Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of May 17, 2018,
is by and among Biodelivery Sciences International, Inc., a Delaware corporation
with headquarters located 4131 ParkLake Ave., Suite 225, Raleigh, North Carolina
27612, (the “Company”), and each of the investors listed on Schedule 1 hereto
(individually, a “Buyer” and collectively, the “Buyers”).

RECITALS

A.    The Company and each Buyer desire to enter into this transaction to
purchase shares of the Company’s Series B Non-Voting Convertible Preferred
Stock, par value $0.001 per share (the “Series B Preferred Stock”), pursuant to
a currently effective shelf registration statement on Form S-3 (file
No. 333-205483) (the “Registration Statement”), which has $150,000,000 of
unallocated securities, which Registration Statement has been declared effective
in accordance with the Securities Act of 1933, as amended (the “1933 Act”), by
the United States Securities and Exchange Commission (the “SEC”).

B.     Each Buyer wishes to purchase, and the Company wishes to sell, upon the
terms and conditions stated in this Agreement such aggregate number of shares of
Series B Preferred Stock as set forth opposite such Buyer’s name in Schedule 1
(which aggregate amount for all Buyers shall be 5,000 shares of Series B
Preferred Stock, referred to as the “Preferred Shares”).

C.     Contemporaneously with the execution and delivery of this Agreement, the
Company is filing a Certificate of Designation of the Series B Convertible
Preferred Stock (the “Certificate of Designation”), substantially in the form
attached hereto as Exhibit A, with the Secretary of State of the State of
Delaware.

D.     Contemporaneously with the execution and delivery of this Agreement, the
Company and the Lead Investor (as defined in Section 3(i) herein) are executing
and delivering a Registration Rights Agreement, substantially in the form
attached hereto as Exhibit B (the “Registration Rights Agreement”), pursuant to
which the Company has agreed to provide certain registration rights with respect
to the common stock of the Company, par value $0.001 per share (the “Common
Stock”) issuable upon conversion of the Preferred Shares (the “Conversion
Shares,” and together with the Preferred Shares, the “Securities”) under the
1933 Act and the rules and regulations promulgated thereunder, and applicable
state securities laws;

E.    Contemporaneously with the execution and delivery of this Agreement, the
Company and the Lead Investor (as defined herein) are executing a Settlement
Agreement, substantially in the form attached hereto as Exhibit C (the
“Settlement Agreement”).

AGREEMENT

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each Buyer hereby
agree as follows:

1.    PURCHASE AND SALE OF THE PREFERRED SHARES.

(a) Purchase of Preferred Shares. Subject to the satisfaction (or waiver) of the
conditions set forth in Sections 6 and 7 below, the Company shall issue and sell
to each Buyer, and each Buyer severally, but not jointly, agrees to purchase
from the Company on the Closing Date (as defined below) such aggregate number of
Preferred Shares as is set forth opposite such Buyer’s name in Schedule 1.

(b) Closing. The closing (the “Closing”) of the purchase of the Preferred Shares
by the Buyers shall occur at the offices of Ellenoff Grossman & Schole LLP, 1345
Avenue of the Americas, New York, NY 10105 or by remote

 

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electronic exchange of documents for Closing, as agreed by the parties hereto.
The date and time of the Closing (the “Closing Date”) shall be 10:00 a.m., New
York time, on the first (1st) Business Day (as defined below) on which the
conditions to the Closing set forth in Sections 6 and 7 below are satisfied or
waived (or such other date as is mutually agreed to by the Company and each
Buyer). As used herein “Business Day” means any day other than a Saturday,
Sunday or other day on which commercial banks in New York, New York are
authorized or required by law to remain closed.

(c) Purchase Price. The aggregate purchase price for the Preferred Shares to be
purchased by each Buyer (the “Purchase Price”) shall be the amount set forth
opposite such Buyer’s name in Schedule 1. The purchase price per Preferred Share
is $10,000.

(d) Form of Payment; Deliveries. On the Closing Date, (i) the Purchase Price
will be released from escrow in accordance with the escrow agreement among the
Company, William Blair & Company L.L.C. (the “Placement Agent”) and Wilmington
Trust, National Association, as escrow agent (the “Escrow Agreement”) to the
Company for the Preferred Shares to be issued and sold to such Buyer at the
Closing, by wire transfer of immediately available funds and (ii) the Company
shall deliver to each Buyer a certificate representing the Preferred Shares
being purchased. The release of the Purchase Price from escrow shall be subject
to receipt by the Company or the Placement Agent of the Lead Investor
Confirmation (as defined in Section 7 herein).

2.    BUYER’S REPRESENTATIONS AND WARRANTIES.

Each Buyer, severally and not jointly, represents and warrants to the Company
with respect to only itself that, as of the date hereof and as of the Closing
Date:

(a) Organization; Authority. If such Buyer is an entity, it is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite power and authority to enter
into and to consummate the transactions contemplated by the Transaction
Documents (as defined below) to which it is a party and otherwise to carry out
its obligations hereunder and thereunder.

(b) Validity; Enforcement. The Transaction Documents to which it is a party,
have been duly and validly authorized, executed and delivered on behalf of such
Buyer and shall constitute the legal, valid and binding obligations of such
Buyer enforceable against such Buyer in accordance with their terms, except as
such enforceability may be limited by general principles of equity or to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors’ rights and remedies.

(c) No Conflicts. The execution, delivery and performance by such Buyer of the
Transaction Documents to which it is a party and the consummation by such Buyer
of the transactions contemplated hereby and thereby will not (i) result in a
violation of the organizational documents of such Buyer, (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 such Buyer is a party or (iii) result in a violation of any
law, rule, regulation, order, judgment or decree (including federal and state
securities laws) applicable to such Buyer, except, in the case of clauses
(ii) and (iii) above, for such conflicts, defaults, rights or violations which
could not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the ability of such Buyer to perform its obligations
hereunder.

(d) Access to Information. Such Buyer acknowledges that it has had the
opportunity to review the Transaction Documents (including all exhibits and
schedules thereto) and the SEC Documents and has been afforded, (i) the
opportunity to ask such questions as it has deemed necessary of, and to receive
answers from, representatives of the Company concerning the terms and conditions
of the offering of the Securities and the merits and risks of investing in the
Securities; and (ii) access to information about the Company and its financial
condition, results of operations, business, properties, management and prospects
sufficient to enable it to evaluate its investment.

 

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3.    REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company represents and warrants to each of the Buyers that, as of the date
hereof and as of the Closing Date:

(a)    Organization and Qualification. The Company and each of its Subsidiaries
(i) have been duly organized and are validly existing and in good standing under
the laws of their respective jurisdiction of organization, and have all power
and authority necessary to own their respective properties and conduct their
businesses as described in the Pricing Disclosure Package, and (ii) have been
duly qualified for the transaction of business and are in good standing under
the laws of each other jurisdiction in which they own or lease properties or
conduct any business so as to require such qualification, except in the case of
clause (ii), where the failure to be so qualified or in good standing would not
have a Material Adverse Effect. As used in this Agreement, “Material Adverse
Effect” means material adverse change, or any development involving a
prospective material adverse change, in or affecting (i) the general affairs,
business, properties, management, financial position, stockholders’ equity,
results of operations or prospects of the Company and its Subsidiaries, taken as
a whole, or (ii) the authority or ability of the Company or any of its
Subsidiaries to perform any of their respective obligations under any of the
Transaction Documents (as defined below). Other than as set forth on exhibit
21.1 to the Company’s Annual Report on Form 10-K for the year ended December 31,
2017, the Company has no Subsidiaries. “Subsidiaries” means any Person in which
the Company, directly or indirectly, (A) owns any of the outstanding capital
stock or holds any equity or similar interest of such Person or (B) controls or
operates all or any part of the business, operations or administration of such
Person, and each of the foregoing, is individually referred to herein as a
“Subsidiary”

(b)    Authorization; Enforcement; Validity. The Company has the requisite power
and authority to enter into and perform its obligations under this Agreement and
the other Transaction Documents and to issue the Preferred Shares in accordance
with the terms hereof and thereof. The execution and delivery of this Agreement
and the other Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Preferred Shares, the reservation Conversion
Shares, and the issuance of the Conversion Shares upon conversion of the
Preferred Shares, have been duly authorized by the Company’s board of directors
and (other than the filing with the SEC of the prospectus supplement required by
the Registration Statement pursuant to Rule 424(b) under the 1933 Act (the
“Prospectus Supplement”) supplementing the base prospectus forming part of the
Registration Statement (the “Prospectus”) and any other filings as may be
required by any state securities agencies) no further filing, consent or
authorization is required by the Company, its board of directors or its
stockholders or other governing body. This Agreement has been, and the other
Transaction Documents will be prior to the Closing, duly executed and delivered
by the Company, and each constitutes the legal, valid and binding obligations of
the Company, enforceable against the Company in accordance with its 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 and except as rights to
indemnification and to contribution may be limited by federal or state
securities law. “Transaction Documents” means, collectively, this Agreement, the
Registration Rights Agreement, the Certificate of Designation, the Settlement
Agreement, the Escrow Agreement and each of the other agreements and instruments
entered into or delivered by any of the parties hereto in connection with the
transactions contemplated hereby and thereby, as may be amended from time to
time.

(c)     Issuance of Securities; Registration Statement. The issuance of the
Preferred Shares are duly authorized and, upon issuance and payment in
accordance with the terms of the Transaction Documents shall be validly issued,
fully paid and non-assessable and free from all preemptive or similar rights,
mortgages, defects, claims, liens, pledges, charges, taxes, rights of first
refusal, encumbrances, security interests and other encumbrances (collectively
“Liens”) with respect to the issuance thereof. Following the Company’s meeting
of stockholders and approval of an increase in the Company’s authorized capital
stock as contemplated by the Settlement Agreement (the “Stockholders Meeting”),
the Company shall, so long as any of the Preferred Shares are outstanding, take
all action necessary to reserve and keep available out of its authorized and
unissued capital stock, solely for the purpose of effecting the Conversion
Shares, 100% of the number of shares of Common Stock issuable upon conversion of
the Preferred Shares (subject to reduction from time to time for the issuance of
the Conversion Shares). Upon conversion of the Preferred Shares, when issued,
the Conversion Shares will be validly issued, fully paid and nonassessable and
free from all preemptive or similar rights or Liens with respect to the issue
thereof, with the holders being entitled to all rights accorded to a holder of
Common Stock. The issuance by the Company of the Securities has been registered
under the 1933 Act, the Securities are being issued pursuant to the Registration
Statement and all of the Securities are freely transferable and freely tradable
by each of the Buyers without

 

