exv10w1





 Exhibit
10.1



EXECUTION VERSION




NOTE EXCHANGE AGREEMENT




     THIS NOTE EXCHANGE AGREEMENT, dated as of January 20, 2009 (the “Agreement”), is entered into
by and between BMP Sunstone Corporation, a Delaware corporation (the “Company”), and the person
identified as the “Noteholder” on Schedule A hereto (the “Noteholder”, and together with
the Company, the “Parties”).



RECITALS




     WHEREAS, the Noteholder is the holder of a 10.0% Senior Secured Promissory Note due May 1,
2009 in the principal amount set forth on Schedule A hereto (the “Original Note”);



     WHEREAS, the Noteholder and the Company desire to exchange the Original Note for a 12.5%
Secured Convertible Note due July 1, 2011 in a principal amount set forth on Schedule A
hereto and in the form attached as Exhibit A hereto (the “Exchange Note”); and



     WHEREAS, this Agreement is one of a series of note exchange agreements by which certain
Original Notes are being exchanged for Exchange Notes.



     NOW, THEREFORE, in consideration of the premises, and of mutual covenants contained herein and
the mutual benefits to be derived therefrom, the Noteholder and the Company agree as follows:



ARTICLE 1




EXCHANGE




     1.1 Exchange. Each of the Company and the Noteholder hereby agree to exchange the
Original Note for the Exchange Note (the “Exchange”) and to take all actions necessary to
consummate the Exchange; provided, however, this Agreement shall be void ab initio
unless and until at least $10.0 million in principal amount of Original Notes agree to an Exchange.



     1.2 Cancellation and Issuance.



          1.2.1 Upon execution of this Agreement by the Parties,




               (a) the Exchange shall be effective, the notes representing the Original Note will be deemed
cancelled and the Exchange Note shall be deemed issued;



               (b) the Parties shall execute and deliver a Pledge Agreement (the “Pledge Agreement”) in the
form attached as Exhibit B hereto;



               (c) the Company shall deliver to the Noteholder the executed Share Escrow Agreement (the
"Share Escrow Agreement”) in the form of Exhibit C hereto; and



               (d) the Company shall deliver to the Noteholder the executed Interest Escrow Agreement (the
"Interest Escrow Agreement”) in the form of Exhibit D hereto (this Agreement, the Exchange
Note, the Pledge Agreement, the Share Escrow Agreement and the



 









 







Interest Escrow Agreement are herein collectively referred to herein as the “Transaction
Documents”).



          1.2.2 On or as soon as practicable after the Closing Date, the Noteholder shall surrender to
the Company for cancellation the notes representing the Original Note, which the Company shall
promptly cancel, and upon cancellation thereof the Company shall execute and deliver to the
Noteholder an executed copy of the Exchange Note. On or as soon as practicable after the Closing
Date, the Noteholder shall deliver to the Company a completed and executed IRS W-9 Form of the
Noteholder.




          1.2.3 On April 1, 2009, the Company shall pay to Noteholder all accrued but unpaid interest on
the Original Notes, for the period from and including November 2, 2008 through but not including
the Closing Date, from the escrow account maintained by CSC Trust Company of Delaware, pursuant to
the Interest Escrow Agreement.




          1.2.4 Promptly following the Closing Date, the Company shall cause Bryn Mawr Trust Company to
transfer to the Escrow Agent (as defined under the Interest Escrow Agreement) from its escrow
account maintained by Bryn Mawr Trust Company, pursuant to the Escrow Agreement, dated November 1,
2007, between the Company and Bryn Mawr Trust Company, an amount equal to the aggregate interest
payment on the Original Notes being surrendered for the period from and including November 2, 2008
through and including May 1, 2009.




     1.3 Closing. The closing (the “Closing”) of the Exchange shall occur upon execution
of this Agreement and the Transaction Documents to which the Noteholder is a party (the “Closing
Date”).



ARTICLE 2




REPRESENTATIONS AND WARRANTIES BY THE COMPANY




     The Company represents and warrants to the Noteholder that:



     2.1 Organization, Good Standing. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.



     2.2 Conversion Shares. All shares of common stock, par value $0.001 (the “Common
Stock”) of the Company which may be issued upon the conversion of the Exchange Note (the
"Conversion Shares”), upon issuance in accordance with the terms of the Exchange Note, will be duly
authorized, validly issued, fully paid and non-assessable. The Company has taken and shall
continue to take all such actions as may be required to ensure that the Company shall at all times
have authorized and reserved a sufficient number of shares of Common Stock to provide for the
conversion of the Exchange Note into Conversion Shares.



