Document:

Master Security Agreement

 Exhibit 10.6 
  
 BIODELIVERY SCIENCES INTERNATIONAL, INC. AND ITS SUBSIDIARIES 
 MASTER SECURITY AGREEMENT 
  

	To:	Laurus Master Fund, Ltd. 

 c/o M&C Corporate Services
Limited 
 P.O. Box 309 GT 
 Ugland House 
 South Church Street 
 George Town 
 Grand Cayman, Cayman Islands 
  
 Date: February 22, 2005 
  
 To Whom It May Concern: 
  
 1. To secure the payment of all Obligations (as hereafter defined), BioDelivery Sciences International, Inc., a Delaware corporation (the
“Company”), each of the other undersigned parties (other than Laurus Master Fund, Ltd., “Laurus”)) and each other entity that is required to enter into this Master Security Agreement (each an “Assignor” and,
collectively, the “Assignors”) hereby assigns and grants to Laurus a continuing security interest in all of the following property now owned or at any time hereafter acquired by such Assignor, or in which such Assignor now has or at any
time in the future may acquire any right, title or interest (the “Collateral”): all cash; cash equivalents; accounts; accounts receivable; deposit accounts (including, without limitation, the Lockbox Deposit Accounts (as defined below));
inventory, equipment; goods; documents; instruments (including, without limitation, promissory notes); contract rights; general intangibles (including, without limitation, payment intangibles); chattel paper; supporting obligations; investment
property (including, without limitation, all equity interests owned by any Assignor); letter-of-credit rights; and all trademarks, trademark applications, tradestyles, patents, patent applications, copyrights, copyright applications and other
intellectual property (including, without limitation, those specifically listed on Schedules 1 and 2 to that certain Grant of Interest in Patents and Trademarks, dated of even date herewith, by the Company in favor of Laurus), in each case in
which each such Assignor now has or hereafter may acquire any right, title or interest, all proceeds and products thereof (including, without limitation, proceeds of insurance) and all additions, accessions and substitutions thereto or therefor. In
the event any Assignor wishes to finance the acquisition in the ordinary course of business of any hereafter acquired equipment and has obtained a written commitment from an unrelated third party financing source to finance such equipment, Laurus
shall release its security interest on such hereafter acquired equipment so financed by such third party financing source. 
  
 The term “Collateral”, however, shall specifically exclude the following (collectively, the “Excluded Collateral”): (i) any present or
future “in-licensed” intellectual property rights licensed by any Assignor from third parties or intellectual property rights co-owned by any 

 
Assignor under the applicable license agreements (but solely to the extent that such “in-licensed” intellectual property rights are not solely
owned by such Assignor and such third party prohibits such Assignor from assigning such intellectual property to, and/or granting a security interest in such intellectual property for the benefit of, Laurus), including, without limitation, the
“in-licensed” intellectual property rights covered by the licensing agreements listed on Schedule A hereto, and (ii) intellectual property or other assets owned by any Assignor subject to security interests granted or to be granted
under or in connection with strategic joint ventures or similar collaborative arrangements or agreements to which any Assignor is a party relating to the development of pharmaceutical products and/or related intellectual property (including joint
ventures, arrangements or agreements under which a third party retains a security interest in clinical data) (such joint ventures, arrangements or agreements, “JVs”), in each case, however, solely to the extent that no Assignor: (i)
invests, transfers or agrees to invest or transfer any cash or other assets in any such JV and/or (ii) loans or agrees to loan or otherwise make available to any such JV any cash or other liquid assets (it being agreed that in the event that cash or
other assets are invested in, transferred to, loaned to or otherwise made available by an Assignor to any JV, the applicable Assignor’s interest in such JV shall be included in the definition of “Collateral” hereunder). Except as
otherwise defined herein, all capitalized terms used herein shall have the meanings provided such terms in the Securities Purchase Agreement referred to below. 
  

