NOTE AND WARRANT PURCHASE AGREEMENT
NOTE AND WARRANT PURCHASE AGREEMENT (this "Agreement"), dated as of
July 12, 2006, by and among BPK RESOURCES, INC., a Nevada corporation (the
"BPK"), GRAPHITE TECHNOLOGY GROUP, INC., a Delaware corporation ("Graphite" and,
together with BPK, the "Issuers"), and the investor listed on the signature page
below (the "Investor").
WHEREAS, the Issuer and the Investor are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(2) of the Securities Act of 1933, as amended (the "1933 Act");
WHEREAS, the Issuers have authorized the Guaranteed Exchangeable Note
of Graphite in the original principal amount of $4,500,000, in the form attached
hereto as Exhibit A (the "Note"), which Note shall be exchangeable into shares
(as exchanged, collectively, the "Exchange Shares") of BPK's common stock,
$0.0001 par value per share (the "Common Stock") and guaranteed by BPK, in
accordance with the terms of the Note;
WHEREAS, BPK has authorized the warrant, in the form attached hereto as
Exhibit B (the "Warrant"), to acquire 9,782,609 shares (the "Warrant Shares") of
Common Stock; and
WHEREAS, the Investor wishes to purchase, and the Issuers wish to sell,
the Note and the Warrant, upon the terms and conditions stated in this
Agreement;
WHEREAS, the Note bears interest, which at the option of the Issuers,
subject to certain conditions, may be paid in additional shares of Common Stock
(collectively, the "Interest Shares" and, together with the Note, the Exchange
Shares, the Warrant and the Warrant Shares, the "Securities"); and
WHEREAS, in connection with the execution and delivery of this
Agreement, BPK and the Investor are executing and delivering a Registration
Rights Agreement, in the form attached hereto as Exhibit C (the "Registration
Rights Agreement"), pursuant to which BPK has agreed to provide certain
registration rights with respect to the Exchange Shares, the Interest Shares and
the Warrant Shares under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws;
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Issuers and the Investor hereby agree as follows:
Section 1. Purchase and Sale of Note and Warrant.
(a) Note and Warrant. Subject to the satisfaction (or waiver) of the
conditions set forth in Sections 6 and 7 herein, on the Closing Date (as defined
below) (i) Graphite shall issue and sell to the Investor and the Investor shall
purchase from Graphite the Note and (ii) BPK shall issue and sell to the
Investor, and the Investor shall purchase from BPK the Warrant.
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(b) Closing. The closing (the "Closing") of the purchase of the Note
and the Warrant by the Investor shall occur at the offices of White & Case LLP,
000 Xxxxx Xxxxxxxx Xxxxxxxxx, Xxxxx, Xxxxxxx 00000. The date and time of the
Closing (the "Closing Date") shall be 10:00 a.m., New York City time, on the
third Business Day following the satisfaction (or, to the extent permitted,
waiver) of the conditions to the Closing set forth in Sections 6 and 7 herein
(other than any of such conditions that by their nature are to be fulfilled at
Closing, but subject to the fulfillment or waiver of such conditions) and, in
any event later than July 14, 2006, or at such other place, time and date as
shall be agreed by the Issuer and the Investor. For purposes of this Agreement,
"Business Day" means any day other than Saturday, Sunday or other day on which
commercial banks in The City of New York are authorized or required by law to
remain closed.
(c) Fees. On the Closing Date, the Issuers shall pay to the Investor
fees in an amount equal to $___________ in cash.
(d) Purchase Price. The purchase price (the "Purchase Price") of the
Note and the Warrant to be purchased by the Investor at the Closing shall be
equal to $1.00 for each $1.00 of principal amount of the Note.
(e) Form of Payment. On the Closing Date, (i) the Investor shall pay
the Purchase Price to Graphite, by wire transfer of immediately available funds
in accordance with Graphite's written wire instructions, and (ii) the Issuers
shall deliver to the Investor the Note and the Warrant, duly executed on behalf
of the Issuers and registered in the name of the Investor or its designee.
Section 2. Investor's Representations and Warranties.
The Investor represents and warrants that, as of the date hereof and
as of the Closing Date:
(a) No Public Sale or Distribution. The Investor (i) is acquiring
the Note and the Warrant, (ii) upon exchange of the Note, will acquire the
Exchange Shares, (iii) upon the receipt of any Interest Shares, will acquire
such Interest Shares, and (iv) upon exercise of the Warrant, will acquire the
Warrant Shares, in each case, for its own account and not with a view towards,
or for resale in connection with, the public sale or distribution thereof in a
manner that would violate the 1933 Act, except pursuant to sales registered or
exempted under the 1933 Act; provided, however, that by making the
representations herein, the Investor does not agree to hold any of the
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption under the 1933 Act.
(b) Reliance on Exemptions. The Investor understands that the
Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Issuers are relying in part upon the truth and accuracy of,
and the Investor's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Investor set forth herein in order to
determine the availability of such exemptions and the eligibility of the
Investor to acquire the Securities.
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(c) Information. The Investor and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Issuers and materials relating to the offer and sale of the Securities
which have been requested by the Investor. The Investor and its advisors, if
any, have been afforded the opportunity to ask questions of the Issuers. Neither
such inquiries nor any other due diligence investigations conducted by the
Investor or its advisors, if any, or its representatives shall modify, amend or
affect the Investor's right to rely on the Issuers' representations and
warranties contained herein. The Investor understands that its investment in the
Securities involves a high degree of risk. The Investor has sought such
accounting, legal and tax advice as it has considered necessary to make an
informed investment decision with respect to its acquisition of the Securities.
(d) No Governmental Review. The Investor understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
(e) Transfer or Resale. The Investor understands that, except as
provided in the Registration Rights Agreement, the Securities have not been and
are not being registered under the 1933 Act or any state securities laws, and
may not be offered for sale, sold, assigned or transferred unless (A)
subsequently registered thereunder, (B) the Investor shall have delivered to the
Issuer thereof an opinion of counsel, in a generally acceptable form, to the
effect that such Securities to be sold, assigned or transferred may be sold,
assigned or transferred pursuant to an exemption from such registration, or (C)
the Investor provides the Issuer with reasonable assurance that such Securities
can be sold, assigned or transferred pursuant to Rule 144 ("Rule 144") or Rule
144A ("Rule 144A") promulgated under the 1933 Act (or, in each case, a successor
rule thereto); provided, however, that the Securities may be pledged in
connection with a bona fide margin account or other loan or financing
arrangement secured by the Securities and such pledge of Securities shall not be
deemed to be a transfer, sale or assignment of the Securities hereunder, and no
Investor effecting a pledge of Securities shall be required to provide such
Issuer with any notice thereof or otherwise make any delivery to such Issuer
pursuant to this Agreement or any other Transaction Document (as defined in
Section 3(b)), including, without limitation, this Section 2(e).