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restriction, whether by way of registration or some exemption therefrom, except
as otherwise required by applicable law. The Registration Statement is effective
and available for the issuance of the Securities thereunder and the Company has
not received any notice that the SEC has issued or intends to issue a stop-order
with respect to the Registration Statement or that the SEC otherwise has
suspended or withdrawn the effectiveness of the Registration Statement, either
temporarily or permanently, or intends or has threatened in writing to do so.
The “Plan of Distribution” section under the Registration Statement permits the
issuance and sale of the Securities hereunder and as contemplated by the other
Transaction Documents. Upon receipt of the Preferred Shares, and upon conversion
of the Preferred Shares, each of the Buyers will have good and marketable title
to the Preferred Shares and Conversion Shares, as applicable. The Registration
Statement and any prospectus included therein, including the Prospectus and the
Prospectus Supplement, complied in all material respects with the requirements
of the 1933 Act and the Securities Exchange Act of 1934, as amended (the “1934
Act”) and the rules and regulations of the SEC promulgated thereunder and all
other applicable laws and regulations. At the time the Registration Statement
and any amendments thereto became effective, at the date of this Agreement and
at each deemed effective date thereof pursuant to Rule 430B(f)(2) of the 1933
Act, the Registration Statement and any amendments thereto complied and will
comply in all material respects with the requirements of the 1933 Act and did
not and will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus and any amendments or
supplements thereto (including, without limitation the Prospectus Supplement),
at the time the Prospectus or any amendment or supplement thereto was issued and
at the Closing Date, complied, and will comply, in all material respects with
the requirements of the 1933 Act and did not, and will not, contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The Company meets all of the requirements for the use
of Form S-3 under the 1933 Act for the offering and sale of the Securities
contemplated by this Agreement, and the SEC has not notified the Company of any
objection to the use of the form of the Registration Statement pursuant to Rule
401(g)(1) under the 1933 Act. The Registration Statement meets the requirements
set forth in Rule 415(a)(1)(x) under the 1933 Act. At the earliest time after
the filing of the Registration Statement that the Company or another offering
participant made a bona fide offer (within the meaning of Rule 164(h)(2) under
the 1933 Act) relating to any of the Securities, the Company was not and is not
an “Ineligible Issuer” (as defined in Rule 405 under the 1933 Act). There are no
contracts or other documents which are required to be described in the
Registration Statement, the Pricing Prospectus or the Prospectus or to be filed
as an exhibit to the Registration Statement which have not been described or
filed as required. The statistical and market-related data included in the SEC
Documents are based on or derived from sources which the Company believes are
reliable and accurate. The Company (i) has not distributed any offering material
in connection with the offer or sale of any of the Securities and (ii) until no
Buyer holds any of the Securities, shall not distribute any offering material in
connection with the offer or sale of any of the Securities to, or by, any of the
Buyers (if required), in each case, other than the Registration Statement, the
Prospectus or the Prospectus Supplement.

(d)     No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the issuance of
the Preferred Shares, the Conversion Shares and the reservation for issuance of
the Conversion Shares) will not (i) result in a violation of the Certificate of
Incorporation (as defined below) (including, without limitation, any certificate
of designation contained therein), Bylaws (as defined below), certificate of
formation, memorandum of association, articles of association, bylaws or other
organizational documents of the Company or any of its Subsidiaries, or any
capital stock or other securities of the Company or any of its Subsidiaries,
(ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) in any respect under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party, or (iii) subject to Stockholder Approval, result in a
violation of any law, rule, regulation, order, judgment or decree (including,
without limitation, foreign, federal and state securities laws and regulations
and the rules and regulations of Nasdaq Capital Market (the “Principal Market”)
and including all applicable foreign, federal and state laws, rules and
regulations) applicable to the Company or any of its Subsidiaries or by which
any property or asset of the Company or any of its Subsidiaries is bound or
affected; except in the case of each of clauses (ii) and (iii), such as would
not reasonably be expected to result in a Material Adverse Effect. For purposes
herein, “Stockholder Approval” means the approval as may be required by the
applicable rules and regulations of Nasdaq (or any successor entity) from the
stockholders of the Corporation with respect to the transactions contemplated by
the Transaction Documents.

 

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(e)     Consents. Neither the Company nor any Subsidiary is required to obtain
any consent from, authorization or order of, or make any filing or registration
with (other than the filing with the SEC of the Prospectus Supplement and any
other filings as may be required by any state securities agencies), any
Governmental Entity (as defined below) or any regulatory or self-regulatory
agency (other than filings required to be made with the Principal Market
relating to the listing of additional shares) or any other Person in order for
it to execute, deliver or perform any of its respective obligations under or
contemplated by the Transaction Documents, in each case, in accordance with the
terms hereof or thereof. Subject to Stockholder Approval, all consents,
authorizations, orders, filings and registrations which the Company or any
Subsidiary is required to obtain pursuant to the preceding sentence have been or
will be obtained or effected on or prior to the Closing Date, and neither the
Company nor any of its Subsidiaries are aware of any facts or circumstances
which might prevent the Company or any of its Subsidiaries from obtaining or
effecting any of the registration, application or filings contemplated by the
Transaction Documents except as would not reasonably be expected to result in a
Material Adverse Effect. “Governmental Entity” means any nation, state, county,
city, town, village, district, or other political jurisdiction of any nature,
federal, state, local, municipal, foreign, or other government, governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, official, or entity and any court or other tribunal),
multi-national organization or body; or body exercising, or entitled to
exercise, any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature or instrumentality of any
of the foregoing, including any entity or enterprise owned or controlled by a
government or a public international organization or any of the foregoing.

(f)     Acknowledgment Regarding Buyer’s Purchase of Securities. The Company
acknowledges and agrees that each Buyer is acting solely in the capacity of an
arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that no Buyer is prior to the
transactions contemplated by the Transaction Documents, except as contemplated
in the Transaction Documents, (i) an officer or director of the Company or any
of its Subsidiaries, (ii) an “affiliate” (as defined in Rule 144 promulgated
under the 1933 Act (or a successor rule thereto) (collectively, “Rule 144”)) of
the Company or any of its Subsidiaries or (iii) to its knowledge, a “beneficial
owner” of more than 10% of the shares of Common Stock (as defined for purposes
of Rule 13d-3 of the 1934 Act). The Company further acknowledges that no Buyer
is acting as a financial advisor or fiduciary of the Company or any of its
Subsidiaries (or in any similar capacity) with respect to the Transaction
Documents and the transactions contemplated hereby and thereby, and any advice
given by a Buyer or any of its representatives or agents in connection with the
Transaction Documents and the transactions contemplated hereby and thereby is
merely incidental to such Buyer’s purchase of the Securities. The Company
further represents to each Buyer that the Company’s decision to enter into the
Transaction Documents has been based solely on the independent evaluation by the
Company and its representatives.

(g)    Placement Agent’s Fees. The Company 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 Buyer or its investment advisor) relating
to or arising out of the transactions contemplated hereby, including, without
limitation, placement agent fees payable to the Placement Agent in connection
with the sale of the Securities. The fees and expenses of the Placement Agent to
be paid by the Company or any of its Subsidiaries are as set forth on Schedule
3(g) attached hereto. The Company shall pay, and hold each Buyer 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. The Company acknowledges that it has engaged the Placement Agent in
connection with the sale of the Securities. Other than the Placement Agent and
such agent’s advisors, neither the Company nor any of its Subsidiaries has
engaged any placement agent or other agent in connection with the offer or sale
of the Securities.

(h)    No Integrated Offering. Assuming the accuracy of the Buyers’
representations and warranties set forth in Section 2, neither the Company, nor
any of its affiliates, nor 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 cause this
offering of the Securities to be integrated with prior offerings by the Company
for purposes of any applicable shareholder approval provisions of any Principal
Market on which any of the securities of the Company are listed or designated.

(i)    Application of Takeover Protections; Rights Agreement. The Company and
its board of directors have taken all necessary action, if any, in order to
render inapplicable any control share acquisition, interested stockholder,
business combination, poison pill (including, without limitation, any
distribution under a rights agreement), stockholder rights plan or other similar
anti-takeover provision under the Certificate of Incorporation, Bylaws or other
organizational documents or the laws of the jurisdiction of its incorporation or
otherwise which is or

 

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could become applicable to any Buyer as a result of the transactions
contemplated by this Agreement, including, without limitation, the Company’s
issuance of the Securities and any Buyer’s ownership of the Securities. The
Company and its board of directors have taken all necessary action, if any, in
order to render inapplicable any stockholder rights plan or similar arrangement
relating to accumulations of beneficial ownership of shares of Common Stock or a
change in control of the Company or any of its Subsidiaries.

(j)    SEC Documents; Financial Statements. During the two (2) years prior to
the date hereof, the Company has timely filed all reports, schedules, forms,
proxy statements, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the 1934 Act (all of the
foregoing filed prior to the date hereof and all exhibits and appendices
included therein and financial statements, notes and schedules thereto and
documents incorporated by reference therein being hereinafter referred to as the
“SEC Documents”), other than the timely filing of such Form 8-Ks as would not
affect the Company’s eligibility to use Form S-3. 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 the Company included in the SEC Documents complied in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto as in effect as of the
time of filing. Such financial statements have been prepared in accordance with
generally accepted accounting principles (“GAAP”), consistently applied, during
the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (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 the Company 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 which will not be
material, either individually or in the aggregate). The reserves, if any,
established by the Company or the lack of reserves, if applicable, are
reasonable based upon facts and circumstances known by the Company on the date
hereof and there are no loss contingencies that are required to be accrued by
the Statement of Financial Accounting Standard No. 5 of the Financial Accounting
Standards Board which are not provided for by the Company in its financial
statements or otherwise. The Company is not currently contemplating to amend or
restate any of the financial statements (including, without limitation, any
notes or any letter of the independent accountants of the Company with respect
thereto) included in the SEC Documents (the “Financial Statements”), nor is the
Company currently aware of facts or circumstances which would require the
Company to amend or restate any of the Financial Statements, in each case, in
order for any of the Financials Statements to be in compliance with GAAP and the
rules and regulations of the SEC. The Company has not been informed by its
independent accountants that they recommend that the Company amend or restate
any of the Financial Statements or that there is any need for the Company to
amend or restate any of the Financial Statements.

(k)    Certified Accountants. Cherry Bekaert LLP, which has certified the
Financial Statements, are independent public accountants as required by the 1933
Act and the rules and regulations of the SEC thereunder.

