Document:

Form of Security Agreement

 Exhibit 10.2 
  
 FORM OF 
 SECURITY AGREEMENT 
  
 THIS SECURITY
AGREEMENT (the “Agreement”), dated as of                          , 2005, among BioDelivery
Sciences International, Inc. (“BioDelivery”), a corporation organized under the laws of the State of Delaware, Arius Pharmaceuticals, Inc., a Delaware corporation and wholly-owned subsidiary of BioDelivery
(“Grantor”), and Clinical Development Capital LLC (“Secured Party”), a limited liability company organized under the laws of the State of Delaware. 
  
 W I T N E S S E T H: 
  
 WHEREAS, Grantor is developing the compound currently identified as fentanyl
in conjunction with the BEMA Technology (the “Product”); 
  
 WHEREAS, in connection therewith, Grantor, Secured Party and BioDelivery have entered into that certain Clinical Development and License Agreement, dated as of the date hereof (the “Development Agreement”), pursuant to
which Secured Party will be investing in the development of Product; 
  
 WHEREAS, in connection with entering into the Development Agreement, as a condition to the execution and delivery thereto, Grantor wishes to grant a security interest in all of its assets related exclusively to and which assets are used
exclusively in connection with the Product to Secured Party, it being acknowledged by Secured Party that the Product is one of several drug development programs being conducted by Grantor, and that Grantor is not granting a security interest to
Secured Party in any development program or assets other than those related exclusively to and used exclusively in connection with the Product. 
  
 NOW, THEREFORE, in consideration of the foregoing premises and the representations, covenants and agreements contained herein, the Parties, intending to
be legally bound, hereby agree as follows: 
  

	1.	Definitions. 

  
 1.1 Certain Terms. The following terms (whether or not underscored) when used in this Agreement, including its preamble and recitals, shall have
the following meanings (such definitions to be equally applicable to the singular and plural forms thereof): 
  
 “Accounts” shall have the meaning assigned to it in Section 9-102(a)(2) of the U.C.C. 
  
 “Agreement” is defined in the preamble. 
  
 “BioDelivery” is defined in the preamble. 
  
 “Collateral” is defined in Section 2.2. 

 “Copyrights” means any and all copyright rights, copyright applications, copyright
registrations and like protections in each work or authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret, now or hereafter existing, created, acquired or held, including,
without limitation, all of those listed on Schedule IV attached hereto. 
  
 “Documents” shall have the meaning assigned to it in Section 9-102(a)(30) of the U.C.C. 
  
 “Equipment” is defined in clause (a) of Section 2.2. 
  
 “Event of Default” means the termination events described in Sections 10.2, 10.3, 10.4.1, 10.4.2 and 10.4.4
of the Development Agreement. 
  
 “Filings” means
the filing or recording of the Financing Statements relating to the Collateral existing on the date hereof, in the places specified in Item B of Schedule I hereto. 
  
 “Financing Statements” means the financing statements filed by the Grantor or the Grantor’s agent on
the date hereof in the jurisdictions listed in Item B of Schedule I hereto. 
  
 “Goods” shall have the meaning assigned to it in Section 9-102(a)(44) of the U.C.C. 
  
 “Grantor” is defined in the preamble. 
  
 “Intellectual Property Collateral” means, collectively, all of Grantor’s right, title, and interest in and to the Copyrights,
Trademarks, Patents and any other intellectual property owned by Grantor and all amendments, renewals and extensions of any of the foregoing in each case relating to the Product. 
  
 “Inventory” is defined in clause (a) of Section 2.2. 
  
 “Patents” means all patents, patent applications and like
protections including without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same, including, without limitation, all of those listed on Schedule II attached hereto.

  
 “Permitted Liens” means (a) any
mechanic’s, materialmen’s or similar statutory lien incurred in the ordinary course of business for monies not yet due, (b) any lien for taxes not yet due, (c) any purchase money lien or lien securing rental payments under capital lease
arrangements to the extent related to the assets purchased or leased and (d) any recorded easement, covenant, zoning or other restriction on the real estate that, together with all other Permitted Liens, does not prohibit or impair the current use,
occupancy, value, or marketability of title of the property subject thereto. 
  
 “Person” means an individual, partnership, corporation, limited liability company, association, trust, estate, joint venture, unincorporated organization, any government, governmental department or
agency or political subdivision thereof. 
  
 “Receivables” is defined in clause (b) of Section 2.2. 
  

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 “Related Contracts” is defined in clause (b) of Section 2.2. 
  
 “Related Security Documents” means this Agreement and the
Development Agreement. 
  
 “Revised Article 9”
means the revised Article 9 of the Uniform Commercial Code in the form or substantially in the form approved by the American Law Institute and the National Conference of Commissioners on Uniform State Law and contained in the 1999 official text of
Revised Article 9. 
  
 “Secured Party” is defined
in the preamble. 
  
 “Subsequent Filings” means
any filings after the date hereof in any jurisdiction as may be necessary under any requirement of law to perfect a lien on the Collateral in favor of Secured Party. 
  
 “Trademarks” means any trademark and servicemark rights, whether registered or not, applications to
register and registrations of the same and like protections, and the entire goodwill of the business of Grantor connected with and symbolized by such trademarks, including, without limitation, all of those listed on Schedule III attached
hereto. 
  
 “U.C.C.” means the Uniform Commercial
Code, as from time to time in effect in the State of New York. 
  
 1.2 Development Agreement Definitions. Unless otherwise defined herein or the context otherwise requires, terms used in this Agreement, including its preamble and recitals, have the meanings provided in the Development Agreement.

  
 1.3 Other Definitions. Unless otherwise defined herein
or the context otherwise requires, terms for which meanings are provided in the U.C.C. are used in this Agreement, including its preamble and recitals, with such meanings. 
  