(f) Legends. The Investor understands that the certificates or other
instruments representing the Securities, shall, except as set forth below, bear
any legend as required by the "blue sky" laws of any state and a restrictive
legend in substantially the following form (and a stop-transfer order may be
placed against transfer of such stock certificates):
[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES
ARE [EXCHANGEABLE][EXERCISABLE] HAVE BEEN][THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
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REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR (B)
AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT AND APPLICABLE STATE
SECURITIES LAWS OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
The legend set forth above shall be removed and the applicable Issuer shall
issue a certificate without such legend to the holder of the Securities upon
which it is stamped, if (i) such Securities are registered for resale under the
1933 Act, (ii) in connection with a sale, assignment or other transfer, such
holder provides such Issuer with an opinion of counsel, in a generally
acceptable form, to the effect that such sale, assignment or transfer of the
Securities may be made without registration under the applicable requirements of
the 1933 Act, or (iii) such Securities are sold, assigned or transferred
pursuant to Rule 144 or Rule 144A, or such holder provides such Issuer with
reasonable assurance that the Securities can be sold, assigned or transferred
pursuant to Rule 144(k) or Rule 144A.
Section 3. Representations and Warranties of the Issuers.
Each Issuer represents and warrants to the Investor that, as of
the date hereof and as of the Closing Date:
(a) Organization and Qualification. The Issuers and their
"Subsidiaries" (which for purposes of this Agreement, means any entity or
association in which any Issuer, directly or indirectly, owns capital stock or
holds an equity or similar interest) are entities duly organized and validly
existing in good standing under the laws of the jurisdiction in which they are
formed, and have the requisite power and authorization to own their properties
and to carry on their business as now being conducted. Each of the Issuers and
their Subsidiaries is duly qualified as a foreign entity to do business and is
in good standing in every jurisdiction in which its ownership of property or the
nature of the business conducted by it makes such qualification necessary,
except to the extent that the failure to be so qualified or be in good standing
would not have a material adverse effect on the business, properties, assets,
operations, results of operations, condition (financial or otherwise) or
prospects of the Issuers and its Subsidiaries, taken as whole, or on the
transactions contemplated hereby and the other Transaction Documents (as defined
in Section 3(b) below) or on the authority or ability of the Issuers to perform
its obligations under the Transaction Documents (a "Material Adverse Effect").
The Issuers have no Subsidiaries, except as set forth in Schedule 3(a).
(b) Authorization; Enforcement; Validity. Each Issuer has the
requisite power and authority to enter into and perform its obligations under
this Agreement, the Note, the Warrant, the Registration Rights Agreement, the
Irrevocable Transfer Agent Instructions (as defined in Section 5(b)) among the
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Issuer and the Investor, and each of the other agreements entered into by the
parties hereto in connection with the transactions contemplated by this
Agreement (collectively, the "Transaction Documents") and to issue the
Securities in accordance with the terms hereof and thereof. The execution and
delivery of the Transaction Documents by the Issuers and the consummation by the
Issuers of the transactions contemplated hereby and thereby, including, without
limitation, the issuance of the Note, the reservation for issuance and the
issuance of the Exchange Shares and the Interest Shares, the issuance of the
Warrant and the reservation for issuance and issuance of the Warrant Shares
issuable upon exercise of the Warrant, have been duly authorized by each
Issuer's applicable Board of Directors and no further filing, consent, or
authorization is required by the Issuers, its Boards of Directors or their
stockholders. This Agreement has been, and the other Transaction Documents on
the Closing Date will be, duly executed and delivered by the Issuers, and
constitute, or as of the Closing Date will constitute, the legal, valid and
binding obligations of the Issuers, enforceable against the Issuers and in
accordance with their respective terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of applicable creditors' rights and
remedies.
(c) Issuance of Securities. The issuance of the Note and the Warrant
has been duly authorized and such Securities, upon issuance in accordance with
the terms hereof, shall be free from all taxes, liens and charges with respect
to the issue thereof. As of the Closing, BPK shall have reserved from its duly
authorized capital stock not less than the sum of (i) the maximum number of
shares of Common Stock issuable upon exchange of the Note and as payment of
interest under the Note and (ii) the maximum number of shares of Common Stock
issuable upon exercise of the Warrant. Upon issuance or exchange in accordance
with the Note or exercise in accordance with the Warrant, as the case may be,
the Interest Shares, the Exchange Shares and the Warrant Shares, respectively,
will be validly issued, fully paid and nonassessable and free from all
preemptive or similar rights, taxes, liens and charges with respect to the issue
thereof, with the holders being entitled to all rights accorded to a holder of
Common Stock. Assuming the accuracy of the representations made by the Investor
in Section 2 above, the offer and issuance by the Issuers of the Securities is
exempt from registration under the 1933 Act.
(d) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Issuers and the consummation by the Issuers of the
transactions contemplated thereby (including, without limitation, the issuance
of the Note, the Warrant, and the Interest Shares and the reservation for
issuance and issuance of the Exchange Shares and the Warrant Shares) will not
(i) result in a violation of the Articles of Incorporation or Bylaws (each as
defined in Section 3(s) herein) of the Issuers or any of their Subsidiaries or
the terms of any capital stock of the Issuers or any of their Subsidiaries; (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which any Issuer or any of its Subsidiaries is a
party; or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and the rules
and regulations of the NASD OTC Bulletin Board (the "Principal Market"))
applicable to the Issuer or any of its Subsidiaries or by which any property or
asset of the Issuer or any of its Subsidiaries is bound or affected.
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(e) No Defaults. On the Closing Date, and also after giving effect
to the Closing, there shall exist no Default (as defined in the Note) or Event
of Default (as defined in the Note).
(f) Consents. The Issuers are not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court,
governmental agency or any regulatory or self-regulatory agency or any other
Person (as defined in the Note) in order for them to execute, deliver or perform
any of their obligations under or contemplated by the Transaction Documents, in
each case in accordance with the terms thereof. All consents, authorizations,
orders, filings and registrations which the Issuers are required to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to
the Closing Date, and the Issuers and their Subsidiaries are unaware of any
facts or circumstances which might prevent the Issuers from obtaining or
effecting any of the registration, application or filings pursuant to the
preceding sentence. BPK is not in violation of the listing requirements of the
Principal Market and has no knowledge of any facts which would reasonably lead
to delisting or suspension of the Common Stock in the foreseeable future.
(g) Acknowledgment Regarding Investor's Purchase of Securities. Each
Issuer acknowledges and agrees that the Investor is acting solely in the
capacity of an arm's length purchaser with respect to the Transaction Documents
and the transactions contemplated thereby and that the Investor is not (i) an
officer or director of any Issuer, (ii) an "affiliate" of any Issuer (as defined
in Rule 144, "Affiliate") or (iii) to the knowledge of the Issuers, a
"beneficial owner" of more than 10% of the shares of Common Stock (as defined
for purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as amended
(the "1934 Act")). Each Issuer further acknowledges that the Investor is not
acting as a financial advisor or fiduciary of the Issuers (or in any similar
capacity) with respect to the Transaction Documents and the transactions
contemplated thereby, and any advice given by the Investor or any of its
representatives or agents in connection with the Transaction Documents and the
transactions contemplated thereby is merely incidental to the Investor's
purchase of the Securities. Each Issuer further represents to the Investor that
its decision to enter into the Transaction Documents has been based solely on
the independent evaluation by such Issuer and its representatives.