(l)    Absence of Certain Changes. Since the date of the Company’s most recent
audited financial statements contained in a Form 10-K, except as supplemented by
the Form 10-Q for the quarterly period ended March 31, 2018, there has been no
event, occurrence or development that has had or that would reasonably be
expected to result in a Material Adverse Effect. Since the date of the Company’s
most recent audited financial statements contained in a Form 10-K, except as set
forth in a subsequent SEC Document, neither the Company nor any of its
Subsidiaries has (i) declared or paid any dividends, (ii) sold any assets,
individually or in the aggregate, outside of the ordinary course of business;
(iii) incurred any additional debt under the Company’s existing credit facility,
(iv) increased the cash or equity compensation of any of its directors or
executive officers, (v) made any capital expenditures, individually or in the
aggregate, outside of the ordinary course of business, (vi) entered into any
contract, arrangement or agreement (or amendment thereto) which is required to
be filed as an exhibit to the Company’s periodic filings with the SEC but which
has not yet been so filed, (vii) had any material change which is required to be
disclosed in the Company’s period filings with the SEC but which has not yet
been disclosed in the SEC Documents. Neither the Company nor any of its
Subsidiaries has taken any steps to seek protection pursuant to any law or
statute relating to bankruptcy, insolvency, reorganization, receivership,
liquidation or winding up, nor does the Company or any Subsidiary have any
knowledge or reason to believe that any of their respective creditors

 

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intend to initiate involuntary bankruptcy proceedings or any actual knowledge of
any fact which would reasonably lead a creditor to do so. The Company and its
Subsidiaries, on a consolidated basis, after giving effect to the transactions
contemplated hereby to occur at the Closing, will not be Insolvent (as defined
below). For purposes of this Section 3(l), “Insolvent” means, (i) with respect
to the Company and its Subsidiaries, on a consolidated basis, (A) the present
fair saleable value of the Company’s and its Subsidiaries’ assets is less than
the amount required to pay the Company’s and its Subsidiaries’ total
Indebtedness (as defined below), (B) the Company and its Subsidiaries are unable
to pay their debts and liabilities, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured or (C) the Company and
its Subsidiaries intend to incur or believe that they will incur debts that
would be beyond their ability to pay as such debts mature; and (ii) with respect
to the Company and each Subsidiary, individually, (A) the present fair saleable
value of the Company’s or such Subsidiary’s (as the case may be) assets is less
than the amount required to pay its respective total Indebtedness, (B) the
Company or such Subsidiary (as the case may be) is unable to pay its respective
debts and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured or (C) the Company or such Subsidiary
(as the case may be) intends to incur or believes that it will incur debts that
would be beyond its respective ability to pay as such debts mature. Neither the
Company nor any of its Subsidiaries has engaged in any business or in any
transaction, and is not about to engage in any business or in any transaction,
for which the Company’s or such Subsidiary’s remaining assets constitute
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.

(m)    No Undisclosed Events, Liabilities, Developments or Circumstances. To the
Company’s knowledge, no event, liability, development or circumstance has
occurred or exists, or is reasonably expected to exist or occur with respect to
the Company, any of its Subsidiaries or any of their respective businesses,
properties, liabilities, prospects, operations (including results thereof) or
condition (financial or otherwise), that would reasonably be expected to result
in a Material Adverse Effect.

(n)    Conduct of Business; Regulatory Permits. Neither the Company nor any of
its Subsidiaries is in violation of any term of or in default under its
Certificate of Incorporation, any certificate of designation, preferences or
rights of any other outstanding series of preferred stock of the Company or any
of its Subsidiaries or Bylaws or their organizational charter, certificate of
formation, memorandum of association, articles of association, Certificate of
Incorporation or certificate of incorporation or bylaws, respectively. Neither
the Company nor any of its Subsidiaries is in violation of any judgment, decree
or order or any statute, ordinance, rule or regulation applicable to the Company
or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries
will conduct its business in violation of any of the foregoing, except in all
cases for possible violations which would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect. During the two
years prior to the date hereof, (i) the Common Stock has been listed or
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) the
Company 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 Company and each of its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate regulatory
authorities necessary to conduct their respective businesses, except where the
failure to possess such certificates, authorizations or permits would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect, and neither the Company nor any such Subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit. There is no agreement, commitment,
judgment, injunction, order or decree binding upon the Company or any of its
Subsidiaries or to which the Company or any of its Subsidiaries is a party which
has or would reasonably be expected to have the effect of prohibiting or
materially impairing any business practice of the Company or any of its
Subsidiaries, any acquisition of property by the Company or any of its
Subsidiaries or the conduct of business by the Company or any of its
Subsidiaries as currently conducted other than such effects, individually or in
the aggregate, which would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect on the Company or any of its
Subsidiaries.

(o)     Foreign Corrupt Practices. Neither the Company nor any of its
Subsidiaries nor any director, officer, agent or employee of the Company or any
of its Subsidiaries has (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense 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 Foreign Corrupt
Practices Act of 1977; or (iv) made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.

 

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(p)     Sarbanes-Oxley Act. The Company and each Subsidiary is in compliance
with any and all applicable requirements of the Sarbanes-Oxley Act of 2002, as
amended, and any and all applicable rules and regulations promulgated by the SEC
thereunder.

(q)    Transactions With Affiliates. Except as set forth in the SEC Documents,
there are no transactions between the Company or any Subsidiaries, on the one
hand, and Affiliates of the Company or any Subsidiaries, on the other hand.

(r)     Equity Capitalization. The Company has an authorized capitalization as
set forth in the Prospectus in the column entitled “Actual” under the caption
“Capitalization”; all of the issued shares of capital stock of the Company have
been duly and validly authorized and issued and are fully paid and
non-assessable; except for Bioral Nutrient Delivery, LLC, all of the issued
shares of capital stock of each Subsidiary have been duly and validly authorized
and issued, are fully paid and non-assessable and are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances or claims;
and none of the issued shares of capital stock of the Company was issued in
violation of the preemptive or other similar rights of any security holder of
the Company

(s)    Existing Securities; Obligations. (A) The holders of outstanding shares
of the Company’s capital stock are not entitled to preemptive or other rights to
subscribe for the shares of Preferred Shares that have not been complied with or
otherwise effectively waived; (B) except as set forth in the SEC Documents,
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 shares, interests or
capital stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares, interests or
capital stock of the Company 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 shares, interests or capital stock of the Company or any
of its Subsidiaries; (C) there are no agreements or arrangements under which the
Company or any of its Subsidiaries is obligated to register the sale of any of
their securities under the 1933 Act (except pursuant to this Agreement);
(D) there are no outstanding securities or instruments of the Company or any of
its Subsidiaries which contain any redemption or similar provisions, and there
are no contracts, commitments, understandings or arrangements by which the
Company or any of its Subsidiaries is or may become bound to redeem a security
of the Company or any of its Subsidiaries; (E) there are no securities or
instruments containing anti-dilution or similar provisions; (F) neither the
Company nor any Subsidiary has any stock appreciation rights or “phantom stock”
plans or agreements or any similar plan or agreement; and (G) the Company has
not sold or issued any shares of Common Stock during the six-month period
preceding the date of the Prospectus, including any sales pursuant to Regulation
D of, the 1933 Act, other than (i) shares issued pursuant to employee benefit
plans, stock option plans or other employee compensation plans or pursuant to
outstanding options, rights or warrants, or (ii) as set forth, incorporated by
reference or described in the SEC Documents.

(t)    Organizational Documents. The Company has filed on EDGAR true, correct
and complete copies of the Company’s Articles of Incorporation, as amended and
as in effect on the date hereof (the “Certificate of Incorporation”), and the
Company’s second amended and restated bylaws as in effect on the date hereof
(the “Bylaws”), and the terms of all Convertible Securities and the material
rights of the holders thereof in respect thereto.

(u)    Litigation; Investigations. Except as described in the SEC Documents,
there are no actions, suits, proceedings, inquiries or investigations before or
by the Principal Market, any court, public board, government agency, including,
but not limited to, the Department of Justice, the SEC, the Office of Inspector
General, the Federal Trade Commission or the FDA, self-regulatory organization
or body pending or, to the Knowledge of the Company, threatened against or
affecting the Company, the Common Stock or any of the Company’s officers or
directors, whether of a civil or criminal nature or otherwise.

(v)     Insurance. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for, and neither the Company nor any such
Subsidiary has any reason to believe that it will be unable 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 reasonably be expected to have a Material
Adverse Effect.

 

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(w)     Employee Relations. Neither the Company nor any of its Subsidiaries is a
party to any collective bargaining agreement or employs any member of a union.
The Company and its Subsidiaries believe that their relations with their
employees are good. No executive officer (as defined in Rule 501(f) promulgated
under the 1933 Act) or other key employee of the Company or any of its
Subsidiaries has notified the Company or any such Subsidiary that such officer
intends to leave the Company or any such Subsidiary or otherwise terminate such
officer’s employment with the Company or any such Subsidiary. The Company and
its 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, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.

(x)    Title. Except as set forth in the SEC Documents, the Company and its
Subsidiaries do not own any real property and have good and marketable title to
all personal property owned by them which is material to the business of the
Company, 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
Company and its Subsidiaries; and any real property and buildings held under
lease by the Company and 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
buildings by the Company and its Subsidiaries.

(y)    FDA and Regulatory Matters. Except in each case as set forth in the SEC
Documents, the Company and its Subsidiaries (i) are and at all times have been
in material compliance with all federal, state, local and foreign statutes,
rules and regulations applicable to the ownership, testing, development,
manufacture, packaging, processing, use, distribution, handling, marketing,
labeling, advertising, promotion, sale, offer for sale, storage, import, export
or disposal of any product under development, subject to an approved New Drug
Application, or manufactured or distributed by or on behalf of the Company or
its Subsidiaries, including, without limitation, the Federal Food, Drug, and
Cosmetic Act and the Controlled Substances Act (“Industry Laws”); (ii) have not
received any FDA Form 483, notice of adverse finding, warning letter, untitled
letter or other similar correspondence or notice from the U.S. Food and Drug
Administration (the “FDA”), the Drug Enforcement Administration (the “DEA”) or
any other federal, state, local or foreign governmental or regulatory authority
alleging or asserting material noncompliance with any Industry Laws or any
licenses, certificates, approvals, clearances, authorizations, permits,
registrations and supplements or amendments thereto required by any such
Industry Laws (“Healthcare Permits”); (iii) possess all material Healthcare
Permits, which are valid and in full force and effect, and are not in material
violation of any term of any such Healthcare Permit, and no event has occurred
which allows, or after notice or lapse of time would allow, revocation or
termination of any Healthcare Permit or results in any other material impairment
of the rights of the holder of any Healthcare Permit; (iv) have not received
notice of any claim, action, suit, proceeding, hearing, enforcement,
investigation, arbitration or other action from the FDA, DEA or any other
federal, state, local or foreign governmental or regulatory authority or third
party alleging that any product operation or activity is in material violation
of any Industry Laws or Healthcare Permits, and have no knowledge that the FDA,
DEA or any other federal, state, local or foreign governmental or regulatory
authority or third party is considering any such claim, litigation, arbitration,
action, suit, investigation or proceeding; (v) have not received notice that the
FDA, DEA or any other federal, state, local or foreign governmental or
regulatory authority has taken, is taking or intends to take action to limit,
suspend, modify or revoke any material Healthcare Permit, and have no knowledge
that the FDA, DEA or any other federal, state, local or foreign governmental or
regulatory authority is considering such action; (vi) have filed, obtained,
maintained or submitted all material reports, documents, forms, notices,
applications, records, claims, submissions and supplements or amendments as
required by any Industry Laws or Healthcare Permits, and all such reports,
documents, forms, notices, applications, records, claims, submissions and
supplements or amendments were materially complete and correct on the date filed
(or were corrected or supplemented by a subsequent submission); and (vii) have
not, either voluntarily or involuntarily, initiated, conducted or issued or
caused to be initiated, conducted or issued, any recall, correction, market
withdrawal or replacement, safety alert, post-sale warning, “dear doctor”
letter, or other notice or action relating to the alleged lack of safety or
efficacy of any product or any alleged product defect or violation and, to the
knowledge of the Company, no third party has initiated, conducted or intends to
initiate any such notice or action.

