by the
party incurring such expenses.
9.10 Notices.
All notices hereunder shall be sufficiently given for all purposes
hereunder if in writing and delivered personally, sent by documented overnight
delivery service or, to the extent receipt is confirmed, telecopy, telefax or
other electronic transmission service to the appropriate address or number as
set forth below.
If to Graphite or Merger Sub: with a copy to:
BPK Resources, Inc. Fox Rothschild LLP
000 Xxxxx Xxxxxxxxx, First Floor 000 Xxxxx Xxxxx, Xxxxxxxx 0
Xxxxxx, XX 00000 Xxxxxxxxxxxxx, XX 00000
Attention: Chief Executive Officer Attention: Xxxxxxx X. Xxxxxx,
Esquire
35
If to Graphite or the Principal Shareholders: with a copy to:
Graphite Technology Group, Inc. Xxxxxx & Eilen LLP
000 Xxxxxxxx Xxxxxx Xxxxxxx Xxx Xxxxxx Xxxxx
Xxxxxx, XX 00000 Suite 300
Attention: Xxxxx X. Olive 00000 Xxxxx Xxxx
Xxxx Xxxxx, XX 00000
Attention: Xxxx Xxxxxx, Esq.
9.11 Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without regard to the laws that might
otherwise govern under applicable principles of conflicts of laws thereof,
except to the extent that the DGCL shall apply to the internal corporate
governance of Graphite, the NGCL shall apply to the internal corporate
governance of BPK and to the extent that the DGCL shall apply to the internal
corporate governance of Merger Sub.
9.12 Arbitration.
If a dispute arises as to the interpretation of this Agreement, it
shall be decided in an arbitration proceeding conforming to the Rules of the
American Arbitration Association applicable to commercial arbitration then in
effect at the time of the dispute. The arbitration shall take place in the State
of New Jersey. The decision 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. The parties shall share equally the
costs of the arbitration.
9.13 Counterparts.
This Agreement may be executed in two or more counterparts and
delivered via facsimile, each of which shall be deemed to be an original, but
all of which together shall constitute one and the same agreement.
9.14 Certain Definitions.
As used herein:
(a) "Affiliate" shall have the meanings ascribed to such term in
Rule 12b 2 of the Exchange Act;
(b) "Business Day" shall mean any day other than a Saturday, Sunday
or a day on which federally chartered financial institutions are not open for
business in New York City;
(c) "Confidential Information" shall mean the existence and contents
of this Agreement and the schedules and exhibits hereto, and all proprietary
technical, economic, environmental, operational, financial and/or business
information or material of one party that, prior to or following the Closing
Date, has been disclosed by Graphite or any Subsidiary, on the one hand, or BPK
or Merger Sub, on the other hand, in written, oral (including by recording),
electronic, or visual form to, or otherwise has come into the possession of, the
other;
36
(d) "Employee Benefit Plan" shall mean: (i) each bonus, stock
option, stock purchase, incentive compensation, deferred compensation and other
equity compensation plan, program, agreement or arrangement; (ii) each severance
or termination pay, medical, surgical, hospitalization, life insurance and other
"welfare" plan, fund or program within the meaning of Section 3(1) of ERISA
(whether or not subject to ERISA); (iii) each profit-sharing, stock bonus or
other "pension" plan, fund or program (within the meaning of Section 3(2) of
ERISA); (iv) each "employee benefit plan" within the meaning of Section 3(3) of
ERISA (whether or not subject to ERISA); (v) each employment, retention,
termination, severance, change of control or compensation agreement; and (vi)
each other employee benefit plan, fund, program, agreement or arrangement that
is, in each case, sponsored, maintained or contributed to or required to be
contributed to by Graphite, any Subsidiary or any third party, or to which
Graphite, any Subsidiary or any third party is party, whether written or
otherwise, for the benefit of any director, employee or former employee of
Graphite or any Subsidiary;
(e) "Encumbrances" shall mean any security or other property
interest or right, claim, lien, pledge, option, charge, security interest,
contingent or conditional sale, or other title claim or retention agreement,
interest or other right or claim of third parties, whether perfected or not
perfected, voluntarily incurred or arising by operation of law, and including
any agreement (other than this Agreement) to grant or submit to any of the
foregoing in the future;
(f) "Environmental Law" shall mean any applicable statute, rule,
regulation, law, bylaw, ordinance or directive of any Governmental Authority
dealing with the pollution or protection of natural resources, the indoor or
ambient environment, or the protection of human health or safety;
(g) "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder;
(i) "GAAP" shall mean United States generally accepted accounting
principles as in effect on the date or for the period with respect to which such
principles are applied;
(j) "Governmental Authority" shall mean any nation or government,
any state, municipality or other political subdivision thereof and any entity,
body, agency, commission or court, whether domestic, foreign or multinational,
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any executive official thereof;
(k) "Intellectual Property" shall mean all of the following: (i)
inventions (whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereto and all patents, patent applications and
patent disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof, (ii)