2. The term “Obligations” as used herein shall mean and include all debts, liabilities and obligations owing by each Assignor to Laurus
arising under, out of, or in connection with: (i) that certain Securities Purchase Agreement dated as of the date hereof by and between the Company and Laurus (the “Securities Purchase Agreement”) and (ii) the Related Agreements referred
to in the Securities Purchase Agreement (the Securities Purchase Agreement and each Related Agreement, as each may be amended, modified, restated or supplemented from time to time, collectively, the “Documents”), and in connection with any
documents, instruments or agreements relating to or executed in connection with the Documents or any documents, instruments or agreements referred to therein or otherwise, and in connection with any other indebtedness, obligations or liabilities of
each such Assignor to Laurus, whether now existing or hereafter arising, direct or indirect, liquidated or unliquidated, absolute or contingent, due or not due and whether under, pursuant to or evidenced by a note, agreement, guaranty, instrument or
otherwise, including, without limitation, obligations and indebtedness of each Assignor for post-petition interest, fees, costs and charges that accrue after the commencement of any case by or against such Assignor under any bankruptcy, insolvency,
reorganization or like proceeding (collectively, the “Debtor Relief Laws”) in each case, irrespective of the genuineness, validity, regularity or enforceability of such Obligations, or of any instrument evidencing any of the Obligations or
of any collateral therefor or of the existence or extent of such collateral, and irrespective of the allowability, allowance or disallowance of any or all of the Obligations in any case commenced by or against any Assignor under any Debtor Relief
Law. 
  
 3. Each Assignor hereby jointly and severally represents,
warrants and covenants to Laurus that: 
  
 (a) it
is a corporation, partnership or limited liability company, as the case may be, validly existing, in good standing and formed under the respective laws of its 

  

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jurisdiction of formation set forth on Schedule B, and each Assignor will provide Laurus thirty (30) days’ prior written notice of any change in
any of its respective jurisdiction of formation; 
  
 (b) its legal name is as set forth in its Certificate of Incorporation or other organizational document (as applicable) as amended through the date hereof and as set forth on Schedule B, and it will provide Laurus thirty (30)
days’ prior written notice of any change in its legal name; 
  
 (c) its organizational identification number (if applicable) is as set forth on Schedule B hereto, and it will provide Laurus thirty (30) days’ prior written notice of any change in its organizational
identification number; 
  
 (d) it is the lawful
owner of its Collateral and it has the sole right to grant a security interest therein and will defend the Collateral against all claims and demands of all persons and entities; 
  
 (e) it will keep its Collateral free and clear of all attachments, levies, taxes, liens, security interests
and encumbrances of every kind and nature (“Encumbrances”), except (i) Encumbrances securing the Obligations, (ii) Encumbrances consisting of purchase money security interests in equipment or other non-real property financed by a third
party financing source, solely to the extent that the principal amount of any such financing does not exceed $50,000 in the aggregate and (iii) Encumbrances securing indebtedness of each such Assignor other than as set forth in clause (ii) above not
to exceed $50,000 in the aggregate for each such Assignor so long as all such Encumbrances are removed or otherwise released or subordinated to Laurus’ satisfaction within thirty (30) days of the creation thereof; 
  
 (f) it will, at its and the other Assignors’ joint and
several cost and expense keep the Collateral in good state of repair (ordinary wear and tear excepted) and will not waste or destroy the same or any part thereof other than ordinary course discarding of items no longer used or useful in its or such
other Assignors’ business; 
  
 (g) it will
not, without Laurus’ prior written consent, sell, exchange, lease or otherwise dispose of any Collateral, whether by sale, lease or otherwise, except for the sale of inventory in the ordinary course of business and for the disposition or
transfer in the ordinary course of business during any fiscal year of obsolete and worn-out equipment or equipment no longer necessary for its ongoing needs, having an aggregate fair market value of not more than $50,000 and only to the extent that:

  
 (i) the proceeds of each such disposition are
used to acquire replacement Collateral which is subject to Laurus’ first priority perfected security interest, or are used to repay the Obligations or to pay general corporate expenses; or 
  