(h) No General Solicitation; Placement Agent's Fees. Neither Issuer,
not its Subsidiaries, nor any of its or their Affiliates, nor any Person acting
on its or their behalf, has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D under the 0000 Xxx) in
connection with the offer or sale of the Securities. The Issuers shall be
responsible for the payment of any placement agent's fees, financial advisory
fees, or brokers' commissions (other than for persons engaged by any Investor or
its investment advisor) relating to or arising out of the transactions
contemplated hereby. The Issuers shall jointly and severally pay, and hold the
Investor harmless against, any liability, loss or expense (including, without
limitation, attorney's fees and out-of-pocket expenses) arising in connection
with any such claim.
(i) No Integrated Offering. Neither Issuer, nor its Subsidiaries,
nor any of its or their Affiliates, or any Person acting on its or their behalf,
has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that would require
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registration of any of the Securities under the 1933 Act or cause this offering
of the Securities to be integrated with prior offerings by the Issuers for
purposes of the 1933 Act or any applicable stockholder approval provisions,
including, without limitation, under the rules and regulations of any exchange
or automated quotation system on which any of the securities of BPK are listed
or designated. Neither Issuer, nor its Subsidiaries, nor any of its or their
Affiliates or any Person acting on its or their behalf will take any action or
steps referred to in the preceding sentence that would require registration of
any of the Securities under the 1933 Act or cause the offering of the Securities
to be integrated with other offerings.
(j) Dilutive Effect. BPK understands and acknowledges that the
number of Exchange Shares issuable upon exchange of the Note, and the number of
Warrant Shares issuable upon exercise of the Warrant, will increase in certain
circumstances. BPK further acknowledges that its obligation to issue Exchange
Shares upon exchange of the Note in accordance with this Agreement and the Note
and its obligation to issue the Warrant Shares upon exercise of the Warrant in
accordance with this Agreement and the Warrant is, in each case, absolute and
unconditional regardless of the dilutive effect that such issuance may have on
the ownership interests of other stockholders of BPK.
(k) Application of Takeover Protections; Rights Agreement. BPK and
its Board of Directors has taken all necessary action, if any, in order to
render inapplicable any control share acquisition, business combination, poison
pill (including any distribution under a rights agreement) or other similar
anti-takeover provision under the Articles of Incorporation (as defined in
Section 3(s)) or the laws of the jurisdiction of its formation which is or could
become applicable to the Investor as a result of the transactions contemplated
by this Agreement, including, without limitation, BPK's issuance of the
applicable Securities and the Investor's ownership of the Securities. The Issuer
has not adopted a stockholder rights plan or similar arrangement relating to
accumulations of beneficial ownership of Common Stock or a change in control of
BPK.
(l) SEC Documents; Financial Statements. Since December 31, 2005,
BPK has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the United States Securities and Exchange
Commission (the "SEC") pursuant to the reporting requirements of the 1934 Act
(all of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements, notes and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the "SEC
Documents"). BPK has delivered to the Investor or its respective representatives
true, correct and complete copies of the SEC Documents not available on the
XXXXX system. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. As of their respective dates, the financial statements of BPK and
its consolidated subsidiaries included in the SEC Documents complied as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes thereto, or
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(ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of BPK and its consolidated
subsidiaries as of the dates thereof and the results of its operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments).
(m) Absence of Certain Changes. Except for the merger effected
pursuant to that certain Merger Agreement, dated April 19, 2006, by and among
BPK, BPK Resources Acquisition Corp., a Delaware corporation and wholly owned
subsidiary of BPK, Graphite, and Xxxxx Xxxxxx and Xxxxx X. Olive, since December
31, 2005, there has been no material adverse change and no material adverse
development in the business, assets, properties, operations, condition
(financial or otherwise), results of operations or prospects of any Issuer or
its Subsidiaries. Since December 31, 2005, no Issuer has (i) declared or paid
any dividends, (ii) sold any assets or (iii) had capital expenditures,
individually or in the aggregate, in excess of $100,000. No Issuer has taken any
steps to seek protection pursuant to any bankruptcy law nor does any Issuer have
any knowledge or reason to believe that its creditors intend to initiate
involuntary bankruptcy proceedings or any actual knowledge of any fact which
would reasonably lead a creditor to do so. No Issuer is as of the date hereof,
and, after giving effect to the transactions contemplated hereby to occur at the
Closing will not, be Insolvent (as hereinafter defined). For purposes of this
Section 3(m), "Insolvent" means (i) the present fair saleable value of any
Issuer's assets is less than the amount required to pay such Issuer's total
Indebtedness (as defined in the Note), (ii) any Issuer is unable to pay its
debts and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured, (iii) any Issuer intends to incur or
believes that it will incur debts that would be beyond its ability to pay as
such debts mature or (iv) any Issuer has unreasonably small capital with which
to conduct the business in which it is engaged as such business is now conducted
and is proposed to be conducted.
(n) No Undisclosed Events, Liabilities, Developments or
Circumstances. No event, liability, development or circumstance has occurred or
exists, or is contemplated to occur with respect to BPK, its Subsidiaries or
their respective business, properties, prospects, operations or financial
condition, that would be required to be disclosed by BPK under applicable
securities laws on a registration statement on Form S-1 filed with the SEC
relating to an issuance and sale by BPK of its Common Stock and which has not
been publicly announced.
(o) Conduct of Business; Regulatory Permits. Neither Issuer nor any
of its Subsidiaries is in violation of any term of or in default under its
Articles of Incorporation or Bylaws. Neither Issuer nor any of its Subsidiaries
is in violation of any judgment, decree or order or any statute, ordinance, rule
or regulation applicable to such Issuer or any of its Subsidiaries. Without
limiting the generality of the foregoing, BPK is not in violation of any of the
rules, regulations or requirements of the Principal Market and has no knowledge
of any facts or circumstances that would reasonably lead to delisting or
suspension of the Common Stock by the Principal Market in the foreseeable
future. Since December 31, 2005, (i) the Common Stock has been designated for
quotation on the Principal Market, (ii) trading in the Common Stock has not been
suspended by the SEC or the Principal Market and (iii) BPK has received no
communication, written or oral, from the SEC or the Principal Market regarding
the suspension or delisting of the Common Stock from the Principal Market. The
Issuers and their Subsidiaries possess all certificates, authorizations and
permits issued by the appropriate regulatory authorities necessary to conduct
their respective businesses, and neither Issuer, nor any such Subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit.
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(p) Foreign Corrupt Practices. Neither Issuer, nor any of its
Subsidiaries nor any director, officer, agent, employee or other Person acting
on behalf of such Issuer or any of its Subsidiaries has, in the course of its
actions for, or on behalf of, such Issuer or its Subsidiaries (i) used any
corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity; (ii) made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds; (iii) violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv)
made any unlawful bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or employee.
(q) Xxxxxxxx-Xxxxx Act. BPK is in compliance with any and all
applicable requirements of the Xxxxxxxx-Xxxxx Act of 2002 that are effective as
of the date hereof, and any and all applicable rules and regulations promulgated
by the SEC thereunder that are effective as of the date hereof.
(r) Transactions With Affiliates. Except as set forth in Schedule
3(r), none of the officers, directors or employees of the Issuers is presently a
party to any transaction with the Issuers or any of their Subsidiaries (other
than for ordinary course services as employees, officers or directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any such
officer, director or employee or, to the knowledge of the Issuers, any
corporation, partnership, trust or other entity in which any such officer,
director, or employee has a substantial interest or is an officer, director,
trustee or partner.