     2.3 Authority. The execution, delivery and performance of, and compliance with, the
Transaction Documents, the issuance of the Exchange Note in exchange for the Original Note and the
issuance of the Conversion Shares have been duly authorized by all necessary corporate action on
the part of the Company The Transaction Documents are valid and binding



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agreements of the Company and are enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting
creditors’ rights and remedies generally, and subject, as to enforceability to general principles
of equity, including principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in equity).



ARTICLE 3




REPRESENTATIONS AND WARRANTIES BY THE NOTEHOLDER




     The Noteholder hereby represents and warrants to the Company that:



     3.1 Authority Relative to this Agreement and Transaction Documents. The execution,
delivery and performance of, and compliance with, this Agreement, and the Transaction Documents
contemplated hereunder to which the Noteholder is a party, by the Noteholder and the terms of the
Exchange have been duly authorized by all necessary action on the part of the Noteholder. The
Transaction Documents to which the Noteholder is a party are valid and binding agreements of the
Noteholder, enforceable in accordance with their terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, and similar laws affecting creditors’ rights and remedies
generally, and subject, as to enforceability to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is
sought in a proceeding at law or in equity).



     3.2 Ownership. The Noteholder is the sole record and beneficial owner of the Original
Note and has good title to the Original Note free and clear of any mortgage, lien, pledge, charge,
security interest, encumbrance, conditional sales contract, transfer restriction, right of first
refusal, voting trust agreement, preemptive right, or other adverse claim, defect of title,
limitation or restriction of any type or nature whatsoever.



     3.3 Access. The Noteholder has had an opportunity to discuss the Company’s business,
management and financial affairs with the Company’s management. The Noteholder has had full
opportunity to seek the advice of independent counsel with respect to the Exchange and the tax
risks and implications thereof.



ARTICLE 4




COVENANTS




     4.1 Lock-Up. The “Lock-Up Period” means the period beginning on the date of this
Agreement and ending on the earlier of May 15, 2009 or the closing of the issuance of shares of
common stock of the Company in one or more offerings to investors resulting in the receipt of
proceeds, net of all commissions, by the Company in an aggregate amount of at least sixteen million
dollars ($16,000,000). The Noteholder agrees that, during the Lock-Up Period, the Noteholder will
not, directly or indirectly, (a) enter into any short sale or any purchase, sale or grant of any
right (including without limitation the purchase of any long put option or writing of any call
option) which is designed to, or which reasonably could be expected to, result in a sale of
disposition of any security of the Company, or (b) enter into a “put equivalent position”, as



3









 




defined in Rule 16a-1 under the Securities Exchange Act of 1934, with respect to any security
of the Company. The foregoing restriction is expressly agreed to preclude the Noteholder from,
directly or indirectly, engaging in any hedging or other transaction which is designed to or which
reasonably could be expected to lead to or result in a sale or disposition of any securities of the
Company not directly owned by the Noteholder. Notwithstanding the foregoing, the Noteholder shall
not be restricted from selling shares of common stock of the Company in ordinary course regular way
sale transactions in public trading markets in the United States and where settlement is effected
within three (3) trading days following the date of such sale transaction.




     4.2 Enforceability. If the Exchange Note is determined not to be enforceable by a
court of competent jurisdiction in a final and non-appealable verdict, the Company shall pay the
Noteholder the outstanding principal amount of the Exchange Note and the accrued but unpaid
interest (through the date of such final and non-appealable verdict) on such outstanding principal
amount of the Exchange Note.



ARTICLE 5




INDEMNIFICATION




     5.1 Noteholder Indemnification. The Noteholder acknowledges and understands the
meaning of the representations and warranties made in this Agreement and hereby agrees to indemnify
and hold harmless the Company and its respective predecessors, successors, direct or indirect
subsidiaries and affiliates and its and their past and present shareholders, members (direct and
indirect), managers, directors, officers, employees, agents, and representatives from and against
any and all loss, costs, expenses, damages and liabilities (including, without limitation, court
costs and reasonable attorneys fees) arising out of or due to a breach by the Noteholder of any
such representations and warranties or of any covenants or other agreements contained in this
Agreement. All representations, warranties, covenants or other agreements contained in this
Agreement shall survive the execution and delivery of this Agreement and the exchange by the
Noteholder of the Original Note for the Exchange Note.