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 (ii) following the occurrence of an Event of Default which continues to exist the
proceeds of which are remitted to Laurus to be held as cash collateral for the Obligations; 
  
 (h) it will insure or cause the Collateral to be insured in Laurus’ name (as additional insured and loss payee) against loss or
damage by fire, theft, burglary, pilferage, loss in transit and such other hazards as Laurus shall specify in amounts and under policies by insurers acceptable to Laurus and all premiums thereon shall be paid by such Assignor and the policies
delivered to Laurus. If any such Assignor fails to do so, Laurus may procure such insurance and the cost thereof shall be promptly reimbursed by the Assignors, jointly and severally, and shall constitute Obligations; 
  
 (i) it will at all reasonable times allow Laurus or
Laurus’ representatives free access to and the right of inspection of the Collateral; such Assignor (jointly and severally with each other Assignor) hereby indemnifies and saves Laurus harmless from all loss, costs, damage, liability and/or
expense, including reasonable attorneys’ fees, that Laurus may sustain or incur to enforce payment, performance or fulfillment of any of the Obligations and/or in the enforcement of this Master Security Agreement or in the prosecution or
defense of any action or proceeding either against Laurus or any Assignor concerning any matter growing out of or in connection with this Master Security Agreement, and/or any of the Obligations and/or any of the Collateral except to the extent
caused by Laurus’ own gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and nonappealable decision); and 
  
 (j) on or prior to the Closing Date (or such later date as Laurus shall agree in writing), each Assignor
will (x) irrevocably direct all of its present and future Account Debtors (as defined below) and other persons or entities obligated to make payments constituting Collateral to make such payments directly to the lockboxes maintained by such Assignor
(the “Lockboxes”) with North Fork Bank or such other financial institution accepted by Laurus in writing as may be selected by the Company (the “Lockbox Bank”) (each such direction pursuant to this clause (x), a “Direction
Notice”) and (y) provide Laurus with copies of each Direction Notice, each of which shall be agreed to and acknowledged by the respective Account Debtor. Upon receipt of such payments, the Lockbox Bank shall agree to deposit the proceeds of
such payments in that certain deposit account maintained at the Lockbox Bank and evidenced by a deposit account or accounts referred in the documentation referred to in this clause (j) below or such other deposit account accepted by Laurus in
writing (the “Lockbox Deposit Account”). On or prior to the Closing Date, the Company shall and shall cause the Lockbox Bank to enter into all such documentation acceptable to Laurus pursuant to which, among other things, the Lockbox Bank
agrees to, following notification by Laurus (which notification Laurus shall only give following the occurrence and during the continuance of an Event of Default), comply only with the instructions or other directions of Laurus concerning the
Lockbox and the Lockbox Deposit Account. All of each Assignor’s invoices, account statements and other written or oral communications directing, instructing, demanding or requesting payment of any Account (as hereinafter defined) of any such
Assignor or any other amount constituting Collateral shall conspicuously direct that all payments be made 

  

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to the Lockbox or such other address as Laurus may direct in writing. If, notwithstanding the instructions to Account Debtors, any Assignor receives any
payments, such Assignor shall immediately remit such payments to the Lockbox Deposit Account in their original form with all necessary endorsements. Until so remitted, the Assignors shall hold all such payments in trust for and as the property of
Laurus and shall not commingle such payments with any of its other funds or property. For the purpose of this Master Security Agreement, (x) ”Accounts” shall mean all “accounts”, as such term is defined in the Uniform Commercial
Code as in effect in the State of New York on the date hereof, now owned or hereafter acquired by any Assignor and (y) “Account Debtor” shall mean any person or entity who is or may be obligated with respect to, or on account of, an
Account. 
  