(z)    Clinical Trials. To the Company’s knowledge, the preclinical and clinical
trials conducted by or on behalf of the Company and its Subsidiaries were and,
if still ongoing, are being conducted in all material respects in

 

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accordance with experimental protocols, procedures and controls pursuant to
accepted professional scientific standards and all Industry Laws and Healthcare
Permits; (ii) the descriptions of the results of such studies, tests and trials
contained in the SEC Documents are accurate and complete in all material
respects and fairly present the data derived from such studies, tests and
trials; (iii) except to the extent disclosed in each of the Pricing Disclosure
Package, the Company is not aware of any studies, tests or trials, the results
of which the Company believes reasonably call into question the study, test, or
trial results described or referred to in the SEC Documents when viewed in the
context in which such results are described and the clinical state of
development; and (iv) except as described in the SEC Documents, since
December 31, 2013, the Company has not received any notices or correspondence
from the FDA or any other federal, state, local or foreign governmental or
regulatory authority requiring the termination, suspension or material
modification of any studies, tests or preclinical or clinical trials conducted
by or on behalf of the Company.

(aa)    Compliance with Healthcare Laws. Each of the Company and its
Subsidiaries and, to the knowledge of the Company, their directors, officers,
employees and agents is, and at all times has been, in material compliance with
all applicable healthcare laws and regulations, including, without limitation,
the federal Anti-kickback Statute (42 U.S.C. § 1320a-7b(b)), the Anti-Inducement
Law (42 U.S.C. § 1320a-7a(a)(5)), the civil False Claims Act (31 U.S.C. §§ 3729
et seq.), the administrative False Claims Law (42 U.S.C. § 1320a-7b(a)), the
Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. § 1320d
et seq.), as amended by the Health Information Technology for Economic and
Clinical Health Act (42 U.S.C. §§ 17921 et seq.), the exclusion laws (42 U.S.C.
§ 1320a-7), and the Food Drug and Cosmetic Act (21 U.S.C. §§ 301 et seq.),
Medicare (Title XVIII of the Social Security Act), Medicaid (Title XIX of the
Social Security Act), the regulations promulgated pursuant to such laws, and any
other state or federal law, accreditation standards, regulation, guidance
document, manual provision, program memorandum, opinion letter, or other
issuance which regulates kickbacks, patient or program charges, recordkeeping,
claims process, documentation requirements, medical necessity, referrals, the
hiring of employees or acquisition of services or supplies from those who have
been excluded from government health care programs, quality, safety, privacy,
security, licensure, accreditation or any other aspect of providing health care
or pharmaceutical services (collectively, the “Health Care Laws”); (ii) neither
the Company nor any of its Subsidiaries nor, to the knowledge of the Company,
any director, officer, employee, agent, employee or affiliate of the Company or
any of its Subsidiaries, have committed any act, made any statement or failed to
make any statement that would reasonably be expected to provide a basis for the
FDA or any other governmental or regulatory authority to invoke its policy with
respect to “Fraud, Untrue Statements of Material Facts, Bribery, and Illegal
Gratuities,” or similar policies, set forth in any Health Care Law;
(iii) neither the Company nor any of its Subsidiaries nor, to the knowledge of
the Company, any director, officer, employee, agent, employee or affiliate of
the Company or any of its Subsidiaries has been convicted of any crime or
engaged in any conduct that has resulted, or would reasonably be expected to
result, in debarment under any Health Care Law, including, without limitation,
21 U.S.C. Section 335a; (iv) no claims, actions, proceedings or investigations
that would reasonably be expected to result in such a material debarment or
exclusion are pending or, to the knowledge of the Company, threatened, against
the Company, its Subsidiaries or, to the knowledge of the Company, any director,
officer, employee, agent, employee or affiliate of the Company or any of its
Subsidiaries; (v) neither the Company nor any of its Subsidiaries has received
any notification, correspondence or any other written or oral communication from
any governmental or regulatory entity (including, without limitation, the FDA,
DEA, the Centers for Medicare and Medicaid Services, and the Department of
Health and Human Services Office of Inspector General) of potential or actual
material non-compliance by, or liability of, the Company or any of its
Subsidiaries under any Health Care Law; (vi) neither the Company nor any of its
Subsidiaries is a party to any corporate integrity agreements, monitoring
agreements, consent decrees, settlement orders, or similar agreements with or
imposed by any governmental or regulatory entity; and (vii) the manufacture of
Company’s and its Subsidiaries products by or on behalf of the Company and/or
its Subsidiaries is being conducted in compliance in all material respects with
all applicable Laws, including, without limitation, the FDA’s current good
manufacturing practice regulations for products in the United States, and the
respective counterparts thereof promulgated by governmental and regulatory
authorities in countries outside the United States.

(bb)    Intellectual Property Rights. The Company and its Subsidiaries own,
possess, have a license to or have adequate rights to use on reasonable terms,
all patents, patent applications, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks,
trade names, domain names, or other intellectual property including
registrations and applications for registration thereof (collectively
“Intellectual Property”) necessary to carry on the business now operated by them
or as described in the SEC Documents to be operated by them. Except

 

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as described in the SEC Documents (i) to the Company’s knowledge, after due
investigation, there are no rights of third parties to any such Intellectual
Property except as to third parties who have granted the Company a license
thereto, (ii) to the Company’s knowledge, after due investigation, there is no
material infringement, misappropriation or other violation by third parties of
any such Intellectual Property, (iii) neither the Company nor any of its
Subsidiaries has received any notice of or is otherwise aware of any
infringement or misappropriation of, or conflict with, asserted rights of others
with respect to any Intellectual Property or of any facts or circumstances which
would render any Intellectual Property invalid or unenforceable in whole or in
part, or otherwise inadequate to protect the interest of the Company or any of
its Subsidiaries therein, and which infringement or conflict (if the subject of
any unfavorable decision, ruling or finding) or invalidity, unenforceability or
inadequacy, in whole or in part, that would, individually or in the aggregate,
result in a Material Adverse Effect, (iv) to the Company’s knowledge, after due
investigation, none of the Intellectual Property used by the Company in its
business has been obtained or is being used by the Company in violation of any
contractual obligation binding on the Company or in violation of the rights of
any third parties, (v) the Company is not aware of any facts that it believes
would form a reasonable basis for a successful challenge that any of its
employees are in or have ever been in violation of any employment contract,
patent disclosure agreement, invention assignment agreement, non-competition
agreement, non-solicitation agreement, nondisclosure agreement or any
restrictive covenant to or with a former employer where such violation relates
to such employee’s breach of a confidentiality obligation, obligation to assign
to the company Intellectual Property, or obligation not to use third party
Intellectual Property or other proprietary rights on behalf of the Company and
(vi) the Company is not a party to or bound by any options, licenses or other
agreements with respect to the Company’s or any third party’s Intellectual
Property that are required to be set forth in the SEC Documents, but are not
described in all material respects in the SEC Documents.

(cc)    Environmental Laws. Except as disclosed in the SEC Documents, neither
the Company nor any of its Subsidiaries is in violation of any statute, any
rule, regulation, decision or order of any governmental authority or any court,
domestic or foreign, relating to the use, disposal or release of hazardous or
toxic substances or relating to the protection or restoration of the environment
or human exposure to hazardous or toxic substances (collectively, “Environmental
Laws”), owns or operates any real property contaminated with any substance that
is subject to any Environmental Laws, is liable for any off-site disposal or
contamination pursuant to any Environmental Laws, or is subject to any claim
relating to any environmental laws, which violation, contamination, liability or
claim would individually or in the aggregate be reasonably expected to have a
Material Adverse Effect; and the Company is unaware of any pending investigation
which might lead to such a claim.

(dd)     Tax Status. The Company and each of its Subsidiaries (i) has timely
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 or
has requested extensions thereof (except in any case in which the failure so to
file would not have a Material Adverse Effect), (ii) has timely 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) has set aside on its books
provision reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply.
The Company is not operated in such a manner as to qualify as a passive foreign
investment company, as defined in Section 1297 of the U.S. Internal Revenue Code
of 1986, as amended (the “Code”).

(ee)     Internal Accounting and Disclosure Controls. The Company maintains a
system of “internal control over financial reporting” (as such term is defined
in Rule 13a-15(f) under the 1934 Act) that complies with the requirements of the
1934 Act and has been designed by the Company’s principal executive officer and
principal financial officer, or under their supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with GAAP. The
Company and its Subsidiaries maintain 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 GAAP and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. Except as disclosed in the Registration Statement,
the Company’s internal control over financial reporting is effective and there
are no material weaknesses or significant deficiencies in its internal control
over financial reporting. Since the date of the latest audited financial
statements included in the SEC Documents, there has been no change in the
Company’s internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect, the Company’s internal
control over financial reporting.

 

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(ff)    Disclosure Controls. The Company maintains “disclosure controls and
procedures” (as such term is defined in Rule 13a-15(e) under the 1934 Act) that
comply with the requirements of the 1934 Act; such disclosure controls and
procedures have been designed to ensure that information required to be
disclosed by the Company in reports that it files or submits under the 1934 Act
is recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and forms, including controls and procedures
designed to ensure that such information is accumulated and communicated to the
Company’s management as appropriate to allow timely decisions regarding required
disclosure; and such disclosure controls and procedures are effective.

(gg)    Off Balance Sheet Arrangements. There is no transaction, arrangement, or
other relationship between the Company or any of its Subsidiaries and an
unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company in its SEC Documents and is not so disclosed or that
otherwise could be reasonably likely to have a Material Adverse Effect.

(hh)     Investment Company Status. Neither the Company nor any of its
Subsidiaries is, and after giving effect to the offering and sale of the shares
of Preferred Shares and the application of the proceeds thereof as described in
the Prospectus Supplement, none of them will not be, an “investment company” or
an entity “controlled” by an “investment company”, as each such term is defined
in the Investment Company Act of 1940, as amended.

(ii)    Registration Eligibility. The Company is eligible to register the
issuance of the Securities by the Company using Form S-3 promulgated under the
1933 Act.

(jj)    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 issuance, sale and transfer of the Securities to be sold to each Buyer
hereunder will be, or will have been, fully paid or provided for by the Company,
and all laws imposing such taxes will be or will have been complied with.

(kk)     Money Laundering. The operations of the Company and its Subsidiaries
are and have been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering statutes of
all jurisdictions, the rules and regulations thereunder and any related or
similar rules, regulations or guidelines, issued, administered or enforced by
any governmental agency (collectively, the “Money Laundering Laws”) and no
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of its
Subsidiaries with respect to the Money Laundering Laws is pending or, to the
knowledge of the Company, threatened.

(ll)    Market Manipulation. The Company has not taken and will not take,
directly or indirectly, any action which is designed to or which has constituted
or which would reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Preferred Shares.

(mm)    Unlawful Payments. Neither the Company nor any of its Subsidiaries nor
any director, officer, agent or employee of the Company or any of its
Subsidiaries has (i) used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expense 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 Foreign Corrupt Practices Act of 1977; or
(iv) made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment.

(nn)    Stock Option Plans. Each stock option granted by the Company was granted
(i) in accordance with the terms of the applicable stock option plan of the
Company and (ii) with an exercise price at least equal to the fair market value
of the Common Stock on the date such stock option would be considered granted
under GAAP and applicable law. No stock option granted under the Company’s stock
option plan has been backdated. The Company has not knowingly granted, and there
is no and has been no policy or practice of the Company to knowingly grant,
stock options prior to, or otherwise knowingly coordinate the grant of stock
options with, the release or other public announcement of material information
regarding the Company or its Subsidiaries or their financial results or
prospects.