trademarks, service marks, trade dress, domain names, maskworks, logos, trade
names and corporate names, including all goodwill associated therewith and all
applications, registrations and renewals in connection therewith, (iii)
copyrightable works, copyrights and all applications, registrations and renewals
in connection therewith, (iv) trade secrets and confidential business
information (including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques, technical
data, designs, drawings, specifications, customer and supplier lists, pricing
and cost information and business and marketing plans and proposals), (v)
computer software, together with all translations, adaptations, derivations and
combinations thereof (including data and related documentation), (vi) all other
proprietary rights, and (vii) all copies and tangible embodiments thereof (in
whatever form or medium);
37
(l) "Knowledge" shall mean (i) with respect to an individual,
knowledge of a particular fact or other matter, if such individual is aware of
such fact or other matter, and (ii) with respect to a Person that is not an
individual, knowledge of a particular fact or other matter if any individual who
is serving, or who has at any time served, as a director, officer, partner,
executor, or trustee of such Person (or in any similar capacity) has, or at any
time had, knowledge of such fact or other matter;
(m) "Liens" shall mean liens, pledges, charges, claims, security
interests, purchase agreements, options, title defects, restrictions on transfer
or other encumbrances, or any agreements (other than this Agreement) to do any
of the foregoing, of any nature whatsoever, whether consensual, statutory or
otherwise;
(n) "Material Adverse Effect" shall mean any adverse effect on the
business, condition (financial or otherwise) or results of operation of the
applicable entity and its subsidiaries, if any, which is material to the
applicable entity and its subsidiaries, if any, taken as a whole;
(o) "Material Contract" shall mean any oral, written or implied
contracts, agreements, leases, powers of attorney, guaranties, surety
arrangements, employment agreements, consulting agreements or other commitments,
the liabilities or commitments associated therewith exceed, in the case of
Graphite and its Subsidiaries collectively, $10,000 individually or $25,000 in
the aggregate;
(p) "Person" shall mean any individual, corporation, partnership,
association, trust or other entity or organization, including a governmental or
political subdivision or any agency or institution thereof;
(q) "SEC" shall mean the Securities and Exchange Commission;
(r) "Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder; and
38
(s) "Taxes" shall mean all taxes (whether U.S. federal, state, local
or non-U.S.) based upon or measured by income and any other tax whatsoever,
including, without limitation, gross receipts, profits, sales, levies, imposts,
deductions, charges, rates, duties, use, occupation, value added, ad valorem,
transfer, franchise, withholding, payroll and social security, employment,
excise, stamp duty or property taxes, together with any interest, penalties,
charges or fees imposed with respect thereto.
[Remainder of page intentionally left blank]
39
IN WITNESS WHEREOF, BPK, Merger Sub, Graphite and the Principal
Shareholders have caused this Agreement to be signed by their respective
officers hereunto duly authorized, all as of the date first written above.
BPK RESOURCES, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxxxxxxx X. Xxxxxxxx
President
BPK RESOURCES ACQUISITION CORP.
By: /s/ Xxxxxxxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxxxxxxx X. Xxxxxxxx
President
GRAPHITE TECHNOLOGY GROUP, INC.
By: /s/ Xxxxx X. Olive
--------------------------------------
Xxxxx X. Olive
Chief Executive Officer and Director
/s/ Xxxxx Xxxxxx
--------------------------------------
Xxxxx Xxxxxx
/s/ Xxxxx X. Olive
--------------------------------------
Xxxxx X. Olive
40
SCHEDULE I
GRAPHITE SHAREHOLDERS AND ALLOCATION OF
BPK COMMON SHARES AND BPK PREFERRED SHARES
Common Shares Issued Graphite Series D
(Graphite Technology Group, Inc.) Technology Shares % Share Exchange Preferred
--------------------------------------------------------------------------------------------------------------------
40,000,000 585,000
40.61% 59.39%
Xxxxx Xxxxx 1,350,000 9.13% 3,651,167 53,398
Xxxxx Xxxxx 450,000 3.04% 1,217,056 17,799
Xxxxxxxxxx Capital, L.P. 850,000 5.75% 2,298,883 33,621
Opal Partners, L.P. 856,413 5.79% 2,316,228 33,875
Xxxxx Xxxxxx 1,155,221 7.81% 3,124,374 45,694
Xxxxxx Xxxxxx 1,155,221 7.81% 3,124,374 45,694
Xxxxxxx Xxxxxx 1,155,221 7.81% 3,124,374 45,694
Beach Lane Capital 893,661 6.04% 2,416,967 35,348
0000 Xxxxxx Inc. 1,874,449 12.67% 5,069,576 74,143
Xxxxxx Xxxx 500,000 3.38% 1,352,284 19,777
Hyo-Xxxx Xxxxxxxx 371,250 2.51% 1,004,071 14,685
Industry Capital Partners L.P. 340,932 2.31% 922,074 13,485
Xxxx XxXxxxxx 25,000 0.17% 67,614 989
Xxx Xxxxxxx 133,000 0.90% 359,708 5,261
Xxxxxx X. Xxxx 57,500 0.39% 155,513 2,274
Xxxxxx X'Xxxxxxx 28,571 0.19% 77,272 1,130
Xxxxxx Xxxx 5,714 0.04% 15,454 226
R&N Xxxxxxx 150,000 1.01% 405,685 5,933
Awsum Corporation 69,500 0.47% 187,968 2,749
Xxxxx Xxxx 60,000 0.41% 162,274 2,373
Xxxxxx Xxxxxxx 50,000 0.34% 135,228 1,978
Xxxxxx Xxxxxx 53,846 0.36% 145,630 2,130
Xxxxxx Xxxxxxx Xx. 40,000 0.27% 108,183 1,582
Xxxxxx Xxxxx 40,000 0.27% 108,183 1,582
X.X. Xxxxx 40,000 0.27% 108,183 1,582
E.L. Xxxx 40,000 0.27% 108,183 1,582
Xxxxx X. Xxxxxxxx 40,000 0.27% 108,183 1,582
Schedule I (cont.)
