THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE. THE SECURITIES REPRESENTED HEREBY HAVE BEEN TAKEN BY THE
REGISTERED OWNER FOR INVESTMENT, AND WITHOUT A VIEW TO RESALE OR
DISTRIBUTION THEREOF, AND MAY NOT BE SOLD, TRANSFERRED OR DISPOSED
OF WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT
SUCH TRANSFER OR DISPOSITION DOES NOT VIOLATE THE SECURITIES ACT OF
1933, AS AMENDED, THE RULES AND REGULATIONS THEREUNDER OR OTHER
APPLICABLE SECURITIES LAWS.
BPK RESOURCES, INC.
CONVERTIBLE NOTE
$_____________ Dated: _______, 2006
FOR VALUE RECEIVED, the undersigned, BPK Resources, Inc. ("Maker"),
promises to pay to the order of ___________________________, a _______________
("Lender" or "Holder"), in immediately available funds at the office of Lender
at _________________________________, or at such other location as the Lender
may designate in writing from time to time, the principal amount of
$______________ together with interest from the date hereof (computed on the
basis of a year of 360 days of twelve 30-day months) on the outstanding
principal balance, to be fixed at a rate equal to 10% per annum in accordance
with the following terms:
1. Terms of Repayment.
(a) The principal amount of this Convertible Note shall be due and
payable in full on the date (the "Maturity Date") which is the earlier of (i)
the date of the closing of the Maker's acquisition of all of the issued and
outstanding stock of Graphite Technology Group, Inc.; or (ii) the date which is
one (1) year from the date of this Convertible Note, at which time all unpaid
interest which has accrued on this Convertible Note shall also be due and
payable. The Maker shall have the right to prepay the principal amount of this
Convertible Note, in whole or in part, together with any accrued but unpaid
interest due on such principal amount, at any time upon ten (10) days written
notice to Holder upon Holder's delivery of this Convertible Note to the Maker
for full or partial cancellation.
(b) Interest on the outstanding principal balance of this
Convertible Note shall accrue at the rate of 10% per annum.
2. Transferability. This Convertible Note and any shares of common stock,
$.001 par value per share ("Common Stock"), of Maker issuable upon conversion
hereof or in payment of any interest due hereunder may not be offered for sale
or sold, or otherwise transferred in any transaction which would constitute a
sale thereof within the meaning of the Securities Act of 1933, as amended (the
"1933 Act"), unless (i) such security has been registered for sale under the
1933 Act and registered or qualified upon applicable state securities laws
relating to the offer and sale of securities; or (ii) exemptions from the
registration requirements of the 1933 Act and the registration or qualification
requirements of all such state securities laws are available and the Maker shall
have received an opinion of counsel that the proposed sale or other disposition
of such securities may be effected without registration under the 1933 Act and
would not result in any violation of any applicable state securities laws
relating to the registration or qualification of securities for sale, such
opinion and counsel to be satisfactory to counsel to Maker.
3. Subordination.
(a) The indebtedness evidenced by this Convertible Note is
subordinated to the prior payment when due of the principal of, premium, if any,
and interest on all "Senior Indebtedness" (as defined in Section 3(b) below) of
Maker. Therefore, upon any distribution of its assets in a liquidation or
dissolution of Maker, or in bankruptcy, reorganization, insolvency, receivership
or similar proceedings relating to Maker, Lender will not be entitled to receive
payment of the indebtedness evidenced by this Convertible Note until the holders
of Senior Indebtedness are paid in full. Upon the occurrence of an event of
default with respect to any Senior Indebtedness, as such event of default may be
defined in such instrument evidencing the Senior Indebtedness, to the extent
such event of default permits the holders of such Senior Indebtedness to
accelerate the maturity thereof, then upon written notice thereof given to Maker
by any holder of such Senior Indebtedness or their representative, no payment
shall be made by Maker in respect of this Convertible Note until Maker has cured
such event of default to the satisfaction of the holders of such Senior
Indebtedness.