(s) Equity Capitalization. As of the date hereof, (i) the authorized
capital stock of BPK consists of 10,000,000 shares of preferred stock, $0.001
par value per share, of which 829,755 Series B, 32,605,800 Series C and 585,000
Series D shares are issued and outstanding, and 100,000,000 shares of Common
Stock, of which, 95,789,914 shares are issued and outstanding, and (ii) the
authorized capital stock of Graphite consists of 1,000,000 shares of preferred
stock, $0.001 par value per share, of which no shares are issued and
outstanding, and 25,000,000 shares of Common Stock, of which, 25,000,000 shares
are issued and outstanding. All of such outstanding shares have been, or upon
issuance will be, validly issued and fully paid and nonassessable. Except as set
forth in Schedule 3(s): (i) none of any Issuer's share capital is subject to
preemptive rights or any other similar rights or any liens or encumbrances
suffered or permitted by such Issuer; (ii) there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, or exercisable
or exchangeable for, any share capital of any Issuer or any of its Subsidiaries,
or contracts, commitments, understandings or arrangements by which any Issuer or
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any of its Subsidiaries is or may become bound to issue additional share capital
of the Issuer or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
share capital of any Issuer or any of its Subsidiaries; (iii) there are no
outstanding debt securities, notes, credit agreements, credit facilities or
other agreements, documents or instruments evidencing Indebtedness of any Issuer
or any of its Subsidiaries or by which any Issuer or any of its Subsidiaries is
or may become bound; (iv) there are no financing statements securing obligations
in any material amounts, either singly or in the aggregate, filed in connection
with any Issuer or any of its Subsidiaries; (v) there are no agreements or
arrangements under which any Issuer or any of its Subsidiaries is obligated to
register the sale of any of their securities under the 1933 Act (except the
Registration Rights Agreement); (vi) there are no outstanding securities or
instruments of any Issuer or any of its Subsidiaries which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which any Issuer or any of its Subsidiaries is
or may become bound to redeem a security of any Issuer or any of its
Subsidiaries; (vii) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities; (viii) the Issuers do not have any stock appreciation rights or
"phantom stock" plans or agreements or any similar plan or agreement; and (ix)
the Issuers and their Subsidiaries have no liabilities or obligations required
to be disclosed in the SEC Documents but not so disclosed in the SEC Documents,
other than those incurred in the ordinary course of their respective businesses.
Schedule 3(s) contains true, correct and complete copies of each Issuer's
Articles of Incorporation, as amended and as in effect on the date hereof (the
"Articles of Incorporation"), and each Issuer's Bylaws, as amended and as in
effect on the date hereof (the "Bylaws").
(t) Indebtedness and Other Contracts. Except as set forth in audited
consolidated financial statements of Graphite as of March 31, 2006 and 2005 (the
"Graphite Financials"), neither Issuer nor any of its Subsidiaries (i) has any
outstanding Indebtedness, (ii) is a party to any contract, agreement or
instrument, the violation of which, or default under which, by the other
party(ies) to such contract, agreement or instrument would result in a Material
Adverse Effect, (iii) is in violation of any term of or in default under any
contract, agreement or instrument relating to any Indebtedness, or (iv) is a
party to any contract, agreement or instrument relating to any Indebtedness, the
performance of which, in the judgment of the Issuers, has or is expected to have
a Material Adverse Effect, except as set forth in the Graphite Financials.
(u) Absence of Litigation. Except as set forth in Schedule 3(u),
there is no action, suit, proceeding, inquiry or investigation before or by any
court, public board, government agency (including the SEC), self-regulatory
organization or body pending or, to the knowledge of the Issuers, threatened
against or affecting any Issuer, the Common Stock or any of the Issuers'
Subsidiaries or any of the Issuers' or their Subsidiaries' officers or directors
in their capacities as such.
(v) Insurance. Each of the Issuers and their Subsidiaries is insured
by insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Issuers believes to be prudent and
customary in the businesses in which the Issuers and their Subsidiaries are
engaged. Neither any Issuer nor any such Subsidiary has been refused any
insurance coverage sought or applied for and neither the Issuers, nor any such
Subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect.
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(w) Employee Relations. Neither Issuer nor any of its Subsidiaries
is a party to any collective bargaining agreement or employs any member of a
union. The Issuers and their Subsidiaries believe that they have good relations
with their employees. No executive officer of any Issuer any of its Subsidiaries
has notified any Issuer or any such Subsidiary that such officer intends to
leave such Issuer or any such Subsidiary or otherwise terminate such officer's
employment with such Issuer or any such Subsidiary. No executive officer of any
Issuer or any of its Subsidiaries, to the knowledge of any Issuer or any such
Subsidiary, is, or is now expected to be, in violation of any material term of
any employment contract, confidentiality, disclosure or proprietary information
agreement, non-competition agreement, or any other contract or agreement or any
restrictive covenant, and the continued employment of each such executive
officer does not subject any Issuer or any such Subsidiary to any liability with
respect to any of the foregoing matters. The Issuers and their Subsidiaries are
in compliance with all federal, state, local and foreign laws and regulations
respecting labor, employment and employment practices and benefits, terms and
conditions of employment and wages and hours, except where failure to be in
compliance would not, either individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.
(x) Title. The Issuers and their Subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business
of the Issuers and their Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as do not materially affect the value of
such property and do not interfere with the use made and proposed to be made of
such property by the Issuers and their Subsidiaries. Any real property and
facilities held under lease by any Issuer and any of its Subsidiaries are held
by them under valid, subsisting and enforceable leases with such exceptions as
are not material and do not interfere with the use made and proposed to be made
of such property and facilities by such Issuer and its Subsidiaries.
(y) Description of Mines. Set forth in Schedule 3(y) is a complete
and accurate description of the mining property and rights owned or otherwise
held or possessed by the Issuers and their Subsidiaries.
(z) Intellectual Property Rights. The Issuers and their Subsidiaries
own or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service xxxx registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and other intellectual property rights
("Intellectual Property Rights") necessary to conduct their respective
businesses as now conducted. Except as set forth in Schedule 3(z), none of such
Intellectual Property Rights has expired or terminated, or are expected to
expire or terminate. The Issuers do not have any knowledge of any infringement
by any Issuer or any of its Subsidiaries of Intellectual Property Rights of
others. There is no claim, action or proceeding being made or brought, or to the
knowledge of the Issuers, being threatened, against Issuers or their
Subsidiaries regarding such Intellectual Property Rights. The Issuers are
unaware of any facts or circumstances which might give rise to any of the
11
foregoing infringements or claims, actions or proceedings. The Issuers and their
Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual properties.
(aa) Environmental Laws. The Issuers and their Subsidiaries (i) are
in compliance with any and all Environmental Laws (as defined in the Note), (ii)
have received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (iii)
are in compliance with all terms and conditions of any such permit, license or
approval where, in each of the foregoing clauses (i), (ii) and (iii), the
failure to so comply could be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect.