 2. Security Interest. 
  
 2.1 Grant of Security. As security for the performance of Grantor’s and BioDelivery’s obligations pursuant
to the terms of the Development Agreement, Grantor does hereby assign, transfer, pledge, and hypothecate unto Secured Party, and does hereby grant to Secured Party, a continuing security interest of first priority in all of Grantor’s right,
title and interest in and to all of the following, whether now or hereafter existing or acquired by the Grantor, in each case as they relate exclusively to and are used exclusively in connection with the Product (the “Collateral”):

  
 (a) all Goods, including (i) all equipment in all of its
forms of the Grantor, wherever located, including all parts thereof and all accessions, additions, attachments, improvements, substitutions and replacements thereto and therefor (any and all of the foregoing being the “Equipment”);
and (ii) all inventory of Product, active pharmaceutical ingredient, and all other components and raw materials used in the manufacture or supply of Product, in all of its forms of the Grantor, wherever located, and all accessions thereto, products
thereof and documents therefor (any and all such inventory, materials, goods, accessions, products and 

  

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documents being the “Inventory”); provided, however, that any Equipment or Inventory purchased by the Grantor by installment sale or leased
by the Grantor, which is subject to a specific purchase money lien, shall be permitted and such purchase money lien shall be a permitted lien senior to the liens created by this Agreement and the lien created by this Agreement shall be junior to
such purchase money lien; 
  
 (b) all Accounts, contracts,
contract rights, chattel paper (whether tangible or electronic), documents, instruments and general intangibles relating to the Product or the sale thereof (including payment intangibles and software), rental agreements, or any part thereof
including, but not limited to the Grantor’s right to receive, either directly or indirectly, from any Person, any rents or other payments due and payable under such agreements of the Grantor, whether or not arising out of or in connection with
the sale or lease of goods or the rendering of services, and all rights of the Grantor now or hereafter existing in and to all security agreements, guaranties, leases and other contracts securing or otherwise relating to any such accounts,
contracts, contract rights, chattel paper, documents, instruments, and general intangibles (any and all such accounts, contracts, contract rights, chattel paper, documents, instruments, and general intangibles being the
“Receivables”, and any and all such security agreements, guaranties, leases and other contracts being the “Related Contracts”); 
  
 (c) all Intellectual Property Collateral of the Grantor and all investment property; 
  
 (d) all books and records relating to, used or useful in connection with,
evidencing, embodying, incorporating or referring to, any of the foregoing in this Section 2.2, including without limitation, any and all data, reports, studies, analysis or similar items related to the development and commercialization of the
Product; 
  
 (e) all Documents relating to the Product;

  
 (f) all instruments (including promissory notes), rights to
the payment of money, insurance refund claims and all other insurance claims, commercial tort claims, letter-of-credit rights (whether or not the letter of credit is evidenced by a writing) and supporting obligations relating to the Product;

  
 (g) all of the Grantor’s other personal property and
rights of every kind and description and interests therein related to the Product; 
  
 (h) All Investigational New Drug Applications and New Drug Applications related to the Product filed with the FDA pursuant to the Federal Drug and Cosmetic Act (21 U.S.C. Section 321, et seq.), and the rules and
regulations contemplated thereunder, and any and all governmental approvals necessary or useful for the development, use and sale of the Product; and 
  
 (i) all products, rents, issues, profits, returns, income and proceeds of and from any and all of the foregoing Collateral (including proceeds which
constitute property of the types described in clauses (a), (b), (c), (d), (e), (f), (g) and (h) above), and, to the extent not otherwise included, all payments under insurance (whether or not Secured Party is the loss payee thereof), or any
indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing Collateral). 
  

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 Notwithstanding anything herein to the contrary, the Collateral shall exclude (i) the Grantor’s
rights under contracts and agreements which by their terms prohibit the granting of a security interest therein or assignment thereof (except to the extent such prohibitions are ineffective under Sections 9-406, 9-407, 9-408 and 9-409 of the U.C.C.
or other applicable law)and (ii) all of Grantor’s assets not exclusively related to or used exclusively in connection with the Product. 
  
 2.2 Continuing Security Interest; Termination. This Agreement shall create a security interest in the Collateral and shall in accordance with
applicable law: 
  
 (a) remain in full force and effect until the
performance of Grantor’s and BioDelivery’s obligations pursuant to the terms of the Development Agreement; and 
  
 (b) be binding upon the Grantor and BioDelivery, their successors, transferees and assigns. 
  
 Upon the payment in full of the Milestone, the security interest granted herein shall automatically terminate with respect to all
Collateral. Upon any such termination, Secured Party will, at the Grantor’s sole expense, deliver any Collateral (or portion thereof) to the extent held by it hereunder and to the extent the termination relates to such Collateral, and at the
Grantor’s sole expense execute and deliver to the Grantor such documents and instruments and take such other action as the Grantor shall reasonably request to evidence or more fully effect termination of the security interest hereunder relating
to such portion or all of the Collateral, as the case may be. 
  
 2.3 Grantor Remains Liable. Anything herein to the contrary notwithstanding: 
  
 (a) the Grantor shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein, as if this Agreement had not been executed; 
  
 (b) the exercise by Secured party of any of its rights hereunder shall not
release the Grantor from any of its duties or obligations under any such contracts or agreements included in the Collateral; and 
  
 (c) Secured Party shall not have any obligation or liability under any such contracts or agreements included in the Collateral by reason of this
Agreement, nor shall Secured Party be obligated to perform any of the obligations or duties of the Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder. 
  
 3. Representations and Warranties. 
  
 3.1 Representations and Warranties of Grantor. The Grantor represents
and warrants unto Secured Party as set forth in this Section. 
  

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 (a) Generally. As of the date hereof, to the extent not already owned by Grantor as of the date
hereof, BioDelivery has assigned, conveyed and/or transferred the Collateral to Grantor. 
  
 (b) Location of Collateral, etc. All of the Equipment and Inventory (other than Inventory in transit) of the Grantor constituting Collateral are located at the places specified in Item A of Schedule
I hereto, and at such other locations as are notified to the Secured Party. The place(s) of business and chief executive office of the Grantor and the office(s) where the Grantor keeps its records concerning the Receivables constituting
Collateral, and all originals of all chattel paper which evidence Receivables constituting collateral, are located at the addresses as set forth in Item C of Schedule I hereto, and at such other locations as are notified to the Secured
Party. As of the date hereof, the Grantor has no trade name, except as set forth in Item D of Schedule I hereto. During the four months preceding the date hereof, the Grantor has not been known by any legal name different from the one
set forth on the signature page hereto, nor has the Grantor been the subject of any merger or other corporate reorganization. 
  