 4. The occurrence of any of the following events or
conditions shall constitute an “Event of Default” under this Master Security Agreement: 
  
 (a) any covenant or any other term or condition of this Master Security Agreement is breached in any material respect and such breach, if
subject to cure, shall continues for a period of fifteen (15) days after the occurrence thereof; 
  
 (b) any representation or warranty, or statement made or furnished to Laurus under this Master Security Agreement by any Assignor or on
any Assignor’s behalf should at any time be false or misleading in any material respect; 
  
 (c) the loss, theft, substantial damage, destruction, sale or encumbrance to or of any of the Collateral or the making of any levy,
seizure or attachment thereof or thereon except to the extent: 
  
 (i) such loss is covered by insurance proceeds which are used to replace the item or repay Laurus; or 
  
 (ii) said levy, seizure or attachment does not secure indebtedness in excess of $100,000 in the aggregate for all Assignors and such levy,
seizure or attachment has been removed or otherwise released within ten (10) days of the creation or the assertion thereof; 
  
 (d) an Event of Default shall have occurred under and as defined in any Document. 
  
 5. Upon the occurrence of any Event of Default and at any time thereafter,
Laurus may declare all Obligations immediately due and payable and Laurus shall have the remedies of a secured party provided in the Uniform Commercial Code as in effect in the State of New York, this Agreement and other applicable law. Upon the
occurrence of any Event of Default and at any time thereafter, Laurus will have the right to take possession of the Collateral and to maintain such possession on any Assignor’s premises or to remove the Collateral or any part thereof to such
other premises as Laurus may desire. Upon Laurus’ request, each Assignor shall assemble or cause the Collateral to be assembled and make it available to Laurus at a place designated by Laurus. If any notification of intended disposition of any
Collateral is required by law, such notification, if mailed, shall be deemed properly and reasonably given if mailed at least 

  

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ten (10) days before such disposition, postage prepaid, addressed to the applicable Assignor either at such Assignor’s address shown herein or at any
address appearing on Laurus’ records for such Assignor. Any proceeds of any disposition of any of the Collateral shall be applied by Laurus to the payment of all expenses in connection with the sale of the Collateral, including reasonable
attorneys’ fees and other legal expenses and disbursements and the reasonable expenses of retaking, holding, preparing for sale, selling, and the like, and any balance of such proceeds may be applied by Laurus toward the payment of the
Obligations in such order of application as Laurus may elect, and each Assignor shall be liable for any deficiency. For the avoidance of doubt, following the occurrence and during the continuance of an Event of Default, Laurus shall have the
immediate right to withdraw any and all monies contained in any deposit accounts in the name of the Assignor and controlled by Laurus and apply same to the repayment of the Obligations (in such order of application as Laurus may elect). 

 
 6. If any Assignor defaults in the performance or fulfillment of any of
the terms, conditions, promises, covenants, provisions or warranties on such Assignor’s part to be performed or fulfilled under or pursuant to this Master Security Agreement, Laurus may, at its option without waiving its right to enforce this
Master Security Agreement according to its terms, immediately or at any time thereafter and without notice to any Assignor, perform or fulfill the same or cause the performance or fulfillment of the same for each Assignor’s joint and several
account and at each Assignor’s joint and several cost and expense, and the cost and expense thereof (including reasonable attorneys’ fees) shall be added to the Obligations and shall be payable on demand with interest thereon at the
highest rate permitted by law, or, at Laurus’ option, debited by Laurus from any deposit account in the name of the Assignor and controlled by Laurus. 
  
 7. Each Assignor appoints Laurus, any of Laurus’ officers, employees or any other person or entity whom Laurus may designate as such Assignor’s
attorney, with power to execute such documents in each such Assignor’s behalf and to supply any omitted information and correct patent errors in any documents executed by any Assignor or on any Assignor’s behalf; to file financing
statements against such Assignor covering the Collateral (and in connection with the filing of any such financing statements, describe the Collateral as “all assets and all personal property, whether now owned and/or hereafter acquired, other
than the Excluded Collateral set forth on Schedule A hereto”); to sign such Assignor’s name on public records; and to do all other things Laurus deem necessary to carry out this Master Security Agreement. Each Assignor hereby ratifies and
approves all acts of the attorney and neither Laurus nor the attorney will be liable for any acts of commission or omission, nor for any error of judgment or mistake of fact or law other than gross negligence or willful misconduct (as determined by
a court of competent jurisdiction in a final and non-appealable decision). This power being coupled with an interest, is irrevocable so long as any Obligations remains unpaid. 
  