(bb) Subsidiary Rights. Except as set forth in Schedule 3(bb), the
Issuers or one of their Subsidiaries has the unrestricted right to vote, and
(subject to limitations imposed by applicable law) to receive dividends and
distributions on, all capital securities of its Subsidiaries as owned by such
Issuer or such Subsidiary.
(cc) Investment Company Act. None of the Issuers and its
Subsidiaries, is an Affiliate of, an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(dd) Tax Status. Each of the Issuers and each of its Subsidiaries
has (i) made or filed all foreign, federal and state income and all other tax
returns, reports and declarations required by any jurisdiction to which it is
subject, (ii) paid all taxes and other governmental assessments and charges that
are material in amount, shown or determined to be due on such returns, reports
and declarations, except those being contested in good faith and (iii) set aside
on its books provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction, and the Issuers know of no basis for any
such claim.
(ee) Internal Accounting and Disclosure Controls. BPK maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset and liability
accountability, (iii) access to assets or incurrence of liabilities is permitted
only in accordance with management's general or specific authorization and (iv)
the recorded accountability for assets and liabilities is compared with the
existing assets and liabilities at reasonable intervals and appropriate action
is taken with respect to any difference. BPK maintains disclosure controls and
procedures (as such term is defined in Rule 13a-14 under the 0000 Xxx) that are
effective in ensuring that information required to be disclosed by BPK in the
reports that it files or submits under the 1934 Act is recorded, processed,
summarized and reported, within the time periods specified in the rules and
forms of the SEC, including, without limitation, controls and procedures
designed in to ensure that information required to be disclosed by the Issuer in
the reports that it files or submits under the 1934 Act is accumulated and
12
communicated to its management, including its principal executive officer or
officers and its principal financial officer or officers, as appropriate, to
allow timely decisions regarding required disclosure. During the twelve months
prior to the date hereof, neither BPK nor any of its Subsidiaries has received
any notice or correspondence from any accountant relating to any potential
material weakness in any part of the system of internal accounting controls of
BPK or any of its Subsidiaries.
(ff) Off Balance Sheet Arrangements. There is no transaction,
arrangement, or other relationship between any Issuer and an unconsolidated or
other off balance sheet entity that is required to be disclosed by BPK in its
1934 Act filings and is not so disclosed or that otherwise would be reasonably
likely to have a Material Adverse Effect.
(gg) Transfer Taxes. On the Closing Date, all stock transfer or
other taxes (other than income or similar taxes) which are required to be paid
in connection with the sale and transfer of the Securities to be sold to the
Investor hereunder will be, or will have been, fully paid or provided for by the
Issuers, and all laws imposing such taxes will be or will have been complied
with.
(hh) Manipulation of Price. BPK has not, and to its knowledge no one
acting on its behalf has, (i) taken, directly or indirectly, any action designed
to cause or to result in the stabilization or manipulation of the price of any
security of BPK to facilitate the sale or resale of any of the Securities, (ii)
sold, bid for, purchased, or paid any compensation for soliciting purchases of,
any of the Securities (except for customary placement fees payable in connection
with this transaction), or (iii) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities of BPK.
(ii) Compliance with ERISA. Each, if any, multiemployer plan or
single-employer plan, as defined in the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder ("ERISA"), which is maintained or contributed to by
(or to which there is an obligation to contribute of), or at any time preceding
the date of this Agreement, was maintained or contributed to by (or to which
there was an obligation to contribute of), any Issuer or a Subsidiary of the
Issuers or an ERISA Affiliate (as defined below) (each such plan, a "Plan") is
in substantial compliance with the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and rulings issued thereunder
(the "Code") and ERISA; no event described in Section 4043(b) of ERISA with
respect to a Plan to which the 30-day notice requirement has not been waived by
the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of
ERISA has occurred with respect to a Plan; no Plan is insolvent or in
reorganization; no Plan has an Unfunded Current Liability (as defined below),
and no Plan has an accumulated or waived funding deficiency, has permitted
decreases in its funding standard account or has applied for an extension of any
amortization period within the meaning of Section 412 of the Code; neither any
Issuer nor any Subsidiary or ERISA Affiliate has incurred any material liability
to or on account of a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062,
4063, 4064, 4069, 4201 or 4204 of ERISA or expects to incur any liability under
any of the foregoing sections with respect to any such Plan; no proceedings have
been instituted to terminate any Plan; no condition exists which presents a
material risk to any Issuer or any of its Subsidiaries or any ERISA Affiliate of
incurring a liability to or on account of a Plan pursuant to the foregoing
13
provisions of ERISA and the Code; no lien imposed under the Code or ERISA on the
assets of any Issuer or any of its Subsidiaries or any ERISA Affiliate exists or
is likely to arise on account of any Plan; and the Issuers and their
Subsidiaries may terminate contributions to any other employee benefit plans
maintained by them without incurring any material liability to any Person
interested therein. For purposes of this Section 3(ii), "ERISA Affiliate" means
any person (as defined in Section 3(9) of ERISA) which together with any Issuer
or any of its Subsidiaries would be deemed to be a "single employer" within the
meaning of Section 414(b), (c), (m) or (o) of the Code. "Unfunded Current
Liability" of any Plan means the amount, if any, by which the present value of
the accrued benefits under the Plan as of the close of its most recent plan
year, determined in accordance with Statement of Financial Accounting Standards
No. 35, based upon the actuarial assumptions under by the Plan's actuary in the
most recent annual variation of the Plan, exceeds the fair market value of the
assets allocable thereto, determined in accordance with Section 412 of the Code.
(jj) Disclosure. Each Issuer understands and confirms that the
Investor will rely on the foregoing representations in effecting transactions in
securities of the Issuers. All disclosure provided to the Investor regarding any
Issuer, its business and the transactions contemplated hereby, including the
Schedules to this Agreement, furnished by or on behalf of the Issuers is true
and correct and does not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. Each press release issued by the BPK since December 31, 2005 did not
at the time of release 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 the light of the circumstances under which they
are made, not misleading. No event or circumstance has occurred or information
exists with respect to any Issuer or any of its Subsidiaries or their business,
properties, prospects, operations or financial conditions, which, under
applicable law, rule or regulation, requires public disclosure or announcement
by BPK but which has not been so publicly announced or disclosed, except for
information that will be contained within BPK's next due Form 10-QSB and
information relative to this transaction.
Section 4. Covenants.
(a) Best Efforts. Each party shall use its best efforts timely to
satisfy each of the conditions to be satisfied by it as provided in Sections 6
and 7 of this Agreement.
(b) Blue Sky. The Issuers shall, on or before the Closing Date, take
such action as the Issuer shall reasonably determine is necessary in order to
obtain an exemption for or to qualify the Securities for sale to the Investor at
the Closing pursuant to this Agreement under applicable securities or "Blue Sky"
laws of the states of the United States (or to obtain an exemption from such
qualification), and shall provide evidence of any such action so taken to the
Investor on or prior to the Closing Date. The Issuers shall make all filings and
reports relating to the offer and sale of the Securities required under
applicable securities or "Blue Sky" laws of the states of the United States
following the Closing Date.