 (c) Intellectual Property Collateral. With respect to any Intellectual Property Collateral that constitutes Collateral: 
  
 (i) the Grantor has made such filings and recordations to protect its
interest in such Intellectual Property Collateral, as are commercially reasonable and will, if requested by Secured Party to the extent practicable, effect recordations of its interest in such Patents and Trademarks, in each case that constitutes
Collateral, in the United States Patent and Trademark Office and its claims to the such Copyright that constitutes Collateral in the United States Copyright Office; and 
  
 (d) the Grantor has performed and will continue to perform all acts and has paid and will continue to pay all required fees
and taxes to maintain all registered Patents, Trademarks and Copyrights that constitute Collateral in full force and effect in the United States, as applicable. 
  

4. Covenants. 
  
 4.1 Certain Covenants. The Grantor covenants and agrees that, so long as any obligations of the Grantor under the Related Security Documents shall
remain unpaid, the Grantor will perform the obligations set forth in this Article IV. 
  
 4.2 As to Collateral. 
  
 (a) If there shall have occurred and be continuing any Event of Default, Secured Party may notify any parties obligated on any of the Collateral to make payment to Secured Party of any amounts due or to become due thereunder and enforce
collection of any of the Collateral by suit or otherwise and surrender, release, or exchange all or any part thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any indebtedness thereunder or
evidenced thereby. Upon request of Secured Party (which request may not be made unless there shall have occurred and be continuing a Event of Default), the Grantor will, at its own expense, notify any parties obligated on any of the Collateral to
make payment to Secured Party of any amounts due or to become due thereunder. 
  

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 (b) Secured Party is authorized to endorse, in the name of the Grantor, any item, howsoever received by
Secured Party, representing any payment on or other proceeds of any of the Collateral for application pursuant to Section 6.1. 
  
 (c) If the Grantor shall at any time acquire a commercial tort claim, as defined in U.C.C., with a value reasonably estimated by the Grantor to be in
excess of $25,000, the Grantor shall promptly notify Secured Party in a writing signed by the Grantor of the brief details thereof and grant to Secured Party for its benefit in such writing a security interest therein and in the proceeds thereof,
all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to Secured Party. 
  
 (d) The Grantor shall at any time and from time to time take such steps as Secured Party may reasonably request for Secured Party (i) to obtain an
acknowledgement, in form and substance satisfactory to Secured Party, of any bailee having possession of any of the Collateral that the bailee holds such Collateral for Secured Party for the its benefit, (ii) to obtain “control” of any
investment property, deposit accounts, letter-of-credit rights or electronic chattel paper (as such terms are defined in U.C.C. §§ 9-104, 9-105, 9-106 and 9-107 relating to what constitutes “control” for such items of Collateral)
that constitute Collateral, with any agreements establishing control to be in form and substance satisfactory to Secured Party, and (iii) otherwise to insure the continued perfection and priority of Secured Party’s security interest for its
benefit in any of the Collateral and of the preservation of its rights therein, following the effectiveness of Revised Article 9 in any jurisdiction. 
  
 (e) If the Grantor shall at any time hold or acquire any instruments or tangible chattel paper that constitutes Collateral, the Grantor shall forthwith
endorse, assign and deliver the same to the Secured Party, accompanied by such instruments of transfer or assignment duly executed in blank as the Secured Party may from time to time specify. 
  
 4.3 As to Intellectual Property Collateral. The Grantor covenants and
agrees to comply with the following provisions as such provisions relate to any Intellectual Property Collateral to the extent material to the future operations or business of the Grantor: 
  
 (a) As to any Patent constituting Collateral that the Grantor may acquire
following the date hereof, the Grantor shall not do any act, or omit to do any act, whereby any of such Patent may lapse or become abandoned or dedicated to the public or unenforceable. 
  
 (b) The Grantor shall not, and the Grantor shall not permit any of its licensees to do or permit any act or knowingly omit
to do any act whereby any of the Trademarks constituting Collateral may lapse or become invalid or unenforceable. 
  
 (c) The Grantor shall not do or permit any act or knowingly omit to do any act whereby any of the Copyright constituting Collateral or any of the trade
secrets constituting collateral may lapse or become invalid or unenforceable or placed in the public domain except upon expiration of the end of an unrenewable term of a registration thereof. 
  
 (d) The Grantor shall notify the Secured Party promptly if it knows, or has
reason to know, that any application or registration relating to any material Patent, Trademark or Copyright, in each case constituting Collateral, may become abandoned or dedicated to the 

  

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public or placed in the public domain or invalid or unenforceable, or of any adverse determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any court) regarding the Grantor’s ownership of any of such Patent, Trademark or Copyright, its right to
register the same or to keep and maintain and enforce the same. 
  
 4.4 Further Assurances, etc. The Grantor agrees that, from time to time at its own expense, the Grantor will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or
that Secured Party may reasonably request, in order to perfect, preserve and protect any security interest granted or purported to be granted hereby in Collateral located in the United States or to enable Secured Party to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. With respect to the foregoing and the grant of the security interest hereunder, the Grantor hereby authorizes Secured Party to file one or more financing or continuation statements, and
amendments thereto, relative to all or any part of the Collateral without the signature of the Grantor where permitted by law. A carbon, photographic or other reproduction of this Agreement or any financing statement covering the Collateral or any
part thereof shall be sufficient as a financing statement where permitted by law. 
  
 5. Rights of Secured Party. 
  
 5.1 Secured Party Appointed Attorney-in-Fact. The Grantor hereby irrevocably appoints Secured Party the Grantor’s attorney-in-fact, with full
authority in the place and stead of the Grantor and in the name of the Grantor or otherwise, from time to time in the Secured Party’s discretion following the occurrence and during the continuance of an Event of Default and notice to the
Grantor, to take any action and to execute any instrument which Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement. The Grantor hereby acknowledges, consents and agrees that the power of attorney granted
pursuant to this Section is irrevocable and coupled with an interest; provided, that the foregoing power of attorney shall terminate upon the release of Secured Party’s liens on all Collateral pursuant to Section 2.4. 
  
 5.2 Secured Party May Perform. If the Grantor fails to perform any
agreement contained herein within 30 days after written notice from Secured Party, Secured Party may themselves perform, or cause performance of, such agreement, and the expenses of Secured Party incurred in connection therewith shall be payable by
the Grantor pursuant to Section 6.2. 
  
 5.3 Secured Party Has
No Duty. The powers conferred on Secured Party hereunder are solely to protect its interest in the Collateral and shall not impose any duty on it to exercise any such powers. Except for reasonable care of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Secured Party shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral.