     5.2 Company Indemnification. The Company hereby agrees to indemnify and hold harmless
the Noteholder from and against any and all loss, costs, expenses, damages and liabilities
(including, without limitation, court costs and reasonable attorneys fees) arising out of or due to
a breach by the Company of any representations and warranties set forth in this Agreement or of any
covenants or other agreements contained in this Agreement. All representations, warranties,
covenants or other agreements contained in this Agreement shall survive the execution and delivery
of this Agreement by the Company and the exchange by the Noteholder of the Original Note for the
Exchange Note.



ARTICLE 6




MISCELLANEOUS PROVISIONS




     6.1 Governing Law. This Agreement shall be construed and interpreted in accordance
with the internal laws of the State of Delaware without regard to any choice of law or conflict of
law, choice of forum or provision, rule or principle (whether of the State of Delaware



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or any other jurisdiction) that might otherwise refer construction or interpretation of this
Agreement to the substantive law of another jurisdiction. The Parties hereby irrevocably (a)
submit themselves to the non-exclusive jurisdiction of any federal court in the United States and
(b) waive the right and hereby agree not to assert by way of motion, as a defense or otherwise in
any action, suit or other legal proceeding brought in any such court, any claim that it, he or she
is not subject to the jurisdiction of such court, that such action, suit or proceeding is brought
in an inconvenient forum or that the venue of such action, suit or proceeding is improper. Each
Party also irrevocably and unconditionally consents to the service of any process, pleadings,
notices or other papers in a manner permitted by the notice provisions of Section 6.2. EACH PARTY
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
ACTIONS OF SUCH PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.




     6.2 Notice. All notices, requests, consents and other communications hereunder shall
be in writing, shall be mailed (a) if within the United States by first-class registered or
certified airmail, or nationally recognized overnight express courier, postage prepaid, by
facsimile or e-mail, or (b) if delivered from outside the United States, by international express
courier, facsimile or e-mail, and shall be deemed given (i) if delivered by first-class registered
or certified mail, five business days after so mailed, (ii) if delivered by nationally recognized
overnight carrier, one business day after so mailed, (iii) if delivered by International Federal
Express, two business days after so mailed, or (iv) if delivered by facsimile or e-mail, upon
electronic confirmation of receipt and shall be delivered as addressed as follows:



          6.2.1 if to the Company, to:



BMP Sunstone Corporation.

600 W. Germantown Pike

Suite 400

Plymouth Meeting, PA 19462

Facsimile: 610.940.1676

Email: fpowell@bmpsunstone.com

Attn: Fred M. Powell, Chief Financial Officer




          6.2.2 with a copy to:



Morgan, Lewis & Bockius LLP

1701 Market Street

Philadelphia, PA 19103

Facsimile: 215.963.5001

Attention: Joanne R. Soslow, Esq.




          6.2.3 if to the Noteholder, at its mail or e-mail address on the signature page hereto, or at
such other address or addresses as may have been furnished to the Company in writing.




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     6.3 Counterparts. This Agreement may be executed in two or more counterparts
(delivery of which may occur via facsimile or as an attachment to an electronic mail message in
“pdf” or similar format), each of which shall be binding as of the date first written above, and,
when delivered, all of which shall constitute one and the same instrument. This Agreement and any
documents delivered pursuant hereto, and any amendments hereto or thereto, to the extent signed and
delivered by means of a facsimile machine or as an attachment to an electronic mail message in
“pdf” or similar format, shall be treated in all manner and respects as an original agreement or
instrument and shall be considered to have the same binding legal effect as if it were the original
signed version thereof delivered in person. At the request of either Party hereto or to any such
agreement or instrument, the other Party hereto or thereto shall re-execute original forms thereof
and deliver them to the other Party. No Party hereto or to any such agreement or instrument shall
raise the use of a facsimile machine or electronic mail attachment in “pdf” or similar format to
deliver a signature or the fact that any signature or agreement or instrument was transmitted or
communicated through the use of a facsimile machine or as an attachment to an electronic mail
message as a defense to the formation of a contract and each such Party forever waives any such
defense. A facsimile signature or electronically scanned copy of a signature shall constitute and
shall be deemed to be sufficient evidence of a Party’s execution of this Agreement, without
necessity of further proof. Each such copy shall be deemed an original, and it shall not be
necessary in making proof of this Agreement to produce or account for more than one such
counterpart.