(c) Reporting Status. Until the date on which the Investor shall
have sold all the Exchange Shares, Interest Shares and Warrant Shares and none
of the Note or Warrant is outstanding (the "Reporting Period"), BPK shall file
14
all reports required to be filed with the SEC pursuant to the 1934 Act, and BPK
shall not terminate its status as an issuer required to file reports under the
1934 Act even if the 1934 Act or the rules and regulations thereunder would
otherwise permit such termination.
(d) Use of Proceeds. Graphite shall use the proceeds from the sale
of the Note and the Warrant to (i) finance the purchase price of the Acquisition
(as defined in that certain Side Letter Agreement, dated as of July 12, 2006, by
and between Graphite and the Investor) and (iii) for general corporate purposes,
and not for (A) repayment of any other outstanding Indebtedness of any Issuer or
any of its Subsidiaries or (B) redemption or repurchase of any of its or its
Subsidiaries' equity securities.
(e) Financial Information. BPK shall send the following to the
Investor during the Reporting Period (i) unless filed with the SEC through XXXXX
and available to the public through the XXXXX system, within one Business Day
after the filing thereof with the SEC, a copy of all Annual Reports on Form
10-KSB, any interim reports or any consolidated balance sheets, income
statements, stockholders' equity statements and/or cash flow statements for any
period other than annual, any Current Reports on Form 8-K and any registration
statements (other than on Form S-8) or amendments filed pursuant to the 1933
Act, (ii) on the same day as the release thereof, copies of all press releases
issued by BPK or any of its Subsidiaries, and (iii) copies of any notices and
other information made available or given to the stockholders of the Issuers
generally, contemporaneously with the making available or giving thereof to the
stockholders.
(f) Listing. To the extent the Registrable Securities (as defined in
the Registration Rights Agreement) are listed upon a national securities
exchange or automated quotation system that provides for the listing of
securities, BPK shall promptly secure the listing of all of the Registrable
Securities upon each national securities exchange and automated quotation
system, if any, upon which the Common Stock is then listed (subject to official
notice of issuance) and shall maintain such listing of all Registrable
Securities from time to time issuable under the terms of the Transaction
Documents. BPK shall maintain the Common Stock's authorization for quotation on
the Principal Market. Neither BPK nor any of its Subsidiaries shall take any
action which would be reasonably expected to result in the delisting or
suspension of the Common Stock on the Principal Market. The Issuers shall pay
all fees and expenses in connection with satisfying its obligations under this
Section 4(f).
(g) Fees. Whether or not the transactions contemplated by the
Transaction Documents shall be consummated, the Issuers shall reimburse the
Investor or its designee(s) for all reasonable costs and expenses incurred in
connection with the transactions contemplated by the Transaction Documents
(including all reasonable legal fees and disbursements in connection therewith,
documentation and implementation of the transactions contemplated by the
Transaction Documents and due diligence in connection therewith), which amount
shall be withheld by the Investor from the Purchase Price at the Closing. The
Issuers shall be responsible for the payment of any placement agent's fees,
financial advisory fees, or broker's commissions (other than for Persons engaged
by the Investor) relating to or arising out of the transactions contemplated
hereby. The Issuers shall pay, and hold the Investor harmless against, any
liability, loss or expense (including, without limitation, reasonable attorney's
fees and out-of-pocket expenses) arising in connection with any claim relating
to any such payment.
15
(h) Pledge of Securities. Each Issuer acknowledges and agrees that
the Securities may be pledged by the Investor in connection with a bona fide
margin agreement or other loan or financing arrangement that is secured by the
Securities. The pledge of Securities shall not be deemed to be a transfer, sale
or assignment of the Securities hereunder, and the Investor (when effecting a
pledge of Securities) shall be required to provide any Issuer with any notice
thereof or otherwise make any delivery to any Issuer pursuant to this Agreement
or any other Transaction Document, including, without limitation, Section 2(e)
hereof. Each Issuer hereby agrees to execute and deliver such documentation as a
pledgee of the Securities may reasonably request in connection with a pledge of
the Securities to such pledgee by the Investor.
(i) Disclosure of Transactions and Other Material Information. On or
before 8:30 a.m., New York City time, on the second Business Day following the
date of this Agreement, BPK shall file a Current Report on Form 8-K describing
the terms of the transactions contemplated by the Transaction Documents in the
form required by the 1934 Act and attaching the material Transaction Documents,
including, without limitation, this Agreement, the form of Note, the form of
Warrant and the Registration Rights Agreement (including all attachments, the
"8-K Filing"). Any material non-public information provided by BPK to the
Investor in connection with this transaction, shall be included by BPK within
either the aforementioned Form 8-K, or at its discretion, within the BPK's next
Quarterly Report on Form 10-QSB, due on or about July 19, 2006. From and after
the filing of the 8-K Filing with the SEC, the Investor shall not be in
possession of any material, nonpublic information received from BPK or any of
its Subsidiaries, or any of their respective officers, directors, employees or
agents, that is not disclosed in the 8-K Filing. The Issuers shall not, and
shall not permit any of its Subsidiaries and each of their respective officers,
directors, employees and agents to provide the Investor with any material,
nonpublic information regarding any Issuer or any of its Subsidiaries from and
after the filing of the 8-K Filing with the SEC without the express written
consent of the Investor. In the event of a breach of the foregoing covenant by
the Issuers, any of their Subsidiaries, or any of their respective officers,
directors, employees and agents, in addition to any other remedy provided herein
or in the Transaction Documents, the Investor may, but shall not be obligated
to, notify the Issuer of such breach and the material, nonpublic information the
receipt of which resulted in such breach. Within two Business Days of receipt of
such notice, the Issuers shall either (a) deliver a notice to the Investor
certifying such material, non-public information has already been publicly
disclosed by BPK or (b) make a public disclosure, in the form of a press
release, public advertisement or otherwise, of such material, nonpublic
information. If the Issuers fail to comply with its obligation set forth in the
preceding sentence within such period of two Business Days, the Investor shall
have the right to make a public disclosure, in the form of a press release or
otherwise, of such material non-public information. Subject to the foregoing,
neither the Issuers, nor their Subsidiaries nor the Investor shall issue any
press releases or any other public statements with respect to the transactions
contemplated hereby; provided, however, that BPK shall be entitled, without the
prior approval of the Investor, to make any press release or other public
disclosure with respect to such transactions (i) in substantial conformity with
the 8-K Filing and contemporaneously therewith and (ii) as is required by
applicable law and regulations (provided that in the case of clause (i) the
Investor shall be consulted by BPK in connection with any such press release or
other public disclosure prior to its release). Without the prior written consent
of the Investor, the Issuers shall not disclose the name of the Investor in any
filing, announcement, release or otherwise.
16
Section 5. Register; Transfer Agent Instructions.
(a) Register. The Issuers shall maintain at their principal
executive offices (or such other office or agency of the Issuers as they may
designate by notice to each holder of Securities), a register for the Note and
the Warrant in which the Issuers shall record the name and address of the Person
in whose name the Note and the Warrant have been issued (including the name and
address of each transferee), the principal amount of Note held by such Person,
the number of Exchange Shares issuable upon exchange of the Note and Warrant
Shares issuable upon exercise of the Warrant held by such Person. The Issuers
shall keep the register open and available at all times during business hours
for inspection of the Investor or its legal representatives.