Common Shares Issued Graphite Series D
(Graphite Technology Group, Inc.) Technology Shares % Share Exchange Preferred
--------------------------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxx 15,000 0.10% 40,569 593
Xxxx Xxxxx 15,000 0.10% 40,569 000
Xxxxxxx Xxxxxxxxx 15,000 0.10% 40,569 593
Xxxxx Xxxx 15,000 0.10% 40,569 593
Xxx Xxxxxx 75,000 0.51% 202,843 2,967
Xxxx Xxxxxx 75,000 0.51% 202,843 2,967
Xxxx Xxxxxxxx 75,000 0.51% 202,843 2,967
Xxxxxx Xxxxx 75,000 0.51% 202,843 2,967
Beach Lane Capital 120,000 0.81% 324,548 4,747
Twinbro Capital LLC 43,610 0.29% 117,946 1,725
Industry Capital Partners L.P. 165,466 1.12% 447,514 6,545
Merchant Capital 450,000 3.04% 1,217,056 17,799
Range Corp 45,673 0.31% 123,526 1,807
Xxx Xxxxxxxxx 75,000 0.51% 202,843 2,967
Xxxxx Xxxxxxxxxx 20,000 0.14% 54,091 791
M Xxxxx Revocable Trust 71,429 0.48% 193,185 2,825
Xxxxx Xxxxxxxxx 10,000 0.07% 27,046 396
Xxxxxxxx Xxxxxxxx 66,667 0.45% 180,305 2,637
Xxxxxxx Xxxxxxxx 66,667 0.45% 180,305 2,637
Xxx Xxxxxxxx 15,000 0.10% 40,569 593
Xxx Xxxxxxxx 15,000 0.10% 40,569 593
Merchant Capital 144,796 0.98% 391,611 5,727
Merchant Capital 452,489 3.06% 1,223,787 17,898
Shu Xxx Xxxx 75,000 0.51% 202,843 2,967
Xxxxxxxx Living Trust 5,714 0.04% 15,454 226
Chenzhou Global Graphite, Inc. 600,795 4.06% 1,624,891 23,764
Xxxxx Xxxxxx 11,337 0.08% 30,662 000
Xxxxxx Inc. 67,626 0.46% 182,899 2,675
Beach Lane Capital 54,485 0.37% 147,358 2,155
E.L. Xxxx 2,019 0.01% 5,461 80
X.X.Xxxxx 3,989 0.03% 10,789 158
Xxxx Insurance Brokers 5,481 0.04% 14,824 217
Schedule I (cont.)
Common Shares Issued Graphite Series D
(Graphite Technology Group, Inc.) Technology Shares % Share Exchange Preferred
--------------------------------------------------------------------------------------------------------------------
Carlant Holdings 4,615 0.03% 12,482 000
Xxxxx Xxxx Capital 12,766 0.09% 34,527 505
E. L. Xxxx 3,333 0.02% 9,014 132
X. X. Xxxxx 16,000 0.11% 43,273 633
Xxxx Insurance Brokers 12,667 0.09% 34,259 501
Carlant Holdings 6,667 0.05% 18,031 264
Total Shares 14,789,790 100% 40,000,000 585,000
Graphite Series A Series E
Series A & B Preferred Shares & B Preferred Preferred
--------------------------------------------------------------------------------------------------------------------
Series A Preferred Shares
Xxxxx Xxxxxx 4,546
Series B Preferred Shares
Xxxxx Xxxxxx 10,000
Series E Convertible Preferred
Xxxxx Xxxxxx 14,546