 8. No delay or failure on Laurus’ part in exercising any right, privilege or option hereunder shall operate as a waiver
of such or of any other right, privilege, remedy or option, and no waiver whatever shall be valid unless in writing, signed by Laurus and then only to the extent therein set forth, and no waiver by Laurus of any default shall operate as a waiver of
any other default or of the same default on a future occasion. Laurus’ books and records containing entries with respect to the Obligations shall be admissible in evidence in any action or proceeding, shall 

  

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be binding upon each Assignor for the purpose of establishing the items therein set forth and shall constitute prima facie proof thereof. Laurus shall have
the right to enforce any one or more of the remedies available to Laurus, successively, alternately or concurrently. Each Assignor agrees to join with Laurus in executing such documents or other instruments to the extent required by the Uniform
Commercial Code in form satisfactory to Laurus and in executing such other documents or instruments as may be required or deemed necessary by Laurus for purposes of affecting or continuing Laurus’ security interest in the Collateral.

  
 9. This Master Security Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York applicable to contracts made and performed in such state and cannot be terminated orally. All of the rights, remedies, options, privileges and elections given to Laurus
hereunder shall inure to the benefit of Laurus’ successors and assigns. The term “Laurus” as herein used shall include Laurus, any parent of Laurus’, any of Laurus’ subsidiaries and any co-subsidiaries of Laurus’
parent, whether now existing or hereafter created or acquired, and all of the terms, conditions, promises, covenants, provisions and warranties of this Agreement shall inure to the benefit of each of the foregoing, and shall bind the
representatives, successors and assigns of each Assignor. 
  
 10.
Each Assignor hereby consents and agrees that the state of federal courts located in the County of New York, State of New York shall have exclusive jurisdiction to hear and determine any claims or disputes between Assignor, on the one hand, and
Laurus, on the other hand, pertaining to this Master Security Agreement or to any matter arising out of or related to this Master Security Agreement, provided, that Laurus and each Assignor acknowledges that any appeals from those courts may have to
be heard by a court located outside of the County of New York, State of New York, and further provided, that nothing in this Master Security Agreement shall be deemed or operate to preclude Laurus from bringing suit or taking other legal action in
any other jurisdiction to collect, the Obligations, to realize on the Collateral or any other security for the Obligations, or to enforce a judgment or other court order in favor of Laurus. Each Assignor expressly submits and consents in advance to
such jurisdiction in any action or suit commenced in any such court, and each Assignor hereby waives any objection which it may have based upon lack of personal jurisdiction, improper venue or forum non conveniens. Each Assignor
hereby waives personal service of the summons, complaint and other process issues in any such action or suit and agrees that service of such summons, complaint and other process may be made by registered or certified mail addressed to such assignor
at the address set forth on the signature lines hereto and that service so made shall be deemed completed upon the earlier of such Assignor’s actual receipt thereof or three (3) days after deposit in the U.S. mails, proper postage prepaid.

  
 The parties desire that their disputes be resolved by a judge
applying such applicable laws. Therefore, to achieve the best combination of the benefits of the judicial system and of arbitration, the parties hereto waive all rights to trial by jury in any action, suite, or proceeding brought to resolve any
dispute, whether arising in contract, tort, or otherwise between Laurus, and/or any Assignor arising out of, connected with, related or incidental to the relationship established between them in connection with this Master Security Agreement or the
transactions related hereto. 
  

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 11. It is understood and agreed that any person or entity that desires to become an Assignor hereunder,
or is required to execute a counterpart of this Master Security Agreement after the date hereof pursuant to the requirements of any Document, shall become an Assignor hereunder by (x) executing a Joinder Agreement in form and substance satisfactory
to Laurus, (y) delivering supplements to such exhibits and annexes to such Documents as Laurus shall reasonably request and (z) taking all actions as specified in this Master Security Agreement as would have been taken by such Assignor had it been
an original party to this Master Security Agreement, in each case with all documents required above to be delivered to Laurus and with all documents and actions required above to be taken to the reasonable satisfaction of Laurus. 
  