(b) Transfer Agent Instructions. BPK shall issue irrevocable
instructions to its transfer agent, and any subsequent transfer agent, to issue
certificates or credit shares to the applicable balance accounts at The
Depository Trust Company ("DTC"), registered in the name of the Investor or its
respective nominee(s), for the Exchange Shares, the Interest Shares, if any, and
the Warrant Shares in such amounts as specified from time to time by the
Investor to BPK upon exchange of the Note or exercise of the Warrant in the form
of Exhibit D attached hereto (the "Irrevocable Transfer Agent Instructions").
BPK warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 5(b), and stop transfer instructions to
give effect to Section 2(e) hereof, will be given by BPK to its transfer agent
with respect to the Securities, and that the Securities shall otherwise be
freely transferable on the books and records of BPK to the extent provided in
this Agreement and the other Transaction Documents. If the Investor effects a
sale, assignment or transfer of the Securities in accordance with Section 2(e)
hereof, BPK shall permit the transfer and shall promptly instruct its transfer
agent to issue one or more certificates or credit shares to the applicable
balance accounts at DTC in such name and in such denominations as specified by
the Investor to effect such sale, transfer or assignment. In the event that such
sale, assignment or transfer involves Exchange Shares, Interest Shares, Warrant
Shares sold, assigned or transferred pursuant to an effective registration
statement or pursuant to Rule 144, the transfer agent shall issue such
Securities to the Investor, assignee or transferee, as the case may be, without
any restrictive legend.
Section 6. Conditions to the Issuer's Obligation to Sell. The
obligations of the Issuers hereunder to issue and sell the Note and the Warrant
to the Investor at the Closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for the Issuers' sole benefit and may be waived by any Issuer at
any time in its sole discretion by providing the Investor with prior notice
thereof:
(i) The Investor shall have executed and delivered to the Issuers
each of the Transaction Documents.
(ii) The Investor shall have delivered to the Issuers the
Purchase Price for the Note and the Warrant, by wire transfer of
immediately available funds pursuant to the wire instructions provided
by the Issuers.
(iii) The representations and warranties of the Investor shall be
true and correct in all material respects as of the date when made and
17
as of the Closing Date as though made at that time (except for
representations and warranties that expressly relate to an earlier
date), and the Investor shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with
by the Investor at or prior to the Closing Date.
Section 7. Conditions to the Investor's Obligation to Purchase. The
obligation of the Investor hereunder to purchase the Note and the Warrant from
the Issuers at the Closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for the Investor's sole benefit and may be waived by the Investor
at any time in its sole discretion by providing any Issuer with prior notice
thereof:
(i) The Issuers shall have executed and delivered to the Investor
(A) each of the Transaction Documents to which any of them is a party
and (B) the Note and the Warrant being purchased by the Investor at the
Closing pursuant to this Agreement.
(ii) The Investor shall have received an opinion of Xxxxxx &
Eilen LLP, the Issuers' outside counsel, dated as of the Closing Date,
in substantially the form of Exhibit E attached hereto.
(iii) The Issuers shall have delivered to the Investor a copy of
the Irrevocable Transfer Agent Instructions, in the form of Exhibit D
attached hereto, which instructions shall have been delivered to and
acknowledged in writing by BPK's transfer agent.
(iv) Each Issuer shall have delivered to the Investor a
certificate evidencing the formation and good standing of such Issuer
and each of its Subsidiaries in such entity's jurisdiction of formation
issued by the Secretary of State (or comparable office) of such
jurisdiction, as of a date reasonably proximate to the Closing Date.
(v) Each Issuer shall have delivered to the Investor a
certificate evidencing such Issuer's qualification as a foreign
corporation and good standing issued by the Secretary of State (or
comparable office) of each jurisdiction in which such Issuer conducts
business, as of a date reasonably proximate to Closing Date.
(vi) BPK shall have delivered to the Investor a certified copy of
the Articles of Incorporation as certified by the Secretary of State of
the State of Nevada reasonably proximate to the Closing Date, and
Graphite shall have delivered to the Investor a certified copy of the
Articles of Incorporation as certified by the Secretary of State of the
State of Delaware reasonably proximate to the Closing Date.
(vii) Each Issuer and shall have delivered to the Investor a
certificate, executed by the Secretary of such Issuer, dated as of the
Closing Date, as to (i) the resolutions consistent with Section 3(b)
hereof as adopted by such Issuer's Board of Directors in a form
reasonably acceptable to the Investor, (ii) the Articles of
Incorporation and (iii) the Bylaws, each as in effect at the Closing,
in the form attached hereto as Exhibit F.
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(viii) The representations and warranties of the Issuers shall be
true and correct as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties
that expressly relate to an earlier date) and the Issuers shall have
performed, satisfied and complied in all respects with the covenants,
agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by the Issuers at or prior to the
Closing Date. The Investor shall have received a certificate, executed
by the Chief Executive Officer of each Issuer, dated as of the Closing
Date, to the foregoing effect and as to such other matters as may be
reasonably requested by the Investor in the form attached hereto as
Exhibit F.
(ix) BPK shall have delivered to the Investor a letter from the
BPK's transfer agent certifying the number of shares of Common Stock
outstanding as of a date within five days of the Closing Date.
(x) The Common Stock (I) shall be designated for quotation or
listed on the Principal Market and (II) shall not have been suspended,
as of the Closing Date, by the SEC or the Principal Market from trading
on the Principal Market nor shall suspension by the SEC or the
Principal Market have been threatened, as of the Closing Date, either
(A) in writing by the SEC or the Principal Market or (B) by falling
below the minimum listing maintenance requirements of the Principal
Market.
(xi) The Issuers shall have received any and all necessary
authorizations, consents and approvals and shall have made any and all
filings and shall have satisfied all applicable waiting periods
necessary in connection with the consummation of the transactions
contemplated by the Transaction Documents.
(xii) On or prior to the Closing Date, the Issuers shall have
paid to the Investor all fees, costs and expenses (including, without
limitation, legal fees and expenses) payable to the Investor to the
extent then due.
(xiii) The Investor shall be satisfied in its sole and absolute
discretion with the results of its business, accounting, environmental,
legal and tax due diligence reviews of the Issuers and their
Subsidiaries. Without limiting the foregoing, the Investor shall be
satisfied with the terms of agreements with management and other
Affiliate arrangements, including employment contracts and
non-competition agreements.
(xiv) The Investor shall be satisfied with the ownership,
corporate and legal structure and capitalization of the Issuers and
their Subsidiaries, including, without limitation, the terms and
conditions of any capital stock, options, warrants or other securities
issued by the Issuer and their Subsidiaries and any agreements related
thereto, and the management of the Issuers and their Subsidiaries shall
be acceptable to the Investor.
(xv) Since December 31, 2005, nothing shall have occurred (and
the Investor is not aware of any fact or conditions not previously
known) which the Investor shall, in its sole discretion, determine has
or could be reasonably expected to have, a Material Adverse Effect on
19
the rights or remedies of the Investor under this Agreement or the
other Transaction Documents, or on the ability of the Investor to
perform its obligations under the Transaction Documents to which the
Investor is a party.
(xvi) The Issuers shall have delivered to the Investor such other
documents relating to the transactions contemplated by this Agreement
as the Investor or its counsel may reasonably request.