(b) "Senior Indebtedness" means: (i) all direct or indirect,
contingent or certain indebtedness of any type, kind or nature (present or
future) created, incurred or assumed by the Maker with respect to any present or
future bank or other financial institutional indebtedness of the Maker and any
guaranty by Maker of any present or future bank or other financial institutional
indebtedness of any subsidiary of Maker; and (ii) any indebtedness created,
incurred, or assumed, by the Maker secured by a lien on any assets of the Maker.
4. Event of Default. An "Event of Default" under this Convertible Note
means the occurrence of any of the following events (whether the reason for such
event of default shall be voluntary or involuntary or be effected by operation
of law or pursuant to any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body): (i) nonpayment
of all principal and interest when and as due under the terms of this
Convertible Note; (ii) any other material breach of the terms of this
Convertible Note; (iii) any material breach by Maker of any representation,
warranty or agreement of Maker contained in that certain Securities Purchase
Agreement dated as of even date herewith by and between the Maker and Lender
(the "Securities Purchase Agreement") which is not cured by Maker within thirty
(30) days after notice by Lender; (iv) the institution of any proceedings by or
against Maker under any law relating to bankruptcy, insolvency, reorganization
or other form of debtor relief or Maker's making an assignment for the benefit
of creditors, or the appointment of a receiver, trustee, conservator or other
judicial representative for Maker or any of its respective properties; or (iv)
an event of bankruptcy or insolvency of Maker. Maker shall receive written
notice upon the occurrence of an Event of Default and provided the default is
not cured within five (5) days, with respect to any Event of Default based on
non-payment of principal or interest, or within ten (10) days, with respect to
any other Event of Default, of the stated Event of Default, the entire principal
and accrued interest under this Convertible Note shall accelerate and become
immediately due and payable.
5. Conversion Feature. This Convertible Note may be converted, at the
option of the Holder, at any time prior to the Maturity Date, into that number
of shares of Common Stock as determined herein. The date of conversion shall be
the "Conversion Date".
The number of shares of Common Stock that shall be issuable upon
conversion of the Convertible Note shall be equal to the face amount of the
Convertible Note, plus any accrued but unpaid interest thereon, divided by the
Conversion Price (as defined below) in effect on the date the Conversion Notice
is given; provided, however, that in the event that this Convertible Note shall
have been partially repaid, shares of Common Stock shall be issued pro rata. No
partial share will be issued. Any partial shares will be rounded down to the
nearest whole share. Within 5 days after the Conversion Date, Maker shall
provide written notice thereof to the Holder. Upon receipt of the written
notice, the Holder shall return this Convertible Note to the Maker, and Maker
shall issue and deliver by hand against a signed receipt therefore, by
nationally recognized overnight requiring a signed receipt therefore, or by
United States registered mail, return receipt requested, to the address provided
herein, a stock certificate or stock certificates of the Maker representing the
number of shares of Common Stock to which Holder is entitled. The Conversion
Price shall be $0.15, subject to adjustment. Except as provided in this Section
5, the Holder of the Convertible Note shall have no conversion rights.