  
 5.4 Reasonable Care. Secured Party is required to
exercise reasonable care in the custody and preservation of any of the Collateral in their possession; provided, however, Secured Party shall be deemed to have exercised reasonable care in the custody and preservation of any 

  

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of the Collateral, if they take such action for that purpose as the Grantor reasonably requests in writing at times other than upon the occurrence and during
the continuance of any Event of Default, but failure of Secured Party to comply with any such request at any time shall not in itself be deemed a failure to exercise reasonable care. 
  
 6. Remedies. 
  
 6.1 Certain Remedies. If any Event of Default shall have occurred and be continuing: 
  
 (a) Secured Party may exercise in respect of the Collateral, in addition to
other rights and remedies provided for herein or otherwise available to them, all the rights and remedies of a secured party on default under the U.C.C. (whether or not the U.C.C. applies to the affected Collateral) and also may: 
  
 (i) require the Grantor to, and the Grantor hereby agrees that it will, at
its expense and upon request of Secured Party forthwith, assemble all or part of the Collateral as directed by Secured Party and make it available to Secured Party at a place to be designated by Secured Party which is reasonably convenient to all
parties; and 
  
 (ii) without notice except as specified below,
sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Secured Party’s offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms Secured Party may deem
commercially reasonable. The Grantor agrees that at least ten business days’ prior notice to the Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification.
Secured Party shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. Secured Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to which it was so adjourned. 
  
 (b) All cash proceeds received by Secured Party in respect of any sale of, collection from or other realization upon all or any part of the Collateral may, in the discretion of Secured Party, be held by Secured Party
as collateral for, and/or then or at any time thereafter applied (after payment of any amounts payable to Secured Party pursuant to Section 6.2) in whole or in part by Secured Party against, all or any part of the obligations of the Grantor under
the Related Security Documents as follows: (i) first, to the reasonable out-of-pocket costs and expenses of Secured Party in connection with the retaking, holding, preparing for sale, selling or other disposition of the Collateral, including,
without limitation, all court costs and the reasonable fees and expenses of its agents and legal counsel; (ii) second, to the payment in full of the obligations of the Grantor under the Related Security Documents or in the event that such proceeds
are insufficient to pay in full the obligations, equally and ratably in accordance with Secured Party ‘s amounts owing to it under or pursuant to the Related Security Documents; and (iii) third, to the Grantor, or its successors and assigns, or
whomever may be lawfully entitled to receive the same, of any surplus then remaining. If Secured Party has funds available to apply to a portion of, but not all of, one of the amounts described in clauses (i) through (iii) above, then Secured Party
shall apply such funds to the applicable parties in proportion to the amounts to which such parties would have been entitled if the entire amount described in any such clause had been available. 
  

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	 	6.2	Indemnity and Expenses. 

  
 (a) The Grantor agrees to indemnify Secured Party from and against any and all claims, losses and liabilities arising out of or resulting from any Related
Security Document (including, without limitation, enforcement of this Agreement), except claims, losses or liabilities resulting from Secured Party ‘s negligence or misconduct. 
  
 (b) The Grantor will upon demand pay to Secured Party the amount of any and all reasonable expenses, including the
reasonable fees and disbursements of its counsel (but not more than one firm and all local or special expert counsel, if any, who may be retained by counsel to Secured Party) and of any experts and agents, which Secured Party may incur in connection
with: 
  
 (i) the administration of any Related Security
Document; or 
  
 (ii) the custody, preservation, use or operation
of, or the sale of, collection from, or other realization upon, any of the Collateral. 
  
 7. Miscellaneous Provisions. 
  
 7.1 Amendments; etc. No amendment to or waiver of any provision of this Agreement nor consent to any departure by any Grantor herefrom, shall in
any event be effective unless the same shall be in writing and made in accordance with the terms of the Development Agreement. 
  
 7.2 Addresses for Notices. All demands, notices, requests, consents and other communications required or permitted under this Agreement, shall be
in writing and shall be personally delivered or sent by facsimile machine (with a confirmation copy sent by one of the other methods authorized in this Section), or by commercial overnight delivery service (including FedEx but excluding the U.S.
Postal Service), as set forth below: 
  

	
	 Notices to Grantor shall be addressed to:

	
	 BioDelivery Sciences International, Inc.

	 2501 Aerial Center Parkway, Suite 205

	 Morrisville, NC 27560

	 Facsimile: 919-653-5161

	 Attention: Mark A. Sirgo, Pharm.D.

	
	 with a copy to:

	
	 Wyrick Robbins Yates & Ponton LLP

	 4101 Lake Boone Trail

	 Suite 300

	 Raleigh, NC 27607

	Attention: Larry E. Robbins

  

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	 Notices to Secured Party shall be addressed to:

	
	 Clinical Development Capital LLC

	 47 Hulfish Street, Suite 310

	 Princeton, NJ 08542

	 Facsimile: 609-683-5787

	 Attention: Chief Financial Officer, and

	    David R. Ramsay

	
	 with a copy to:

	
	 Morgan, Lewis & Bockius LLP

	 502 Carnegie Center

	 Princeton, NJ 08540

	 Facsimile: 609.919.6701

	 Attention: Denis Segota, Esq.

  
 Notices shall be
deemed given upon the earliest to occur of (i) receipt by the party to whom such notice is directed, if hand delivered; (ii) if sent by facsimile machine, on the day (other than a Saturday, Sunday or legal holiday in the jurisdiction to which such
notice is directed) such notice is sent if sent (as evidenced by the facsimile confirmed receipt) prior to 5:00 p.m. Eastern Time and, if sent after 5:00 p.m. Eastern Time, on the day (other than a Saturday, Sunday or legal holiday in the
jurisdiction to which such notice is directed) after which such notice is sent; or (iii) on the first business day (other than a Saturday, Sunday or legal holiday in the jurisdiction to which such notice is directed) following the day the same is
deposited with the commercial carrier if sent by commercial overnight delivery service. Each party, by notice duly given in accordance therewith may specify a different address for the giving of any notice hereunder. 
  
 7.3 Section Captions. The descriptive headings of the several sections
and paragraphs of this Agreement are inserted for convenience only, and do not constitute a part of this Agreement and shall not affect in any way the meaning or interpretation of this Agreement. 
  