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 12. All notices from Laurus to any Assignor shall be sufficiently given if mailed or delivered to such
Assignor’s address set forth below. 
  

					
	Very truly yours,
	
	 BIODELIVERY SCIENCES INTERNATIONAL, INC.

		
	By:	 	 /S/ James A. McNulty

	Name:	 	 	 	James A. McNulty
	Title:	 	 	 	Chief Financial Officer
	 	 	 Address: 185 South Orange Avenue,
Administrative Building 4, Newark, New Jersey 07103
 Attention: James A. McNulty

	 	 
	
	ARIUS PHARMACEUTICALS, INC.
		
	By:	 	 /S/ James A. McNulty

	Name:	 	James A. McNulty
	Title:	 	Chief Financial Officer
	 	 	Address: 185 South Orange Avenue, Administrative Building 4, Newark, New Jersey 07103
	 	 	Attention: James A. McNulty
	
	BIORAL NUTRIENT DELIVERY, LLC
	
	By: BioDelivery Sciences International, Inc., its managing member
			
	 	 	By:	 	 /S/ James A. McNulty

	 	 	Name:	 	James A. McNulty
	 	 	Title:	 	Chief Financial Officer of its managing member
	 	 	 	 	Address: 185 South Orange Avenue, Administrative Building 4, Newark, New Jersey 07103
	 	 	 	 	Attention: James A. McNulty

  

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	ACKNOWLEDGED:
	
	LAURUS MASTER FUND, LTD.
		
	By:	 	 /S/ David Grin

	Name:	 	David Grin
	Title:	 	Director

  
 [Signature Page
to Master Security Agreement] 
  

 10Stock Pledge Agreement

 Exhibit 10.7 
  
 STOCK PLEDGE AGREEMENT 
  
 This Stock Pledge Agreement (this “Agreement”), dated as of February 22, 2005, among Laurus Master Fund, Ltd. (the
“Pledgee”), BioDelivery Sciences International, Inc., a Delaware corporation (the “Company”), and each of the other undersigned parties (other than the Pledgee) (the Company and each such other undersigned party, a
“Pledgor” and collectively, the “Pledgors”). 
  
 BACKGROUND 
  
 The Company
has entered into a Securities Purchase Agreement, dated as of February 21, 2005 (as amended, modified, restated or supplemented from time to time, the “Securities Purchase Agreement”), pursuant to which the Pledgee provides or will
provide certain financial accommodations to the Company and certain subsidiaries of the Company. 
  
 In order to induce the Pledgee to provide or continue to provide the financial accommodations described in the Securities Purchase Agreement, each Pledgor
has agreed to pledge and grant a security interest in the collateral described herein to the Pledgee on the terms and conditions set forth herein. 
  
 NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration the receipt of which is hereby acknowledged, the parties
hereto agree as follows: 
  
 1. Defined Terms. All
capitalized terms used herein which are not defined shall have the meanings given to them in the Securities Purchase Agreement. 
  
 2. Pledge and Grant of Security Interest. To secure the full and punctual payment and performance of (the following clauses (a) and (b),
collectively, the “Indebtedness”) (a) the obligations under the Securities Purchase Agreement and the Related Agreements referred to in the Securities Purchase Agreement (the Securities Purchase Agreement and the Related Agreements,
as each may be amended, restated, modified and/or supplemented from time to time, collectively, the “Documents”) and (b) all other indebtedness, obligations and liabilities of each Pledgor to the Pledgee whether now existing or
hereafter arising, direct or indirect, liquidated or unliquidated, absolute or contingent, due or not due and whether under, pursuant to or evidenced by a note, agreement, guaranty, instrument or otherwise (in each case, irrespective of the
genuineness, validity, regularity or enforceability of such Indebtedness, or of any instrument evidencing any of the Indebtedness or of any collateral therefor or of the existence or extent of such collateral, and irrespective of the allowability,
allowance or disallowance of any or all of such in any case commenced by or against any Pledgor under Title 11, United States Code, including, without limitation, obligations or indebtedness of each Pledgor for post-petition interest, fees, costs
and charges that would have accrued or been added to the Indebtedness but for the commencement of such case), each Pledgor hereby pledges, assigns, hypothecates, transfers and grants a security interest to Pledgee in all of the following (the
“Collateral”): 
  