6. Adjustments. The Conversion Price and the securities into which this
Convertible Note is convertible are subject to adjustment from time to time as
follows:
(a) Reorganization, Merger or Sale of Assets. If at any time while
this Convertible Note, or any portion thereof, is outstanding there shall be (i)
a reorganization (other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein), (ii) a merger or
consolidation with or into another corporation in which the Maker is not the
surviving entity, or a reverse triangular merger in which the Maker is the
surviving entity but the shares of the Maker's capital stock outstanding
immediately prior to the merger are converted by virtue of the merger into other
property, whether in the form of securities, cash or otherwise, or (iii) a sale
or transfer of the Maker's properties and assets as, or substantially as, an
entirety to any other person, then, as a part of such reorganization, merger,
consolidation, sale or transfer, lawful provision shall be made so that the
holder of this Convertible Note shall thereafter be entitled to receive upon
conversion of this Convertible Note the number of shares of stock or other
securities or property of the successor corporation resulting from such
reorganization, merger, consolidation, sale or transfer that a holder of the
shares deliverable upon conversion of this Convertible Note would have been
entitled to receive in such reorganization, consolidation, merger, sale or
transfer if this Convertible Note had been converted immediately before such
reorganization, merger, consolidation, sale or transfer, all subject to further
adjustment as provided in this Section 6. The foregoing provisions of this
Section 6(a) shall similarly apply to successive reorganizations,
consolidations, mergers, sales and transfers and to the stock or securities of
any other corporation that are at the time receivable upon the conversion of
this Convertible Note. If the per-share consideration payable to Maker for
shares in connection with any such transaction is in a form other than cash or
marketable securities, then the value of such consideration shall be determined
in good faith by Maker's Board of Directors. In all events, appropriate
adjustment (as determined in good faith by Maker's Board of Directors) shall be
made in the application of the provisions of this Convertible Note with respect
to the rights and interests of Maker after the transaction, to the end that the
provisions of this Convertible Note shall be applicable after that event, as
near as reasonably may be, in relation to any shares or other property
deliverable after that event upon conversion of this Convertible Note.
(b) Reclassification. If Maker, at any time while this Convertible
Note, or any portion thereof, remains outstanding, by reclassification of
securities or otherwise, shall change any of the securities as to which
conversion rights under this Convertible Note exist into the same or a different
number of securities of any other class or classes, this Convertible Note shall
thereafter represent the right to acquire such number and kind of securities as
would have been issuable as the result of such change with respect to the
securities that were subject to the conversion rights under this Convertible
Note immediately prior to such reclassification or other change and number of
shares received upon such conversion shall be appropriately adjusted, all
subject to further adjustment as provided in this Section 6.
(c) Split, Subdivision or Combination of Shares. If Maker at any
time while this Convertible Note, or any portion thereof, remains outstanding
shall split, subdivide or combine the securities as to which conversion rights
under this Convertible Note exist, into a different number of securities of the
same class, the Conversion Price shall be proportionately decreased in the case
of a split or subdivision or proportionately increased in the case of a
combination.
(d) Adjustments for Dividends in Stock or Other Securities or
Property. If while this Convertible Note, or any portion hereof, remains
outstanding the holders of the securities as to which conversion rights under
this Convertible Note exist at the time shall have received, or, on or after the
record date fixed for the determination of eligible stockholders, shall have
become entitled to receive, without payment therefor, other or additional stock
or other securities or property (other than cash) of Maker by way of dividend,
then and in each case, this Convertible Note shall represent the right to
acquire upon conversion, in addition to the number of shares of the security
receivable upon conversion of this Convertible Note, and without payment of any
additional consideration therefor, the amount of such other or additional stock
or other securities or property (other than cash) of Maker that such holder
would hold on the date of such conversion had it been the holder of record of
the security receivable upon conversion of this Convertible Note on the date
hereof and had thereafter, during the period from the date hereof to and
including the date of such conversion, retained such shares and/or all other
additional stock, other securities or property available by this Convertible
Note as aforesaid during such period, giving effect to all adjustments called
for during such period by the provisions of this Section 6.