 7.4 Severability. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby. 
  
 7.5 Governing Law;, Entire Agreement, etc. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE
STATE OF NEW YORK IN ALL RESPECTS AS SUCH LAWS ARE APPLIED TO AGREEMENTS AMONG NEW YORK RESIDENTS ENTERED INTO AND PERFORMED ENTIRELY WITHIN NEW YORK, WITHOUT GIVING EFFECT TO CONFLICT OF LAW PRINCIPLES THEREOF, EXCEPT TO THE EXTENT THAT THE
VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION 

  

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OTHER THAN THE STATE OF NEW YORK. THIS AGREEMENT AND THE OTHER RELATED SECURITY DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH
RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO. 
  
 7.6 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. 
  
 [
Rest of Page Intentionally Left Blank ] 
  

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

			
	CLINICAL DEVELOPMENT CAPITAL LLC, as Secured Party
		
	 By:
	 	  

	Name:	 	 
	Title:	 	 
	
	 Arius Pharmaceuticals, Inc., as Grantor

		
	 By:
	 	  

	Name:	 	 
	Title:	 	 
	
	 BIODELIVERY SCIENCES INTERNATIONAL, INC.

		
	 By:
	 	  

	Name:	 	 
	Title:	 	 

 SCHEDULE I 
 to 
 Agreement 
  

			
	 ITEM A:
	  	2501 Aerial Center Parkway, Suite 205
	 	  	Morrisville, NC 27560
		
	ITEM B:	  	Delaware
		
	ITEM C:	  	2501 Aerial Center Parkway, Suite 205
	 	  	Morrisville, NC 27560
		
	ITEM D:	  	None

  
 This Schedule will be updated prior to
signing this Agreement to reflect the category of information requested as of the date of signing. 

 SCHEDULE II 
 to 
 Agreement 
  
 Patents 
  

													
	 Filing
 Date

	  	 App. No.

	  	 Country/Patent No. &
Date

	  	 Title

	  	 Description/Comments

	  	Priority

	  	 Status/Action

	18 Oct 1996	  	08/734,519	  	 US / Patent No. 5,800,832 on 01 Sep 1998.
  
 Expiration is 18 Oct 2016.S
	  	Bioerodable Film for Delivery of Pharmaceutical Compounds to Mucosal Surfaces	  	 Single claim – layered bioerodable pharmaceutical (dyclonine only) carrier device.
  
 Mucoadhesive layer: HEC, PA, NaCMC
  
 Non adhesive layer: HEC
	  	 	  	Issued
							
	01 Sep 1998	  	09/144,827	  	 US / Patent No. 6,159,498 on 12 Dec 2000.
  
 Expiration is 18 Oct 2016.
	  	Same	  	27 claims broadening pharmaceuticals beyond dyclonine	  	Continuation
of ‘519	  	Issued
							
	29 Apr 1998	  	09/069,703	  	US	  	Pharmaceutical Carrier Device Suitable for Delivery of Pharmaceutical Compounds to Mucosal Surfaces	  	 Expanded: list of polymers in 1st and 2nd layers; list of pharmaceuticals
  
 Added: component to adjust kinetics of layer erodability; method for local treatment and
systemic drug delivery
	  	CIP from
‘519	  	Pending
							
	16 Oct 1997	  	US97/18605	  	 PCT
  
 Australia / Issued 17 May 2001, expires 16 Oct. 2017
  
 EP/ Issued, expires 16 Oct. 2017
	  	Pharmaceutical Carrier Device Suitable for Delivery of Pharmaceutical Compounds to Mucosal Surfaces	  	Like 09/069,703 plus – adherent film for treating wounds or burns of skin	  	PCT of ‘519	  	Entered national phase in Canada, Japan
							
	04 Oct 2000	  	09/684,682	  	US	  	Same	  	Flexible adherent film for treatment of burns and wounds where film is layered device with pharmaceutical. Adhesive layer free of plasticizer.	  	Divisional
of ‘703	  	Pending

													
	12 Oct 2004	 	10/962,833	 	US	 	Same	 	 	 	Con of ‘682	 	Pending
							
	1 Mar 2005	 	11/069,089	 	US	 	Same	 	 	 	Con of ‘682	 	Pending
							
	29 Apr 1999	 	US99/09378	 	 PCT
  
 Australia / Issued, expires 29 Apr. 2019
	 	Pharmaceutical Carrier Device Suitable for Delivery of Pharmaceutical Compounds to Mucosal Surfaces	 	 	 	PCT of ‘703	 	Entered national phase in Canada, Japan, and EP
							
	11 Apr 2002	 	10/121,430	 	US	 	Process for Loading a Drug Delivery Device	 	 	 	New application	 	 Pending
  
 Application published 16 Oct. 2003

							
	11 Apr 2003	 	US03/11313	 	PCT	 	Process for Loading a Drug Delivery Device	 	115 claims including: post-loading, viscosity building agents, polymer cross linking and plasticizers, sustained delivery of drug including fentanyl, ondansetron, and hydrocodone	 	PCT of ‘430	 	Pending
							
	22 Jan 2004	 	US10/763063	 	US	 	Bioerodible Film for Delivery of Pharmaceutical Compounds to Mucosal Surfaces	 	35 claims including: bioadhesive layer dose not include polymer susceptible to react with basic drugs (polyacrylic acid); tri-layer film disk; residence time up to 4 hours; film forming polymers
cross-linked &/or plasticized; vaginal & rectal applications; method of treating nausea and vomiting and migraine	 	 New application
 1195.264US1
	 	Pending
							
	12 Nov 2002	 	60/425,508	 	US	 	Adhesive Bioerodible Ocular Drug Delivery System	 	20 claims including method of delivery of drugs via ocular surfaces; backing layer may contain non-water soluble lubrication layer; mucoadhesive layer with dissolution rate modifiers,
plasticizers	 	Provisional application	 	Pending

  
  

													
	12 Nov 2003	  	10/706,603	  	US	  	Same	  	 	  	New Application based on ‘508	  	Pending
							
	15 Aug 2003	  	60/495,356	  	US	  	Adhesive Bioerodible Transmucosal Drug Delivery System	  	 Added concepts: partially water soluble layers; polymer cross linking; plasticized water soluble polymer; non-water soluble lubricant backing layer;
mucosal penetration enhancers
  
 > 1 adhesive polymer in adhesive layer and
> 1 film forming polymer in backing layer
	  	Provisional application	  	Pending

  
 This Schedule will be
updated prior to signing this Agreement to reflect the category of information requested as of the date of signing. 
  
