THIS NOTE EXCHANGE
AGREEMENT, dated as of March 13, 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
”).
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% March Exchange 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:
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.
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
Noteholder shall deliver to the Company a completed and executed
IRS W-9 Form of the Investor;
(c) the
Noteholder shall execute and deliver a joinder, in the form
attached as Exhibit B-1 hereto (the “ Pledge
Joinder ”), to the Pledge Agreement, as amended (the
“ Pledge Agreement ”), attached as
Exhibit B-2 hereto;
(d) the
Company shall deliver to the Noteholder the executed Share Escrow
Agreement, as amended (the “ Share Escrow Agreement
”), attached as Exhibit C hereto; and
(e) the
Company shall deliver to the Noteholder the executed Interest
Escrow Agreement, as amended (the “ Interest Escrow
Agreement ”), attached as Exhibit D hereto
(this Agreement, the Exchange Note, the Pledge Joinder, 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.
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 ”).
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.
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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 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).
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.
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
twelve million six hundred seventy two thousand four hundred sixty
three dollars ($12,672,463). The
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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 &
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