     6.4 Transaction Documents. The Transaction Documents embody the entire agreement and
understanding of the Parties hereto in respect of the transactions contemplated therein. There are
no restrictions, promises, representations, warranties, covenants or undertakings, other than those
expressly set forth or referred to herein or therein. The Transaction Documents supersede all
prior agreements and understandings between the Parties with respect to such transactions. At and
after the Closing, the Parties shall execute and deliver any and all documents and take any and all
other actions that may be deemed reasonably necessary by their respective counsel to complete the
Exchange. The Parties hereby acknowledge that the terms and language of the Transaction Documents
were the result of negotiations among the Parties and, as a result, there shall be no presumption
that any ambiguities in the Transaction Documents shall be resolved against any particular Party.
Any controversy over construction of the Transaction Documents shall be decided without regard to
events of authorship or negotiation.



     6.5 Successors and Assigns. This Agreement and the rights evidenced hereby shall
inure to the benefit of and be binding upon the successors and assigns of the Parties.



     6.6 Amendment. This Agreement may not be modified or amended except pursuant to an
instrument in writing signed by the Company and the Noteholder.



     6.7 Severability. If any term or other provision of this Agreement is held by a court
of competent jurisdiction to be invalid, illegal or incapable of being enforced under any
applicable law in any particular respect or under any particular circumstances, then, so long as
the economic or legal substance of the Exchange is not affected in any manner materially adverse to
any Party, (a) such term or provision shall nevertheless remain in full force and effect in all
other respects and under all other circumstances, and (b) all other terms, conditions and



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provisions of this Agreement shall remain in full force and effect. Upon such determination
that any term or other provision is invalid, illegal or incapable of being enforced, the Parties
shall negotiate in good faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible in an acceptable manner so that the Exchange is fulfilled to the
fullest extent possible.



REMAINDER OF PAGE INTENTIONALLY LEFT BLANK




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     IN WITNESS WHEREOF, the Parties hereto have executed this Agreement or have caused this
Agreement to be duly executed on their respective behalf by their respective officers thereunto
duly authorized, as of the day and year first above written.



	 	 	 	 	 	 	 	 	 
	BMP SUNSTONE CORPORATION	 	NOTEHOLDER	 	 
	By:

	 	 	 	By:
	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	 	 	Name:	 	 	 	 
	Title:

	 	 	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Provide Notices to:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Address:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Facsimile:          
               
                  
                  	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Email Address:           
                 
                
                 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Wire Instructions for Payments to Noteholder:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 





[Signature Page to January 2009 Note Exchange Agreement]




 









 




If Noteholder wants to transfer its rights to receive the Exchange Note (in whole or in part) to
another party (“Assignee”), please complete the following information and execute in the
space provided. The transfer shall not be effective until acknowledged and agreed to by the
Company.




	 	 	 	 	 	 	 
	Name of Assignee:	 	Principal Amount of Exchange Note to be
transferred to Assignee:                                                            	 	 
	 
	 	 	 	 	 	 
	 	 	Provide Notices to Assignee:	 	 
	 


	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Facsimile:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Email Address:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	Wire Instructions for Payments to Assignee:	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 




Noteholder hereby sets over, assigns and transfers to Assignee (a) Noteholder’s
rights, title and interest to the principal amount of the Exchange Note noted
above and (b) a pro rata interest (based on the principal amount of the
Exchange Note being transferred to the Assignee as compared to the total
principal amount of the Exchange Note) in Noteholder’s rights, title and
interest under the Transaction Documents (other than the Exchange Note).
Assignee hereby (i) accepts such assignment and transfer and (ii) agrees to be
bound by and subject to the terms and conditions of the Transaction Documents.




	 	 	 	 	 	 	 	 	 
	NOTEHOLDER	 	ASSIGNEE	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 	 	 
	Name:

	 	 

	 	Name:
	 	 

	 	 
	Title:

	 	 	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	ACKNOWLEDGED AND AGREED:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	BMP SUNSTONE CORPORATION	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Name:
	 	 	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 






 









 





Schedule A




	 	 	 	 	 	 	 	 
	 	 	Principal Amount of 10.0%	 	Principal Amount of 12.5%	 
	 	 	Senior Secured Promissory	 	Secured Convertible Note	 
	Noteholder	 	Note due May 1, 2009	 	due July 1, 2011	 
	 
	 	 	 	 	 	 	 





 









 





Exhibit A




Form of 12.5% Secured Convertible Note due July 1, 2011




 









 





Exhibit B




Form of Pledge Agreement




 









 





Exhibit C




Form of Share Escrow Agreement




 









 





Exhibit D




Form of Interest Escrow Agreement