  

 SCHEDULE III 
 to 
 Agreement 
  
 Trademarks 
  
 1. BEMA 
  
 This Schedule will be updated prior to signing this Agreement to reflect the category of information requested as of the date of signing. 

 SCHEDULE IV 
 to 
 Agreement 
  
 Copyrights 
  
 None. 
  
 This Schedule will be updated prior to signing this Agreement to reflect the category of information requested as of the date of signing.Registration Rights Agreement

 Exhibit 10.3 
  
 EXECUTION COPY 
  
 REGISTRATION RIGHTS AGREEMENT 
  
 THIS REGISTRATION RIGHTS AGREEMENT (“Agreement”) is entered into as of July 14, 2005, by and between BioDelivery Sciences International,
Inc., a Delaware corporation (the “Company”) and Clinical Development Capital LLC, a Delaware limited liability company (the “Investor”). 
  
 R E C I T A L S: 
  
 WHEREAS, the Company and Investor have entered into a certain Clinical Development and License Agreement dated the date hereof (the “License
Agreement”); and 
  
 WHEREAS, in connection with Investor
entering into the License Agreement, Company has issued to Investor a Warrant dated the date hereof (the “Warrant”) exercisable for up to five hundred thousand (500,000) shares of the Company’s common stock, par value $0.001 per share
(“Common Stock”), subject to adjustment as set forth therein; and 
  
 WHEREAS, the execution and delivery by Investor of the License Agreement is conditioned, among other things, on the execution and delivery of this Agreement. 
  
 NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises and covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 
  
 (1) Certain Definitions. For purposes of this Section Agreement, the
following terms shall have the meanings ascribed to them below. Additional capitalize terms not otherwise defined herein shall have the meaning set forth in the License Agreement. 
  
 (a) “Prospectus” means the prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the issuance of the Warrant, the Warrant Shares and any portion of the Registrable Securities covered by the Registration Statement, and all other amendments and supplements to the Prospectus,
including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus. 
  
 (b) “Registrable Securities” shall mean any Warrant Shares issued or issuable upon exercise of the Warrant together with any securities
issued or issuable upon any stock split, dividend or other distribution, adjustment, recapitalization or similar event with respect to the foregoing. 

 (c) “Registration Statement” means the registration statement required to be filed under
this Agreement, including the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement. 
  
 (d)
“SEC” means the Securities and Exchange Commissions. 
  
 (e) “Securities Act” means The Securities Act of 1933, as amended, together with all rules and regulations promulgated thereunder 
  
 (f) “Warrant Shares” means the shares of Common Stock issued or issuable upon exercise of the Warrants. 
  
 (2) Shelf Registration 
  
 (a) The Company shall use its best efforts to cause to prepare and file with
the SEC a “Shelf” Registration Statement covering the resale of all Registrable Securities for an offering to be made on a continuous basis pursuant to Rule 415 on or prior to April 1, 2008 (such date of actual filing, the “Filing
Date”); provided, however, the filing shall be accelerated to a date not later than the date upon which the Company files a New Drug Application with the Federal Drug Administration for the Company’s BEMA Fentanyl product, if earlier
than April 1, 2008. The Registration Statement shall be on Form S-3 (except if the Company is not then eligible to register for resale the Registerable Securities on Form S-3, in which case such registration shall be on another appropriate form in
accordance herewith). Investor will furnish to the Company in writing the information specified in Item 507 or 508 of Regulation S-K, as applicable, of the Securities Act for use in connection with the Registration Statement or prospectus or
preliminary prospectus included therein. Investor agrees to promptly furnish additional information required to be disclosed in order to make the information previously furnished to the Company by Investor not materially misleading. The Registration
Statement shall register the Registrable Securities for resale by the holders thereof. 
  
 (b) The Company shall cause the Registration Statement to be declared effective by the SEC on or prior to the date which is 120 days subsequent to the Filing Date, and shall keep the Registration Statement
continuously effective under the Securities Act until the earlier of (i) the date when all Registrable Securities covered by such Registration Statement have been sold, or (i) two years from the effective date of the Registration Statement (the
“Effectiveness Period”). 
  
 (c) The Company
shall notify Investor in writing promptly (and in any event within one business day) after receiving notification from the SEC that the Registration Statement has been declared effective. 
  

 2 

 (3) Registration Procedures. In connection with the Company’s registration obligations
hereunder, the Company shall: 
  
 (a) (i) prepare and file with
the SEC such amendments, including post-effective amendments, to the Registration Statement as may be necessary to keep the Registration Statement continuously effective as to the Registrable Securities for the Effectiveness Period; (ii) cause the
related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424; and (iii) respond as promptly as reasonably possible, and in any event within ten (10)
business days, to any comments received from the SEC with respect to the Registration Statement or any amendment thereto and as promptly as reasonably possible provide the Placement Agent true and complete copies of all correspondence from and to
the SEC relating to the Registration Statement. 
  
 (b) Notify the
Investor as promptly as reasonably possible, and (if requested by the Investor) confirm such notice in writing no later than one (1) trading day thereafter, of any of the following events: (i) the SEC notifies the Company whether there will be a
“review” of the Registration Statement; (ii) the SEC comments in writing on the Registration Statement (in which case the Company shall deliver to the Placement Agent a copy of such comments and of all written responses thereto); (iii) the
SEC or any other Federal or state governmental authority in writing requests any amendment or supplement to the Registration Statement or Prospectus or requests additional information related thereto; (iv) if the SEC issues any stop order suspending
the effectiveness of the Registration Statement or initiates any action, claim, suit, investigation or proceeding (a “Proceeding”) for that purpose; (v) the Company receives notice in writing of any suspension of the qualification
or exemption from qualification of any Registrable Securities for sale in any jurisdiction, or the initiation or threat of any Proceeding for such purpose; or (vi) the financial statements included in the Registration Statement become ineligible for
inclusion therein or any statement made in the Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference is untrue in any material respect or any revision to the Registration Statement,
Prospectus or other document is required so that it 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, in light of the circumstances
under which they were made, not misleading. 
  
 (c) Use its
reasonable best efforts to avoid the issuance of or, if issued, obtain the withdrawal of (i) any order suspending the effectiveness of the Registration Statement or (ii) any suspension of the qualification (or exemption from qualification) of any of
the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment. 
  