 

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(oo)    Disclosure. The Company confirms that neither it nor any other person
acting on its behalf has provided any of the Buyers or their agents or counsel
with any information that constitutes or could reasonably be expected to
constitute material, non-public information concerning the Company or any of its
Subsidiaries, other than the existence of the transactions contemplated by this
Agreement and the other Transaction Documents. The Company understands and
confirms that each of the Buyers will rely on the foregoing representations in
effecting transactions in securities of the Company. All disclosure provided to
the Buyers regarding the Company and its Subsidiaries, their businesses and the
transactions contemplated hereby, including the schedules to this Agreement,
furnished by or on behalf of the Company or any of its Subsidiaries 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.
All of the written information furnished after the date hereof by or on behalf
of the Company or any of its Subsidiaries to each Buyer pursuant to or in
connection with this Agreement and the other Transaction Documents, taken as a
whole, will be true and correct in all material respects as of the date on which
such information is so provided and will 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. No event or circumstance has occurred or information
exists with respect to the Company or any of its Subsidiaries or its or their
business, properties, liabilities, prospects, operations (including results
thereof) or conditions (financial or otherwise), which, under applicable law,
rule or regulation, requires public disclosure at or before the date hereof or
announcement by the Company but which has not been so publicly disclosed. The
Company acknowledges and agrees that no Buyer makes or has made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 2.

(pp)    OFAC. Neither the Company nor any of its subsidiaries nor any director,
officer, agent, employee or affiliate of the Company or any of its subsidiaries
is currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will
not directly or indirectly use the proceeds of the offering of the shares of
Preferred Stock, or lend, contribute or otherwise make available such proceeds
to any subsidiary, joint venture partner or other person or entity, for the
purpose of financing the activities of any person currently subject to any U.S.
sanctions administered by OFAC.

4.    COVENANTS.

(a) Efforts. Each Buyer shall use its commercially reasonably efforts to timely
satisfy each of the covenants hereunder and conditions to be satisfied by it as
provided in Section 6 of this Agreement. The Company shall use its best efforts
to timely satisfy each of the covenants hereunder and conditions to be satisfied
by it as provided in Section 7 of this Agreement.

(b) Amendments to the Registration Statement; Prospectus Supplements; Free
Writing Prospectuses. The Company has not made, and agrees that unless it
obtains the prior written consent of the Buyer it will not make, an offer
relating to the Securities that would constitute an “issuer free writing
prospectus” as defined in Rule 433 promulgated under the 1933 Act (an “Issuer
Free Writing Prospectus”) or that would otherwise constitute a “free writing
prospectus” as defined in Rule 405 promulgated under the 1933 Act (a “Free
Writing Prospectus”) required to be filed by the Company or the Buyer with the
SEC or retained by the Company or the Buyer under Rule 433 under the 1933 Act.
The Buyer has not made, and agrees that unless it obtains the prior written
consent of the Company it will not make, an offer relating to the Securities
that would constitute a Free Writing Prospectus required to be filed by the
Company with the SEC or retained by the Company under Rule 433 under the 1933
Act. Any such Issuer Free Writing Prospectus or other Free Writing Prospectus
consented to by the Buyer or the Company is referred to in this Agreement as a
“Permitted Free Writing Prospectus.” The Company agrees that (x) it has treated
and will treat, as the case may be, each Permitted Free Writing Prospectus as an
Issuer Free Writing Prospectus and (y) it has complied and will comply, as the
case may be, with the requirements of Rules 164 and 433 under the 1933 Act
applicable to any Permitted Free Writing Prospectus, including in respect of
timely filing with the SEC, legending and record keeping. Buyers consent to the
following Issuer Free Writing Prospectus: Press Release on CRG Amendment and
Board Changes, issued by the Company on May 17, 2018 and filed as a free writing
prospectus.

(c) Prospectus Delivery. As soon as practicable after execution of this
Agreement the Company shall file a Prospectus Supplement with respect to the
Securities to be issued on the Closing Date, as required under, and in
conformity with, the 1933 Act, including Rule 424(b) thereunder. The Company
shall deliver or make available to the Buyer, without charge, an electronic copy
of each form of Prospectus Supplement, together with the Prospectus,

 

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and any Permitted Free Writing Prospectus on the Closing Date. The Company
consents to the use of the Prospectus (and of any Prospectus Supplements
thereto) in accordance with the provisions of the 1933 Act and with the
securities or “blue sky” laws of the jurisdictions in which the Securities may
be sold by the Buyer, in connection with the offering and sale of the Securities
and for such period of time thereafter as the Prospectus (or in lieu thereof,
the notice referred to in Rule 173(a) under the 1933 Act) is required by the
1933 Act to be delivered in connection with sales of the Securities. If during
such period of time any event shall occur that in the judgment of the Company
and its counsel is required to be set forth in the Registration Statement or the
Prospectus or any Permitted Free Writing Prospectus or should be set forth
therein in order to make the statements made therein (in the case of the
Prospectus, in light of the circumstances under which they were made) not
misleading, or if it is necessary to amend the Registration Statement or
supplement or amend the Prospectus or any Permitted Free Writing Prospectus to
comply with the 1933 Act or any other applicable law or regulation, the Company
shall forthwith prepare and, subject to Section 4(b) above, file with the SEC an
appropriate amendment to the Registration Statement or Prospectus Supplement to
the Prospectus (or supplement to the Permitted Free Writing Prospectus) and
shall expeditiously furnish or make available to the Buyer an electronic copy
thereof.

(d) Stop Orders. The Company shall advise the Buyer promptly (but in no event
later than 24 hours) and shall confirm such advice in writing: (i) of the
Company’s receipt of notice of any request by the SEC for amendment of or a
supplement to the Registration Statement, the Prospectus, any Permitted Free
Writing Prospectus or for any additional information; (ii) of the Company’s
receipt of notice of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or prohibiting or suspending the use
of the Prospectus or any Prospectus Supplement, or of the suspension of
qualification of the Securities for offering or sale in any jurisdiction, or the
initiation or contemplated initiation of any proceeding for such purpose;
(iii) of the Company becoming aware of the happening of any event, which makes
any statement of a material fact made in the Registration Statement, the
Prospectus or any Permitted Free Writing Prospectus untrue or which requires the
making of any additions to or changes to the statements then made in the
Registration Statement, the Prospectus or any Permitted Free Writing Prospectus
in order to state a material fact required by the 1933 Act to be stated therein
or necessary in order to make the statements then made therein (in the case of
the Prospectus, in light of the circumstances under which they were made) not
misleading, or of the necessity to amend the Registration Statement or
supplement the Prospectus or any Permitted Free Writing Prospectus to comply
with the 1933 Act or any other law or (iv) if at any time following the date
hereof the Registration Statement is not effective or is not otherwise available
for the issuance of the Securities or any Prospectus contained therein is not
available for use for any other reason. Thereafter, the Company shall promptly
notify such holders when the Registration Statement, the Prospectus, any
Permitted Free Writing Prospectus and/or any amendment or supplement thereto, as
applicable, is effective and available for the issuance of the Securities. If at
any time the SEC shall issue any stop order suspending the effectiveness of the
Registration Statement or prohibiting or suspending the use of the Prospectus or
any Prospectus Supplement, the Company shall use best efforts to obtain the
withdrawal of such order at the earliest possible time.

(e) Blue Sky. The Company shall, on or before the Closing Date, take such action
as the Company shall reasonably determine is necessary in order to obtain an
exemption for, or to, qualify the Securities for sale to the Buyers 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
Buyers on or prior to the Closing Date. Without limiting any other obligation of
the Company under this Agreement, the Company shall timely make all filings and
reports relating to the offer and sale of the Securities required under all
applicable securities laws (including, without limitation, all applicable
federal securities laws and all applicable “Blue Sky” laws), and the Company
shall comply with all applicable foreign, federal, state and local laws,
statutes, rules, regulations and the like relating to the offering and sale of
the Securities to the Buyers.

(f) Reporting Status. Until the date which is the later of the date on which
(i) the Preferred Shares are no longer outstanding or (ii) the Company is no
longer obligated under the Registration Rights Agreement to maintain the
registration statement filed thereunder, the Company shall timely file all
reports required to be filed with the SEC pursuant to the 1934 Act, and the
Company 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.

 

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(g) Use of Proceeds. The Company will use the proceeds from the sale of the
Securities as described in the Prospectus Supplement, but not, directly or
indirectly, for (i) except as set forth on Schedule 4(g), the satisfaction of
any indebtedness of the Company or any of its Subsidiaries, (ii) the redemption
or repurchase of any securities of the Company or any of its Subsidiaries, or
(iii) the settlement of any outstanding litigation.

(h) Listing. The Company shall use best efforts to maintain the Common Stock’s
listing on the Principal Market. If after using best efforts the Company is
unable to maintain such listing, the Company shall us best efforts to provide
that the Common Stock is quoted for trading on the over-the-counter market.

(i) Fees. The Company shall be responsible for the payment of any Placement
Agent’s fees, financial advisory fees, transfer agent fees, DTC fees or broker’s
commissions (other than for Persons engaged by any Buyer) relating to or arising
out of the transactions contemplated hereby (including, without limitation, any
fees or commissions payable to the Placement Agent, who is the Company’s sole
placement agent in connection with the transactions contemplated by this
Agreement). The Company shall be responsible for all costs and expenses incurred
by Broadfin Healthcare Master Fund Ltd. (the “Lead Investor”), including fees of
counsel to the Lead Investor in connection with entering into this Agreement and
the Transaction Documents and the transactions contemplated herein and therein,
including any filings required by Section 13 or Section 16 of the 1934 Act. The
Company shall pay, and hold each Buyer harmless against, any liability, loss or
expense (including, without limitation, reasonable attorneys’ fees and
out-of-pocket expenses) arising in connection with any claim relating to any
such payment. Except as otherwise set forth in the Transaction Documents, each
party to this Agreement shall bear its own expenses in connection with the sale
of the Securities to the Buyers.

(j) Disclosure of Transactions. The Company shall, on or before 9:30 a.m., New
York time, on the first (1st) Business Day after the date of this Agreement,
issue one or more press releases (collectively, the “Press Release”) reasonably
acceptable to the Buyers disclosing all the material terms of the transactions
contemplated by the Transaction Documents. On or before 9:30 a.m., New York
time, on the first (1st) Business Day after the date of this Agreement, the
Company shall file a Current Report on Form 8-K describing all the material
terms of the transactions contemplated by the Transaction Documents in the form
required by the 1934 Act and attaching all the material Transaction Documents
(including, without limitation, this Agreement (and all schedules to this
Agreement)) (including all attachments, the “8-K Filing”). From and after the
filing of the 8-K Filing, the Company shall have disclosed all material,
non-public information (if any) provided to any of the Buyers by the Company or
any of its Subsidiaries or any of their respective officers, directors,
employees or agents in connection with the transactions contemplated by the
Transaction Documents, other than with respect to the Lead Investor. From and
after the issuance of the Press Release, the Company shall ensure that the Buyer
shall not be in possession of any material, nonpublic information received from
the Company or any of its respective officers, directors, employees or agents,
that is not disclosed in the Press Release. The Company shall not, and shall
cause each of its officers, directors, employees and agents not to, provide the
Buyer with any material, nonpublic information regarding the Company from and
after the filing of the Press Release without the express written consent of the
Buyer pursuant to a Confidentiality and Nondisclosure Agreement.