 (a) the shares of stock and
membership interests set forth on Schedule A annexed hereto and expressly made a part hereof (together with any additional shares of stock or other equity interests or membership interests acquired by any Pledgor, the “Pledged
Stock”), the certificates representing the Pledged Stock and all dividends, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the
Pledged Stock; 

 (b) all additional shares of stock and membership interests of any issuer (each, an
“Issuer”) of the Pledged Stock from time to time acquired by any Pledgor in any manner, including, without limitation, stock dividends or a distribution in connection with any increase or reduction of capital, reclassification,
merger, consolidation, sale of assets, combination of shares, stock split, spin-off or split-off (which shares shall be deemed to be part of the Collateral), and the certificates representing such additional shares and membership interests, as the
case may be, and all dividends, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares and membership interests; and 
  
 (c) all options and rights, whether as an addition to, in substitution of or
in exchange for any shares of any Pledged Stock and all dividends, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all such options and rights.

  
 3. Delivery of Collateral. All certificates
representing or evidencing the Pledged Stock shall be delivered to and held by or on behalf of Pledgee pursuant hereto and shall be accompanied by duly executed instruments of transfer or assignments in blank, all in form and substance satisfactory
to Pledgee. Each Pledgor hereby authorizes the Issuer upon demand by the Pledgee to deliver any certificates, instruments or other distributions issued in connection with the Collateral directly to the Pledgee, in each case to be held by the
Pledgee, subject to the terms hereof. Upon the occurrence and during the continuance of an Event of Default (as defined below), the Pledgee shall have the right, during such time in its discretion and without notice to the Pledgor, to transfer to or
to register in the name of the Pledgee or any of its nominees any or all of the Pledged Stock. In addition, the Pledgee shall have the right at such time to exchange certificates or instruments representing or evidencing Pledged Stock for
certificates or instruments of smaller or larger denominations. 
  
 4. Representations and Warranties of each Pledgor. Each Pledgor jointly and severally represents and warrants to the Pledgee (which representations and warranties shall be deemed to continue to be made until all of the Indebtedness
has been paid in full and each Document and each agreement and instrument entered into in connection therewith has been irrevocably terminated) that: 
  
 (a) the execution, delivery and performance by each Pledgor of this Agreement and the pledge of the Collateral hereunder do not and will not result in any
violation of any agreement, indenture, instrument, license, judgment, decree, order, law, statute, ordinance or other governmental rule or regulation applicable to any Pledgor; 
  

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 (b) this Agreement constitutes the legal, valid, and binding obligation of each Pledgor enforceable
against each Pledgor in accordance with its terms; 
  
 (c) (i) all
Pledged Stock owned by each Pledgor is set forth on Schedule A hereto and (ii) each Pledgor is the direct and beneficial owner of each share of the Pledged Stock; 
  
 (d) all of the shares of the Pledged Stock have been duly authorized, validly issued and are fully paid and nonassessable;

  
 (e) no consent or approval of any person, corporation,
governmental body, regulatory authority or other entity, is or will be necessary for (i) the execution, delivery and performance of this Agreement, (ii) the exercise by the Pledgee of any rights with respect to the Collateral or (iii) the pledge and
assignment of, and the grant of a security interest in, the Collateral hereunder; 
  
 (f) there are no pending or, to the best of Pledgor’s knowledge, threatened actions or proceedings before any court, judicial body, administrative agency or arbitrator which may materially adversely affect the
Collateral; 
  