 (d) Promptly deliver to Investor, without charge, such reasonable number of copies of the Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto as Investor may
reasonably request. The Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by Investor in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or
supplement thereto. 
  

 3 

 (e) (i) In the time and manner required by Nasdaq, prepare and file with Nasdaq an additional shares
listing application covering all of the Registrable Securities and a notification form regarding the change in the number of the Company’s outstanding Shares; (ii) take all steps necessary to cause such Registrable Securities to be approved for
listing on Nasdaq as soon as possible thereafter; (iii) provide to Investor notice of such listing; and (iv) maintain the listing of such Registrable Securities on Nasdaq. 
  
 (f) Prior to any public offering of Registrable Securities, register or qualify or cooperate with the Investor in connection
with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or “blue sky” laws of such jurisdictions within the United States as
Investor requests in writing, to keep each such registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by a Registration Statement; provided, however, that the Company shall not be required for any such purpose to (i) qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not be otherwise required to qualify but for the requirements of this Paragraph (3)(f), or (ii) subject itself to taxation. 
  
 (g) Upon the occurrence of any event described in Paragraph (3)(b)(vi) above, as promptly as reasonably possible, prepare a supplement or amendment,
including a post-effective amendment, to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter
delivered, neither the Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however, that the Company may suspend sales pursuant to the Registration Statement for a period of up to sixty (60) days (unless the holders of at least two-thirds of
the Registrable Securities consent in writing to a longer delay of up to an additional thirty (30) days) no more than once in any twelve-month period if the Company furnishes to the holders of the Registrable Securities a certificate signed by the
Company’s Chief Executive Officer stating that in the good faith judgment of the Company’s Board of Directors, (i) the offering could reasonably be expected to interfere in any material respect with any acquisition, corporate
reorganization or other material transaction under consideration by the Company or (ii) there is some other material development relating to the operations or condition (financial or other) of the Company that has not been disclosed to the general
public and as to which it is in the Company’s best interests not to disclose such development; provided further, however, that the Company may not so suspend sales more than once in any calendar year without the written consent of the holders
of at least two-thirds of the Registrable Securities. 
  

 4 

 (h) Comply with all applicable rules and regulations of the SEC and Nasdaq in all material respects.

  
 (4) Registration Expenses. The Company shall pay (or
reimburse the Investor for) all fees and expenses incident to the performance of or compliance with this Agreement by the Company, including without limitation (a) all registration and filing fees and expenses, including without limitation those
related to filings with the SEC, Amex and in connection with applicable state securities or “Blue Sky” laws, (b) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities and of printing
copies of Prospectuses reasonably requested by the Investor), (c) messenger, telephone and delivery expenses, (d) fees and disbursements of counsel for the Company, and (e) fees and expenses of all other Persons retained by the Company in connection
with the consummation of the transactions contemplated by this Agreement. Notwithstanding the foregoing, Investor shall pay any and all costs, fees, discounts or commissions attributable to the sale of its respective Registrable Securities.

  
 (5) Indemnification. 
  
 (a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless Investor, its officers and directors, partners, members, agents, brokers and employees of each of them, each Person who controls Investor (within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, partners, members, agents and employees of each such controlling Person, and each underwriter of Registrable Securities, to the fullest extent permitted by
applicable law, from and against any and all losses, claims, damages, liabilities, settlement costs and expenses, including without limitation costs of preparation and reasonable attorneys’ fees (collectively, “Losses”), as incurred,
arising out of or relating to any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any Prospectus or form of prospectus or in any amendment or supplement thereto, or arising out of or relating to any
omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were
made) not misleading, except to the extent, but only to the extent, that (i) such untrue statements or omissions are based upon information regarding Investor furnished in writing to the Company by such Investor expressly for use therein, or to the
extent that such information related to Investor or such Investor’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by Investor expressly for use in the Registration Statement, such
Prospectus or such form of Prospectus or in any amendment or supplement thereto (which shall, however, be deemed to include disclosure substantially in accordance with the “Plan of Distribution” attached hereto), or (ii) in the case of an
occurrence of an event of the type specified in Paragraph (3)(b) above, the use by Investor of an outdated or defective Prospectus after the Company has notified Investor in writing that the Prospectus is outdated or defective and prior to the
receipt by Investor of the Advice contemplated in Paragraph (6) below. The Company shall notify the Investor promptly of the institution, threat or assertion of any Proceeding of which the Company is aware in connection with the transactions
contemplated by this Agreement. 
  

 5 

 (b) Indemnification by Investor. Investor shall indemnify and hold harmless the Company, its
directors, officers, agents and employees, and each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling
Persons, to the fullest extent permitted by applicable law, from and against all Losses (as determined by a court of competent jurisdiction in a final judgment not subject to appeal or review) arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, or any form of prospectus or in any amendment or supplement thereto, or arising out of or based upon any omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading to the extent, but only to the extent, that such untrue statement or omission is contained in any information furnished in writing by Investor to the Company specifically for
inclusion in such Registration Statement or Prospectus or to the extent that (i) such untrue statements or omissions are based upon information regarding Investor furnished in writing to the Company by Investor expressly for use therein, or to the
extent that such information related to Investor or Investor’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by Investor expressly for use in the Registration Statement, such
Prospectus or such form of Prospectus or in any amendment or supplement thereto (which shall, however, be deemed to include disclosure substantially in accordance with the “Plan of Distribution” attached hereto), or (ii) in the case of an
occurrence of an event of the type specified in Paragraph (3)(b) above, the use by Investor of an outdated or defective Prospectus after the Company has notified Investor in writing that the Prospectus is outdated or defective and prior to the
receipt by Investor of the Advice contemplated in Paragraph (6) below. In no event shall the liability of Investor hereunder be greater in amount than the dollar amount of the net proceeds received by Investor upon the sale of the Registrable
Securities giving rise to such indemnification obligation. 
  