(k) Reservation of Shares. Following the Stockholders Meeting, so long as any of
the Preferred Shares remain outstanding, the Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, no less than 100% of the sum of the maximum number of Conversion
Shares issuable upon conversion of all the Preferred Shares then outstanding
(without regard to any limitations on the conversion of the Preferred Shares set
forth therein) (collectively, the “Required Reserve Amount”). If at any time the
number of shares of Common Stock authorized and reserved for issuance is not
sufficient to meet the Required Reserve Amount, the Company will promptly take
all corporate action necessary to authorize and reserve a sufficient number of
shares, including, without limitation, calling a special meeting of stockholders
to authorize additional shares to meet the Company’s obligations pursuant to the
Transaction Documents, in the case of an insufficient number of authorized
shares, obtain stockholder approval of an increase in such authorized number of
shares, and voting the management shares of the Company in favor of an increase
in the authorized shares of the Company to ensure that the number of authorized
shares is sufficient to meet the Required Reserve Amount.

 

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(l) Conduct of Business. The business of the Company and its Subsidiaries shall
not be conducted in violation of any law, ordinance or regulation of any
Governmental Entity, except where such violations would not reasonably be
expected to result, either individually or in the aggregate, in a Material
Adverse Effect.

(m) Participation Right. Until the first anniversary of the Closing Date,
neither the Company nor any of its Subsidiaries shall, directly or indirectly,
effect any Subsequent Placement unless the Company shall have first complied
with this Section 4(m). The Company acknowledges and agrees that the right set
forth in this Section 4(m) is a right granted by the Company, separately, to
each Buyer.

(i) At least three (3) days prior to any proposed or intended Subsequent
Placement, the Company shall deliver to each Buyer a written notice (each such
notice, a “Pre-Notice”), which Pre-Notice shall not contain any information
(including, without limitation, material, non-public information) other than:
(A) if the proposed Offer Notice (as defined below) constitutes or contains
material, non-public information, a statement asking whether the Investor is
willing to accept material non-public information or (B) if the proposed Offer
Notice does not constitute or contain material, non-public information, (x) a
statement that the Company proposes or intends to effect a Subsequent Placement,
(y) a statement that the statement in clause (x) above does not constitute
material, non-public information and (z) a statement informing such Buyer that
it is entitled to receive an Offer Notice (as defined below) with respect to
such Subsequent Placement upon its written request. Upon the written request of
a Buyer within one (1) day after the Company’s delivery to such Buyer of such
Pre-Notice, and only upon a written request by such Buyer, the Company shall
promptly, but no later than one day after such request, deliver to such Buyer an
irrevocable written notice (the “Offer Notice”) of any proposed or intended
issuance or sale or exchange (the “Offer”) of the securities being offered (the
“Offered Securities”) in a Subsequent Placement, which Offer Notice shall
(A) identify and describe the Offered Securities, (B) describe the price and
other terms upon which they are to be issued, sold or exchanged, and the number
or amount of the Offered Securities to be issued, sold or exchanged,
(C) identify the persons (if known) to which or with which the Offered
Securities are to be offered, issued, sold or exchanged and (D) offer to issue
and sell to or exchange with such Buyer in accordance with the terms of the
Offer such Buyer’s pro rata portion of the Offered Securities, provided that the
number of Offered Securities which such Buyer shall have the right to subscribe
for under this Section 4(m) shall be (x) based on such Buyer’s pro rata portion
of the Offered Securities equal to the percentage of the Company’s outstanding
equity ownership held by such Buyer, assuming conversion of all the outstanding
Preferred Shares and the Company’s Series A Non-Voting Convertible Preferred
Stock, on the date of delivery of the Pre-Notice (the “Basic Amount”), and
(y) with respect to each Buyer that elects to purchase its Basic Amount, any
additional portion of the Offered Securities attributable to the Basic Amounts
of other Buyers as such Buyer shall indicate it will purchase or acquire should
the other Buyers subscribe for less than their Basic Amounts (the
“Undersubscription Amount”), which process shall be repeated until each Buyer
shall have an opportunity to subscribe for any remaining Undersubscription
Amount.

(ii) To accept an Offer, in whole or in part, such Buyer must deliver a written
notice to the Company prior to the end of the one (1) Business Day after such
Buyer’s receipt of the Offer Notice (the “Offer Period”), setting forth the
portion of such Buyer’s Basic Amount that such Buyer elects to purchase and, if
such Buyer shall elect to purchase all of its Basic Amount, the
Undersubscription Amount, if any, that such Buyer elects to purchase (in either
case, the “Notice of Acceptance”). If the Basic Amounts subscribed for by all
Buyers are less than the total of all of the Basic Amounts, then each Buyer who
has set forth an Undersubscription Amount in its Notice of Acceptance shall be
entitled to purchase, in addition to the Basic Amounts subscribed for, the
Undersubscription Amount it has subscribed for; provided, however, if the
Undersubscription Amounts subscribed for exceed the difference between the total
of all the Basic Amounts and the Basic Amounts subscribed for (the “Available
Undersubscription Amount”), each Buyer who has subscribed for any
Undersubscription Amount shall be entitled to purchase only that portion of the
Available Undersubscription Amount as the Basic Amount of such Buyer bears to
the total Basic Amounts of all Buyers that have subscribed for Undersubscription
Amounts, subject to rounding by the Company to the extent it deems reasonably
necessary. Notwithstanding the foregoing, if the Company desires to modify or
amend the terms and conditions of the Offer prior to the expiration of the Offer
Period, the Company may deliver to each Buyer a new Offer Notice and the Offer
Period shall expire on the first (1st) Business Day after such Buyer’s receipt
of such new Offer Notice.

 

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(iii) The Company shall have seven (7) Business Days from the expiration of the
Offer Period above (A) to offer, issue, sell or exchange all or any part of such
Offered Securities as to which a Notice of Acceptance has not been given by a
Buyer (the “Refused Securities”) pursuant to a definitive agreement(s) (the
“Subsequent Placement Agreement”), but only upon terms and conditions
(including, without limitation, unit prices and interest rates) that are not
more favorable to the acquiring person or persons or less favorable to the
Company than those set forth in the Offer Notice and (B) to publicly announce
(x) the execution of such Subsequent Placement Agreement, and (y) either (I) the
consummation of the transactions contemplated by such Subsequent Placement
Agreement or (II) the termination of such Subsequent Placement Agreement, which
shall be filed with the SEC on a Current Report on Form 8-K with such Subsequent
Placement Agreement and any documents contemplated therein filed as exhibits
thereto (except with respect to the termination of such Subsequent Placement,
which shall be set forth in a written notice or e-mail to the Buyers and shall
relieve such Buyers of any duty of confidentiality with respect to, or a duty
not to trade on the basis of, any material, non-public information delivered by
the Company, any of its Subsidiaries or agents with respect thereto).

(iv) In the event the Company shall propose to sell less than all the Refused
Securities (any such sale to be in the manner and on the terms specified in
Section 4(m)(iii) above), then each Buyer may, at its sole option and in its
sole discretion, reduce the number or amount of the Offered Securities specified
in its Notice of Acceptance to an amount that shall be not less than the number
or amount of the Offered Securities that such Buyer elected to purchase pursuant
to Section 4(m)(ii) above multiplied by a fraction, (A) the numerator of which
shall be the number or amount of Offered Securities the Company actually
proposes to issue, sell or exchange (including Offered Securities to be issued
or sold to Buyers pursuant to this Section 4(m) prior to such reduction) and
(B) the denominator of which shall be the original amount of the Offered
Securities. In the event that any Buyer so elects to reduce the number or amount
of Offered Securities specified in its Notice of Acceptance, the Company may not
issue, sell or exchange more than the reduced number or amount of the Offered
Securities unless and until such securities have again been offered to the
Buyers in accordance with Section 4(m)(i) above.

(v) Upon the closing of the issuance, sale or exchange of all or less than all
of the Refused Securities, such Buyer shall acquire from the Company, and the
Company shall issue to such Buyer, the number or amount of Offered Securities
specified in its Notice of Acceptance, as reduced pursuant to Section 4(m)(iv)
above if such Buyer has so elected, upon the terms and conditions specified in
the Offer. The purchase by such Buyer of any Offered Securities is subject in
all cases to the preparation, execution and delivery by the Company and such
Buyer of a separate purchase agreement relating to such Offered Securities
reasonably satisfactory in form and substance to such Buyer and its counsel.

(vi) Any Offered Securities not acquired by a Buyer or other Persons in
accordance with this Section 4(m) may not be issued, sold or exchanged until
they are again offered to such Buyer under the procedures specified in this
Agreement.

(vii) The Company and each Buyer agree that if any Buyer elects to participate
in the Offer, neither the Subsequent Placement Agreement with respect to such
Offer nor any other transaction documents related thereto (collectively, the
“Subsequent Placement Documents”) shall include any term or provision whereby
such Buyer shall be required to agree to any restrictions on trading as to any
securities of the Company or be required to consent to any amendment to or
termination of, or grant any waiver, release or the like under or in connection
with, any agreement previously entered into with the Company or any instrument
received from the Company.

(viii) Notwithstanding anything to the contrary in this Section 4(m) and unless
otherwise agreed to by such Buyer, the Company shall either confirm in writing
to such Buyer that the transaction with respect to the Subsequent Placement has
been abandoned or shall publicly disclose its intention to issue the Offered
Securities, in either case, in such a manner such that such Buyer will not be in
possession of any material, non-public information, by the seventh
(7th) Business Day following the end of the Offer Period. If by such seventh
(7th) Business Day, no public disclosure regarding a transaction with respect to
the Offered Securities has been made, and no notice regarding the abandonment of
such transaction has been received by such Buyer, such transaction shall be
deemed to have been abandoned and such Buyer shall not be in possession of any
material, non-public information with respect to the Company or any of its
Subsidiaries. Should the Company decide to pursue such transaction with respect
to the Offered Securities, the Company

 

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shall provide such Buyer with another Offer Notice and such Buyer will again
have the right of participation set forth in this Section 4(m). The Company
shall not be permitted to deliver more than one such Offer Notice to such Buyer
in any sixty (60) day period, except as expressly contemplated by the last
sentence of Section 4(m)(ii).

(ix) The Company shall not circumvent the provisions of this Section 4(m) by
providing terms or conditions to one Buyer that are not provided to all.