7. Investment Intent. Lender, by acceptance hereof, acknowledges that
this Convertible Note and the shares to be issued upon conversion hereof are
being acquired solely for Lender's own account and not as a nominee for any
other party, and for investment, and that Lender will not offer, sell or
otherwise dispose of this Convertible Note or any shares to be issued upon
conversion hereof except under circumstances that will not result in a violation
of applicable federal and state securities laws. Upon conversion of this
Convertible Note, Lender shall, if requested by Maker, confirm in writing, in a
form satisfactory to Maker, that the shares so purchased are being acquired
solely for Lender's own account and not as a nominee for any other party, for
investment, and not with a view toward distribution or resale. All shares issued
upon exercise hereof shall be stamped or imprinted with a legend in
substantially the following form (in addition to any legend required by state
securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE. THE SECURITIES REPRESENTED HEREBY HAVE BEEN TAKEN BY THE
REGISTERED OWNER FOR INVESTMENT, AND WITHOUT A VIEW TO RESALE OR
DISTRIBUTION THEREOF, AND MAY NOT BE SOLD, TRANSFERRED OR DISPOSED
OF WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT
SUCH TRANSFER OR DISPOSITION DOES NOT VIOLATE THE SECURITIES ACT OF
1933, AS AMENDED, THE RULES AND REGULATIONS THEREUNDER OR OTHER
APPLICABLE SECURITIES LAWS.
8. Notices.
(a) Whenever the number of shares issuable or the Conversion Price
hereunder shall be adjusted pursuant to Section 6 hereof, Maker shall issue a
certificate signed by its Chief Financial Officer setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated, and the Conversion Price and
kind of securities purchasable hereunder after giving effect to such adjustment,
and shall cause a copy of such certificate to be mailed (by first-class mail,
postage prepaid) to Maker.
(b) All notices, advices and communications under this Convertible
Note shall be deemed to have been given, (i) in the case of personal delivery,
on the date of such delivery and (ii) in the case of mailing, on the third
business day following the date of such mailing, addressed as follows:
If to Maker:
BPK Resources, Inc.
264 Union Blvd.
First Floor
Totowa, New Jersey 07512
Attention: Chief Executive Officer
With a copy to:
Fox Rothschild LLP
997 Lenox Drive
Building 3
Lawrenceville, New Jersey 08648
Attention: Vincent A. Vietti, Esq.
and to the Lender:
At the address set forth in the Securities Purchase Agreement
Either of Maker or Lender may from time to time change the address to
which notices to it are to be mailed hereunder by notice in accordance with the
provisions of this Section 8.
9. Amendments.
(a) Any term of this Convertible Note may be amended with the
written consent of the Maker and the Holder. Any amendment effected in
accordance with this Section 9 shall be binding upon the Holder, each future
holder and the Maker.
(b) No waivers of, or exceptions to, any term, condition or
provision of this Convertible Note, in any one or more instances, shall be
deemed to be, or construed as, a further or continuing waiver of any such term,
condition or provision.
10. Agreements of Maker. Maker and any other party now or hereafter liable
for the payment of this Convertible Note in whole or in part, hereby severally
(i) waive demand, presentment for payment, notice of nonpayment, protest, notice
of protest, notice of intent to accelerate, notice of acceleration and all other
notice, filing of suit and diligence in collecting this Convertible Note, (ii)
agree to the release of any party primarily or secondarily liable hereon, (iii)
agree that the Lender shall not be required first to institute suit or exhaust
its remedies hereon against Maker or others liable or to become liable hereon or
to enforce its rights against them, and (iv) consent to any extension or
postponement of time of payment of this Convertible Note and to any other
indulgence with respect hereto without notice thereof to any of them.
11. Binding Parties. This Convertible Note shall bind Maker and its
successors and assigns, and the benefits hereof shall inure to the benefit of
Lender and its successors and assigns. All references herein to "Maker" and
"Lender" shall be deemed to apply to Maker and Lender, respectively, and to
their respective successors and assigns.
12. Governing Law. This Convertible Note shall be governed by and
construed in accordance with the laws of the State of New Jersey, without regard
to the laws that might otherwise govern under applicable principles of conflicts
of laws thereof, except that the General Corporation Law of the State of Nevada
shall apply to the internal corporate governance of Maker.
13. Section Titles. The Section titles in this Convertible Note are and
shall be without substantive meaning or content of any kind whatsoever and are
not a part of this Convertible Note.
WITNESS the due execution hereof on the date first above written with the
intention that this Convertible Note shall constitute a sealed instrument.
BPK RESOURCES, INC.
By:
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