 (c)
Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from
whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all
fees and expenses incurred in connection with defense thereof, provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and
only) to the extent that such failure shall have prejudiced the Indemnifying Party. An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in writing to pay such fees and expenses; or (ii) the Indemnifying Party shall have failed promptly to assume the defense of such
Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (iii) the named parties to any such Proceeding (including 
  

 6 

 
any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel that a
conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate
counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and such counsel shall be at the expense of the Indemnifying Party; provided, however, that in the event that the
Indemnifying Party shall be required to pay the fees and expenses of separate counsel, the Indemnifying Party shall only be required to pay the fees and expenses of one separate counsel for such Indemnified Party or Parties. The Indemnifying Party
shall not be liable for any settlement of any such Proceeding affected without its written consent, which consent shall not be unreasonably withheld. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such
Proceeding. All fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall
be paid to the Indemnified Party, as incurred, within ten trading days of written notice thereof to the Indemnifying Party (regardless of whether it is ultimately determined that an Indemnified Party is not entitled to indemnification hereunder;
provided, that the Indemnifying Party may require such Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that such Indemnified Party is not entitled to indemnification
hereunder). 
  
 (d) Contribution. If a claim for
indemnification under Paragraph (5)(a) or (b) is unavailable to an Indemnified Party (by reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in
such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or related to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in Paragraph
(5)(c), any reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for
in this Paragraph 5(d) was available to such party in accordance with its terms. 
  

 7 

 The parties hereto agree that it would not be just and equitable if contribution pursuant to this
Paragraph (5)(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provision of this
Paragraph (5)(d), no Investor shall be required to contribute, in the aggregate, any amount in excess of the amount by which the proceeds actually received by such Investor from the sale of the Registrable Securities subject to the Proceeding
exceeds the amount of any damages that such Investor has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. 
  
 The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties. 
  
 (6) Dispositions. Investor agrees
that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement. Investor further agrees that, upon receipt of a notice
from the Company of the occurrence of any event of the kind described in Paragraphs (3)(b), Investor will discontinue disposition of such Registrable Securities under the Registration Statement until Investor’s receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement contemplated by Paragraph (3)(g), or until it is advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus may be resumed, and, in either case,
has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement. The Company may provide appropriate stop orders to enforce the provisions of
this paragraph. 
  
 (7) Intentionally omitted. 

 
 (8) Piggy-Back Registrations. If at any time during the
Effectiveness Period, other than any suspension period referred to in Paragraph (3)(g), there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the SEC a
registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than (i) on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then
equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, or (ii) under any registration
filed on behalf of Laurus Master Fund, Ltd. or its successors or assigns, then the Company shall send to Investor written notice of such determination and if, within fifteen (15) days after receipt of such notice, Investor shall so request in
writing, the Company shall include in such registration statement all or any part of such Registrable Securities not already covered by an effective Registration Statement such Investor 

  

 8 

 
requests to be registered; provided that the Investor includes in such notice a statement that Investor intends to sell such shares within ninety (90) days
of the effective date of the Registration Statement. The Registration Statement with respect to such Registrable Securities shall expire at the end of such ninety (90) day period. 
  
 (9) Intentionally Omitted 
  
 (10) Miscellaneous 
  
 (a) Governing Law. This Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York,
without giving effect to principles of conflicts of law or choice of law that would cause the laws of any other jurisdiction to apply. 
  
 (b) Amendment and Waiver. Any provision of this Agreement may be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only upon the written consent of both the Company and Investor. 
  
 (c) Entire Agreement. This Agreement constitutes the entire agreement between the parties relative to the specific subject matter hereof. Any
previous agreement among the parties relative to the specific subject matter hereof is superseded by this Agreement. 
  
 (d) Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to
the party to be notified; (b) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient, if not, then on the next business day; (c) five (5) days after having been sent by registered or certified mail, return
receipt requested, postage prepaid; or (d) the next business day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the Company at the
address or facsimile number set forth on Schedule A hereof and to Investor at the address or facsimile number set forth on Schedule A attached hereto or at such other address as the Company or Investor may designate by ten (10)
days’ advance written notice to the other parties hereto. 
  
 (e) Severability. In the event one or more of the provisions of this Agreement should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect
any other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. 
  
 (f) Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one (1) and the same instrument. 
  
 (g) Successors and Assigns. The provisions hereof shall inure to the benefit of, and be binding upon, the successors and assigns of the parties hereto. 
  

 9 

 (h) Specific Performance. The parties hereto hereby declare that it is impossible to measure in
money the damages that will accrue to a party hereto, or to their heirs, personal representatives, successors or assigns, by reason of a failure to perform any of the obligations under this Agreement and agree that the terms of this Agreement shall
be specifically enforceable. If any party hereto, or his heirs, personal representatives, or successors or assigns, institutes any action or proceeding to specifically enforce the provisions hereof, any person against whom such action or proceeding
is brought hereby waives the claim or defense therein that such party or such personal representative has an adequate remedy at law, and such person shall not offer in any such action or proceeding the claim or defense that such remedy at law
exists. 
  
 (i) Titles and Subtitles. The titles of the
sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement. 
  
 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 
  

 10 

 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first set
forth above. 
  

			
	COMPANY:
	
	BIODELIVERY SCIENCES INTERNATIONAL, INC.
		
	 By:
	 	 /s/ Mark A. Sirgo

	 Name:
	 	Mark A. Sirgo
	 Title:
	 	President and COO
	
	INVESTOR:
	
	CLINICAL DEVELOPMENT CAPITAL LLC
		
	 By:
	 	 /s/ David R. Ramsay

	 Name:
	 	David R. Ramsay
	 Title:
	 	Authorized Signatory

  
 SIGNATURE PAGE TO
REGISTRATION RIGHTS AGREEMENT 

 SCHEDULE A 
  
 NOTICES 
  
 If to the Company: 
  

	
	 BioDelivery Sciences International, Inc.

	 2501 Aerial Center Parkway, Suite 205

	 Morrisville, NC 27560

	 Facsimile: 919-653-5161

	 Attention: Mark A. Sirgo, Pharm.D.

	 with a copy to:

	 Wyrick Robbins Yates & Ponton LLP

	 4101 Lake Boone Trail

	 Suite 300

	 Raleigh, NC 27607

	 Attention: Larry E. Robbins

  
 If to the Investor: 
  

	
	 Clinical Development Capital LLC

	 47 Hulfish Street, Suite 310

	 Princeton, NJ 08542

	 Facsimile: 609-683-5787

	 Attention: Chief Financial Officer, and

	              David R. Ramsay

	
	 with a copy to:

	
	 Morgan, Lewis & Bockius LLP

	 502 Carnegie Center

	 Princeton, NJ 08540

	 Facsimile: 609.919.6701

	 Attention: Denis Segota, Esq.

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