(x) Notwithstanding the foregoing, this Section 4(m) shall not apply in respect
of the issuance of (A) shares of Common Stock or options to purchase Common
Stock to directors, officers, consultants or employees of the Company in their
capacity as such pursuant to an Approved Stock Plan (as defined below), provided
that the exercise price of any such options is not lowered, none of such options
are amended to increase the number of shares issuable thereunder and none of the
terms or conditions of any such options are otherwise materially changed in any
manner that adversely affects any of the Buyers; provided further, that for any
issuance of securities to consultants to qualify under this clause (A), they may
only be issued as “restricted securities” (as defined in Rule 144) without any
registration rights; (B) shares of Common Stock issued upon the conversion or
exercise of Convertible Securities (other than options to purchase Common Stock
issued pursuant to an Approved Stock Plan that are covered by clause (A) above)
issued prior to the date hereof, provided that the conversion, exercise or other
method of issuance (as the case may be) of any such Convertible Security is made
solely pursuant to the conversion, exercise or other method of issuance (as the
case may be) provisions of such Convertible Security that were in effect on the
date immediately prior to the date of this Agreement, the conversion, exercise
or issuance price of any such Convertible Securities (other than options to
purchase Common Stock issued pursuant to an Approved Stock Plan that are covered
by clause (A) above) is not lowered, none of such Convertible Securities (other
than options to purchase Common Stock issued pursuant to an Approved Stock Plan
that are covered by clause (A) above) are amended to increase the number of
shares issuable thereunder and none of the terms or conditions of any such
Convertible Securities (other than options to purchase Common Stock issued
pursuant to an Approved Stock Plan that are covered by clause (A) above) are
otherwise materially changed in any manner that adversely affects any of the
Buyers; (C) the Conversion Shares; and (D) securities issued pursuant to
acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company, provided that any such issuance shall
only be to a Person (or to the equityholders of a Person) which is, itself or
through its subsidiaries, an operating company or an owner of an asset in a
business synergistic with the business of the Company and shall provide to the
Company additional benefits in addition to the investment of funds, but shall
not include a transaction in which the Company is issuing securities primarily
for the purpose of raising capital or to an entity whose primary business is
investing in securities (each of the foregoing in clauses (A) through (D),
collectively the “Excluded Securities”). “Approved Stock Plan” means any
employee benefit plan which has been approved by the board of directors of the
Company prior to or subsequent to the date hereof pursuant to which shares of
Common Stock and options to purchase Common Stock may be issued to any employee,
officer, consultant or director for services provided to the Company in their
capacity as such. “Convertible Securities” means any capital stock or other
security of the Company or any of its Subsidiaries that is at any time and under
any circumstances directly or indirectly convertible into, exercisable or
exchangeable for, or which otherwise entitles the holder thereof to acquire, any
capital stock or other security of the Company (including, without limitation,
Common Stock) or any of its Subsidiaries.

(n) Passive Foreign Investment Company. The Company shall conduct its business,
and shall cause its Subsidiaries to conduct their respective businesses, in such
a manner as will ensure that the Company will not be deemed to constitute a
passive foreign investment company within the meaning of Section 1297 of the
Code.

(o) Effective Registration Statement. So long as the Preferred Shares are
outstanding, the Company shall take all steps necessary to keep a registration
statement on Form S-3 covering such shares and the Conversion Shares continually
effective.

(p) Voting. Each Buyer, severally and not jointly, agrees to vote all shares of
Common Stock over which such Buyer has voting control on the applicable record
date in favor of any resolution on the Amendment (as defined in the Certificate
of Designation) and Stockholder Approval, to the extent permissible under Nasdaq
rules, that are presented to the stockholders of the Company at the Corporation
Stockholders’ Meeting (as defined in the Certificate of Designation) and at any
meeting of stockholders held subsequent thereto as a result of any adjournment
or postponement of such Corporation Stockholders’ Meeting.

 

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5.    REGISTER; TRANSFER AGENT INSTRUCTIONS; LEGEND.

(a) Register. The Company shall maintain at its principal executive offices (or
such other office or agency of the Company as it may designate by notice to each
holder of Securities), a register for the Preferred Shares in which the Company
shall record the name and address of the Person in whose name the Preferred
Shares have been issued (including the name and address of each transferee), the
number of Preferred Shares held by such Person and the number of Conversion
Shares issuable upon conversion of the Preferred Shares held by such Person. The
Company shall keep the register open and available at all times during business
hours for inspection of any Buyer or its legal representatives.

(b) [reserved]

(c) Legends. Certificates and any other instruments evidencing the Securities
shall not bear any restrictive or other legend.

(d) FAST Compliance. While any Preferred Shares remain outstanding, the Company
shall maintain a transfer agent that participates in the DTC Fast Automated
Securities Transfer Program.

6.    CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

The obligation of the Company hereunder to issue and sell the Preferred Shares
to each Buyer 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 Company’s sole benefit and may be waived by the Company
at any time in its sole discretion by providing each Buyer with prior written
notice thereof:

(a) Such Buyer shall have executed each of the other Transaction Documents to
which it is a party and delivered the same to the Company.

(b) Such Buyer and each other Buyer shall have delivered to the escrow account
the Purchase Price for the Preferred Shares being purchased by such Buyer at the
Closing by wire transfer of immediately available funds in accordance with the
Company’s instructions.

(c) The representations and warranties of such Buyer shall be true and correct
in all material respects as of the date when made and as of the Closing Date as
though originally made at that time (except for representations and warranties
that speak as of a specific date, which shall be true and correct as of such
specific date), and such Buyer 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 such Buyer at or
prior to the Closing Date.

7.    CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.

The obligation of each Buyer hereunder to purchase its Preferred Shares 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 each Buyer’s
sole benefit and may be waived by such Buyer at any time in its sole discretion
by providing the Company with prior written notice thereof:

(a) The Company shall have duly executed and delivered to such Buyer each of the
Transaction Documents to which such Buyer is a party.

(b) The Company shall have filed the Certificate of Designation with the
Delaware Secretary of State, and such Certificate of Designation shall be
effective.

 

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(c) Such Buyer shall have received the opinion of Ellenoff Grossman & Schole
LLP, the Company’s counsel, dated as of the Closing Date, in the form reasonably
acceptable to such Buyer.

(d) The Company shall have duly executed and delivered, or caused to be
delivered, to such Buyer a certificate evidencing a number of Preferred Shares
equal to such Buyer’s Purchase Price divided by $10,000 as set forth across from
such Buyer’s name in Schedule 1, registered in the name of such Buyer;

(e) The Chief Executive Officer of the Company shall have signed the waiver in
substantially the form set forth in Exhibit D.

(f) Each of the directors of the Company set forth on Schedule 7(f) shall have
entered into a Director Retirement Agreement in the form set forth on Exhibit E
hereto.

(g) Each of the individuals set forth on Schedule 7(g) shall have been nominated
and approved by the Company’s board of directors to serve as a director of the
board, effective upon the Closing.

(h) Each of the individuals listed on Schedule 7(g) shall have received and
executed an indemnification agreement with the Company, effective on the
Closing.

(i) The Company shall have amended its term loan agreement with ACRG Servicing
LLC, as administrative agent and collateral agent, in a form reasonably
satisfactory to the Buyers.

(j) The Company shall have delivered to such Buyer a certificate evidencing the
formation and good standing of the Company and each of its Subsidiaries in each
such entity’s jurisdiction of formation issued by the Secretary of State (or
comparable office) of such jurisdiction of formation as of a date within two
(2) days of the Closing Date.

(k) The Company shall have delivered to such Buyer a certificate evidencing the
Company’s qualification as a foreign corporation and good standing issued by the
Secretary of State (or comparable office) of each jurisdiction in which the
Company conducts business and is required to so qualify, as of a date within two
(2) days of the Closing Date.

(l) The Company shall have filed a Notification: Listing of Additional Shares
with the Principal Market for the Conversion Shares and shall have received no
objection thereto from the Principal Market.

(m) Each and every representation and warranty of the Company shall be true and
correct as of the date when made and as of the Closing Date as though originally
made at that time (except for representations and warranties that speak as of a
specific date, which shall be true and correct as of such specific date) and the
Company shall have performed, satisfied and complied in all respects with the
covenants, agreements and conditions required to be performed, satisfied or
complied with by the Company at or prior to the Closing Date. Such Buyer shall
have received a certificate, duly executed by the Chief Executive Officer of the
Company, dated as of the Closing Date, to the foregoing effect and as to such
other matters as may be reasonably requested by such Buyer in the form
acceptable to such Buyer.

(n) No statute, rule, regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or endorsed by any court or
Governmental Entity of competent jurisdiction that prohibits the consummation of
any of the transactions contemplated by the Transaction Documents.

(o) Since the date of execution of this Agreement, no event or series of events
shall have occurred that would reasonably be expected to have or result in a
Material Adverse Effect.

(p) From the date hereof to the Closing Date, (i) trading in the Common Stock
shall not have been suspended by the SEC or the Principal Market (except for any
suspension of trading of limited duration agreed to by the Company, which
suspension shall be terminated prior to the Closing), and, (ii) at any time
prior to the Closing Date, trading in securities generally as reported by
Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall
not have been established on securities whose trades are reported by such
service, or on the Principal Market, nor shall a banking moratorium have been
declared either by the United States or New York State

 

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authorities nor shall there have occurred any material outbreak or escalation of
hostilities or other national or international calamity of such magnitude in its
effect on, or any material adverse change in, any financial market which, in
each case, in the reasonable judgment of each Buyer, makes it impracticable or
inadvisable to purchase the Securities at the Closing.

(q) The Registration Statement shall be effective and available for the issuance
and sale of the Securities hereunder and the Company shall have delivered to
such Buyer the Prospectus and the Prospectus Supplement as required thereunder.

(r) The Company and its Subsidiaries shall have delivered to such Buyer such
other documents, instruments or certificates relating to the transactions
contemplated by this Agreement as such Buyer or its counsel may reasonably
request.

Upon the satisfaction of the conditions in this Section 7, the Lead Investor or
its representative shall promptly deliver a written confirmation (which may be
an e-mail) to the Company and the Placement Agent (the “Lead Investor
Confirmation”) in connection with the Closing.

8.    TERMINATION.

In the event that the Closing shall not have occurred with respect to a Buyer
within five (5) days of the date hereof, then such Buyer shall have the right to
terminate its obligations under this Agreement with respect to itself at any
time on or after the close of business on such date without liability of such
Buyer to any other party; provided, however, (i) the right to terminate this
Agreement under this Section 8 shall not be available to such Buyer if the
failure of the transactions contemplated by this Agreement to have been
consummated by such date is the result of such Buyer’s breach of this Agreement
and (ii) the abandonment of the sale and purchase of the Preferred Shares shall
be applicable only to such Buyer providing such written notice, provided further
that no such termination shall affect any obligation of the Company under this
Agreement to reimburse such Buyer for the expenses described in Section 4(i)
above. Nothing contained in this Section 8 shall be deemed to release any party
from any liability for any breach by such party of the terms and provisions of
this Agreement or the other Transaction Documents or to impair the right of any
party to compel specific performance by any other party of its obligations under
this Agreement or the other Transaction Documents.

9.    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. The Company 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 under any of
the other Transaction Documents or with any transaction contemplated hereby or
thereby, 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.
Nothing contained herein shall be deemed or operate to preclude any Buyer from
bringing suit or taking other legal action against the Company in any other
jurisdiction to collect on the Company’s obligations to such Buyer or to enforce
a judgment or other court ruling in favor of such Buyer. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER
TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY
OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.

 

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(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. In the event that any signature is delivered with
electronic signature or is delivered by facsimile transmission or by e-mail
delivery of a “.pdf” format data file, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force as if such electronic signature, facsimile or
“.pdf” signature page were an original thereof.