Section 8. Miscellaneous.
(a) Governing Law; Jurisdiction; Jury Trial. All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of New
York. Each party hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in The City of New York, Borough of Manhattan,
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(b) Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
(c) Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
(d) Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
20
(e) Entire Agreement; Amendments. This Agreement and the other
Transaction Documents supersede all other prior oral or written agreements
between the Investor, the Issuers, their Affiliates and Persons acting on their
behalf with respect to the matters discussed herein, and this Agreement, the
other Transaction Documents and the instruments referenced herein and therein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Issuers nor the Investor make any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be amended other than by an instrument in writing signed by the
Issuers and the Investor. No provision hereof may be waived other than by an
instrument in writing signed by the party against whom enforcement is sought.
(f) Notices.
(i) All notices and other communications provided for hereunder
shall be either (x) in writing (including telegraphic, telecopy or
electronic communication) and mailed, telegraphed, telecopied or
delivered or (y) as and to the extent set forth in Section 8(f)(ii) and
in the proviso to this Section 8(f)(i), in an electronic medium and
delivered as set forth in Section 8(f)(ii), if to the Investor, at its
address: __________________________; if to any Issuer, at its address
at: 000 Xxxxxxxx Xxx., X.X. Xxx 000, Xxxxxx, XX 00000, Attention: Xxxxx
Xxxxxxxx, CFO, Fax: 000-000-0000, Email Address
x.xxxxxxxx@xxxxxxxxxxxxxxxxxxxxxxx.xxx; or, at such other address as
shall be designated by any Issuer or the Investor in a written notice
to the other party; provided, however, that materials and information
described in Section 8(f)(ii) shall be delivered to the Investor in
accordance with the provisions thereof or as otherwise specified to any
Issuer by the Investor. All such notices and other communications
shall, when mailed, telegraphed, telecopied, or e-mailed, be effective
when received by the Investor. Delivery by telecopier of an executed
counterpart of a signature page to any amendment or waiver of any
provision of this Agreement shall be effective as delivery of an
original executed counterpart thereof.
(ii) The Issuers hereby agree that they will provide to the
Investor all information, documents and other materials that they are
obligated to furnish to the Investor pursuant to the Transaction
Documents, including, without limitation, all notices, requests,
financial statements, financial and other reports, certificates and
other information materials, but excluding any such communication that
(i) relates to the payment of any principal or other amount due under
the Note prior to the scheduled date therefor, (ii) provides notice of
any Default or Event of Default under the Note or (iii) is required to
be delivered to satisfy any condition precedent to the effectiveness of
the Note (all such non-excluded communications being referred to herein
collectively as "Communications"), by transmitting the Communications
in an electronic/soft medium in a format acceptable to the Investor to
______________________ or such other electronic mail address specified
by the Investor to the Issuers. In addition, the Issuers agree to
continue to provide the Communications to the Investor in the manner
specified in the Transaction Documents but only to the extent requested
by the Investor.
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(g) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns,
including any purchasers of the Note or the Warrant. The Issuers shall not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the Investor. The Investor may assign some or all of its
rights hereunder in connection with transfer of any of its Securities without
the consent of the Issuers, in which event such assignee shall be deemed to be
an Investor hereunder with respect to such assigned rights.
(h) No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
(i) Survival. The representations and warranties of the Issuers and
the Investor contained in Sections 2 and 3 and the agreements and covenants set
forth herein shall survive the Closing.
(j) Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(k) Indemnification. In consideration of the Investor's execution
and delivery of the Transaction Documents and acquiring the Securities
thereunder and in addition to all of the Issuers' other obligations under the
Transaction Documents, the Issuers shall defend, protect, indemnify and hold
harmless the Investor and each other holder of the Securities and all of their
stockholders, partners, members, officers, directors, employees and direct or
indirect investors and any of the foregoing Persons' agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
"Indemnitees") from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including
reasonable attorneys' fees and disbursements (the "Indemnified Liabilities"),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by any
Issuer in the Transaction Documents or any other certificate, instrument or
document contemplated thereby, (b) any breach of any covenant, agreement or
obligation of any Issuer contained in the Transaction Documents or any other
certificate, instrument or document contemplated thereby or (c) any cause of
action, suit or claim brought or made against such Indemnitee by a third party
(including for these purposes a derivative action brought on behalf of the
Issuer) and arising out of or resulting from (i) the execution, delivery,
performance or enforcement of the Transaction Documents or any other
certificate, instrument or document contemplated thereby, (ii) any transaction
financed or to be financed in whole or in part, directly or indirectly, with the
proceeds of the issuance of the Securities, (iii) any disclosure made by the
Investor pursuant to Section 4(i), or (iv) the status of the Investor or holder
of the Securities as an investor in the Issuers pursuant to the transactions
contemplated by the Transaction Documents. To the extent that the foregoing
22
undertaking by the Issuers may be unenforceable for any reason, the Issuers
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law. Except as
otherwise set forth herein, the mechanics and procedures with respect to the
rights and obligations under this Section 8(k) shall be the same as those set
forth in Section 6 of the Registration Rights Agreement.
(l) No Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
(m) Remedies. The Investor and each holder of the Securities shall
have all rights and remedies set forth in the Transaction Documents and all
rights and remedies which such holders have been granted at any time under any
other agreement or contract and all of the rights which such holders have under
any law. Any Person having any rights under any provision of this Agreement
shall be entitled to enforce such rights specifically (without posting a bond or
other security), to recover damages by reason of any breach of any provision of
this Agreement and to exercise all other rights granted by law. Furthermore,
each Issuer recognizes that in the event that it fails to perform, observe, or
discharge any or all of its obligations under the Transaction Documents, any
remedy at law will be inadequate relief to the Investors. Each Issuer therefore
agrees that the Investor shall be entitled to seek temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages and without posting a bond or other security.
(n) Payment Set Aside. To the extent that any Issuer make a payment
or payments to the Investor hereunder or pursuant to any of the other
Transaction Documents or the Investor enforces or exercises its rights hereunder
or thereunder, and such payment or payments or the proceeds of such enforcement
or exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to Issuers, a trustee,
receiver or any other Person under any law (including, without limitation, any
bankruptcy law, foreign, state or federal law, common law or equitable cause of
action), then to the extent of any such restoration the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred.
(o) Joint and Several Obligations. The obligations of the Issuers
hereunder and under the other Transaction Documents are joint and several.
[Signature Page Follows]
23
IN WITNESS WHEREOF, the Investor and the Issuers have caused their
respective signature page to this Note and Warrant Purchase Agreement to be duly
executed as of the date first written above.
INVESTOR:
MILLENIUM GOLBAL
SPECIAL SITUATIONS
AMERICAS FUND
By: /s/ M.B. Xxxxxxx
---------------------------
Name: M.B. Xxxxxxx
Title: Director
ISSUERS:
BPK RESOURCES, INC.
By: /s/ Xxxxx X. Olive
---------------------------
Name: Xxxxx X. Olive
Title: CEO
GRAPHITE TECHNOLOGY GROUP, INC.
By: /s/ Xxxxx Xxxxxxxx
---------------------------
Name: Xxxxx Xxxxxxxx
Title: CFO
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