(c) Headings; Gender. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement. Unless the context clearly indicates otherwise, each pronoun herein
shall be deemed to include the masculine, feminine, neuter, singular and plural
forms thereof. The terms “including,” “includes,” “include” and words of like
import shall be construed broadly as if followed by the words “without
limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import
refer to this entire Agreement instead of just the provision in which they are
found.

(d) Severability. If any provision of this Agreement is prohibited by law or
otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or
unenforceable shall be deemed amended to apply to the broadest extent that it
would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this
Agreement so long as this Agreement as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter
hereof and the prohibited nature, invalidity or unenforceability of the
provision(s) in question does not substantially impair the respective
expectations or reciprocal obligations of the parties or the practical
realization of the benefits that would otherwise be conferred upon the parties.
The parties will endeavor in good faith negotiations to replace the prohibited,
invalid or unenforceable provision(s) with a valid provision(s), the effect of
which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s).

(e) Entire Agreement; Amendments. This Agreement supersedes all other prior oral
or written agreements between the Buyer, the Company, their affiliates and
Persons acting on their behalf with respect to the matters discussed herein, and
this Agreement and the instruments referenced herein 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
Company nor the Buyer makes 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 Company and the
Buyers which purchased a majority of the Preferred Shares at the Closing
hereunder. No provision hereof may be waived other than by an instrument in
writing signed by the party against whom enforcement is sought. No such
amendment shall be effective to the extent that it applies to less than all of
the holders of the Preferred Shares then outstanding.

(f) Notices. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon delivery, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one (1) Business Day after deposit with an overnight
courier service with next day delivery specified, in each case, properly
addressed to the party to receive the same. The addresses, facsimile numbers and
e-mail addresses for such communications shall be:

If to the Company:

BioDelivery Sciences International, Inc.

4131 ParkLake Avenue, Suite #225

Raleigh, North Carolina 27612

Facsimile: (919) 582-9051

E-Mail: ernied@bdsi.com

Attention: Chief Financial Officer

With a copy (for informational purposes only) to:

Ellenoff Grossman & Schole LLP

1345 Avenue of the Americas, 11th Floor

 

22

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New York, New York 10105

Facsimile: (212) 370-7889

E-Mail: bigrossman@egsllp.com

Attention: Barry I. Grossman, Esq.

If to a Buyer, to its address, e-mail address and facsimile number set forth on
the Schedule 1, with copies to such Buyer’s representatives as set forth on the
Schedule of Buyers, or to such other address, e-mail address and/or facsimile
number and/or to the attention of such other Person as the recipient party has
specified by written notice given to each other party five (5) days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication,
(B) mechanically or electronically generated by the sender’s facsimile machine
or e-mail containing the time, date, recipient facsimile number and, with
respect to each facsimile transmission, an image of the first page of such
transmission or (C) provided by an overnight courier service shall be rebuttable
evidence of personal service, receipt by facsimile or e-mail or receipt from an
overnight courier service in accordance with clause (i), (ii) or (iii) above,
respectively. To the extent that any notice provided pursuant to any Transaction
Document constitutes, or contains material, non-public information regarding the
Company or any of the Subsidiaries, the Company shall simultaneously file such
notice with the SEC pursuant to a Current Report on Form 8-K.

(g) Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns.

(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, other than the Indemnitees referred to in Section 9(k).

(i) Survival. The representations, warranties, agreements and covenants shall
survive the Closing, provided that the representations and warranties shall
survive for a period of two (2) years following the Closing. Each Buyer shall be
responsible only for its own representations, warranties, agreements and
covenants hereunder.

(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 Buyer’s execution and delivery of
the Transaction Documents and acquiring the Securities thereunder and in
addition to all of the Company’s other obligations under the Transaction
Documents, the Company shall defend, protect, indemnify and hold harmless the
Buyer, any affiliate of Buyer and each of their respective partners, members,
officers, directors, employees and investors and any of the foregoing Persons’
accounting and legal representatives 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 the
Company in the Transaction Documents or any other certificate, instrument or
document contemplated thereby, or (b) any breach of any covenant, agreement or
obligation of the Company contained in the Transaction Documents or any
certificate, instrument or document contemplated thereby. To the extent that the
foregoing undertaking by the Company may be unenforceable for any reason, the
Company 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 9(k) shall be the same as those
set forth in Section 2.5.3 of the Registration Rights Agreement.

(l) 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. No specific
representation or warranty shall limit the generality or applicability of a more
general representation or warranty. Each and every reference to share prices,
shares of Common Stock and any other numbers in this

 

23

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Agreement that relate to the Common Stock shall be automatically adjusted for
any stock splits, stock dividends, stock combinations, recapitalizations or
other similar transactions that occur with respect to the Common Stock after the
date of this Agreement. It is expressly understood and agreed that for all
purposes of this Agreement, and without implication that the contrary would
otherwise be true, neither transactions nor purchases nor sales shall include
the location and/or reservation of borrowable shares of Common Stock.

(m) Remedies. Each Buyer and in the event of assignment by Buyer of its rights
and obligations hereunder, each holder of 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, the Company recognizes
that in the event that it or any Subsidiary fails to perform, observe, or
discharge any or all of its or such Subsidiary’s (as the case may be)
obligations under the Transaction Documents, any remedy at law would inadequate
relief to the Buyers. The Company therefore agrees that the Buyers shall be
entitled to specific performance and/or temporary, preliminary and permanent
injunctive or other equitable relief from any court of competent jurisdiction in
any such case without the necessity of proving actual damages and without
posting a bond or other security. The remedies provided in this Agreement and
the other Transaction Documents shall be cumulative and in addition to all other
remedies available under this Agreement and the other Transaction Documents, at
law or in equity (including a decree of specific performance and/or other
injunctive relief).

(n) Withdrawal Right. Notwithstanding anything to the contrary contained in (and
without limiting any similar provisions of) the Transaction Documents, whenever
any Buyer exercises a right, election, demand or option under a Transaction
Document and the Company or any Subsidiary does not timely perform its related
obligations within the periods therein provided, then such Buyer may rescind or
withdraw, in its sole discretion from time to time upon written notice to the
Company or such Subsidiary (as the case may be), any relevant notice, demand or
election in whole or in part without prejudice to its future actions and rights.

(o) Independent Nature of Buyers’ Obligations and Rights. The obligations of
each Buyer under the Transaction Documents are several and not joint with the
obligations of any other Buyer, and no Buyer shall be responsible in any way for
the performance of the obligations of any other Buyer under any Transaction
Document. Nothing contained herein or in any other Transaction Document, and no
action taken by any Buyer pursuant hereto or thereto, shall be deemed to
constitute the Buyers as, and the Company acknowledges that the Buyers do not so
constitute, a partnership, an association, a joint venture or any other kind of
group or entity, or create a presumption that the Buyers are in any way acting
in concert or as a group or entity, and the Company shall not assert any such
claim with respect to such obligations or the transactions contemplated by the
Transaction Documents or any matters, and the Company acknowledges that the
Buyers are not acting in concert or as a group, and the Company shall not assert
any such claim, with respect to such obligations or the transactions
contemplated by the Transaction Documents. The decision of each Buyer to
purchase Securities pursuant to the Transaction Documents has been made by such
Buyer independently of any other Buyer. Each Buyer acknowledges that no other
Buyer has acted as agent for such Buyer in connection with such Buyer making its
investment hereunder and that no other Buyer will be acting as agent of such
Buyer in connection with monitoring such Buyer’s investment in the Securities or
enforcing its rights under the Transaction Documents. The Company and each Buyer
confirms that each Buyer has independently participated with the Company and its
Subsidiaries in the negotiation of the transaction contemplated hereby with the
advice of its own counsel and advisors. Each Buyer shall be entitled to
independently protect and enforce its rights, including, without limitation, the
rights arising out of this Agreement or out of any other Transaction Documents,
and it shall not be necessary for any other Buyer to be joined as an additional
party in any proceeding for such purpose. The use of a single agreement to
effectuate the purchase and sale of the Securities contemplated hereby was
solely in the control of the Company, not the action or decision of any Buyer,
and was done solely for the convenience of the Company and its Subsidiaries and
not because it was required or requested to do so by any Buyer. It is expressly
understood and agreed that each provision contained in this Agreement and in
each other Transaction Document is between the Company, each Subsidiary and a
Buyer, solely, and not between the Company, its Subsidiaries and the Buyers
collectively and not between and among the Buyers. No consideration (including
any modification of any Transaction Document) shall be offered or paid to any
Person to amend or consent to a waiver or modification of any provision of this
Agreement unless the same consideration is also offered

 

24

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to all of the parties to this Agreement. For clarification purposes, this
provision constitutes a separate right granted to each Buyer by the Company and
negotiated separately by each Buyer, and is intended for the Company to treat
the Buyers as a class and shall not in any way be construed as the Buyers acting
in concert or as a group with respect to the purchase, disposition or voting of
Securities or otherwise.

[signature pages follow]

 

25

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IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Agreement to be duly executed as of the date first
written above.

 

COMPANY: BIODELIVERY SCIENCES INTERNATIONAL, INC.

By:  

 

Name:   Mark A. Sirgo, Pharm. D. Title:   Vice Chairman

 

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IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

 

Name of Buyer:                                          
                                         
                                         
                                          Signature of Authorized Signatory of
Buyer:                                          
                                                                                
Name of Authorized Signatory:                                          
                                         
                                                                           
Title of Authorized Signatory:                                          
                                         
                                                                             
Email Address of Authorized Signatory:                                          
                                         
                                                              Facsimile Number
of Authorized Signatory:                                          
                                         
                                                        Address for Notice to
Buyer: Address for Delivery of Securities to Buyer (if not same as address for
notice): Purchase Price: $                             Preferred Shares:
                                     EIN Number:

 

27

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List of Schedules

Schedule 1 – Buyers

Schedule 3(g) - Placement Agent Fees and Expenses

Schedule 4(g) - Use of Proceeds

Schedule 7(f) – Resigning Directors

Schedule 7(g) – Director Nominees

 

28

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SCHEDULE 1 - BUYERS

 

Buyer

   Preferred
Shares      Aggregate
Purchase Price                    

 

29

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SCHEDULE 3(G) - PLACEMENT AGENT FEES AND EXPENSES

The Company shall pay a fee to the Placement Agent equal to 3% of the gross
proceeds of the offering less the reimbursement of transaction-related expenses
incurred by the Company up to $20,000.

 

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SCHEDULE 4(G) - USE OF PROCEEDS

Trade payables incurred in the ordinary course of business and Permitted
Indebtedness (as defined in the Term Loan Agreement between the Company and CRG
Servicing LLC, as administrative agent and collateral agent)

 

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SCHEDULE 7(F) – RESIGNING DIRECTORS

 

  •   Samuel Sears

 

  •   Barry Feinberg

 

  •   Timothy Tyson

 

  •   Thomas D’Alonzo

 

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SCHEDULE 7(G)- DIRECTOR NOMINEES

 

  •   Kevin Kotler

 

  •   Todd C. Davis

 

  •   Peter S. Greenleaf

 

33

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EXHIBIT A

Certificate of Designation

 

34

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EXHIBIT B

Registration Rights Agreement

 

35

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Exhibit C

Settlement Agreement

 

36

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Exhibit D

Waiver

 

37

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EXHIBIT E

Director Retirement Agreement

 

38