 (g) each Pledgor has the requisite power and
authority to enter into this Agreement and to pledge and assign the Collateral to the Pledgee in accordance with the terms of this Agreement; 
  
 (h) each Pledgor owns each item of the Collateral and, except for the pledge and security interest granted to Pledgee hereunder, the Collateral shall be,
immediately following the closing of the transactions contemplated by the Documents, free and clear of any other security interest, pledge, claim, lien, charge, hypothecation, assignment, offset or encumbrance whatsoever (collectively,
“Liens”); 
  
 (i) there are no restrictions on
transfer of the Pledged Stock contained in the certificate of incorporation or by-laws (or equivalent organizational documents) of the Issuer or otherwise which have not otherwise been enforceably and legally waived by the necessary parties;

  
 (j) none of the Pledged Stock has been issued or transferred
in violation of the securities registration, securities disclosure or similar laws of any jurisdiction to which such issuance or transfer may be subject; 
  
 (k) the pledge and assignment of the Collateral and the grant of a security interest under this Agreement vest in the Pledgee all rights of each Pledgor
in the Collateral as contemplated by this Agreement; and 
  
 (l)
The Pledged Stock constitutes one hundred percent (100%) of the issued and outstanding shares of capital stock of each Issuer owned by the Pledgors. 
  

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 5. Covenants. Each Pledgor jointly and severally covenants that, until the Indebtedness shall be
indefeasibly satisfied in full and each Document and each agreement and instrument entered into in connection therewith is irrevocably terminated: 
  
 (a) No Pledgor will sell, assign, transfer, convey, or otherwise dispose of its rights in or to the Collateral or any interest therein; nor will any
Pledgor create, incur or permit to exist any Lien whatsoever with respect to any of the Collateral or the proceeds thereof other than that created hereby. 
  
 (b) Each Pledgor will, at its expense, defend Pledgee’s right, title and security interest in and to the Collateral against the claims of any other
party. 
  
 (c) Each Pledgor shall at any time, and from time to
time, upon the written request of Pledgee, execute and deliver such further documents and do such further acts and things as Pledgee may reasonably request in order to effectuate the purposes of this Agreement including, but without limitation,
delivering to Pledgee, upon the occurrence of an Event of Default, irrevocable proxies in respect of the Collateral in form satisfactory to Pledgee. Until receipt thereof, upon an Event of Default that has occurred and is continuing beyond any
applicable grace period, this Agreement shall constitute Pledgor’s proxy to Pledgee or its nominee to vote all shares of Collateral then registered in each Pledgor’s name. 
  
 (d) No Pledgor will consent to or approve the issuance of (i) any additional shares of any class of capital stock or other
equity interests of the Issuer; or (ii) any securities convertible either voluntarily by the holder thereof or automatically upon the occurrence or nonoccurrence of any event or condition into, or any securities exchangeable for, any such shares,
unless, in either case, such shares are pledged as Collateral pursuant to this Agreement. 
  
 6. Voting Rights and Dividends. In addition to the Pledgee’s rights and remedies set forth in Section 8 hereof, in case an Event of Default shall have occurred and be continuing, beyond any applicable cure
period, the Pledgee shall (i) be entitled to vote the Collateral, (ii) be entitled to give consents, waivers and ratifications in respect of the Collateral (each Pledgor hereby irrevocably constituting and appointing the Pledgee, with full power of
substitution, the proxy and attorney-in-fact of each Pledgor for such purposes) and (iii) be entitled to collect and receive for its own use cash dividends paid on the Collateral. No Pledgor shall be permitted to exercise or refrain from exercising
any voting rights or other powers if, in the reasonable judgment of the Pledgee, such action would have a material adverse effect on the value of the Collateral or any part thereof; and provided, further, that if an Event of Default should have
occurred and is continuing, each Pledgor shall give at least five (5) days’ written notice of the manner in which such Pledgor intends to exercise, or the reasons for refraining from exercising, any voting rights or other powers other than with
respect to any election of directors and voting with respect to any incidental matters. Following the occurrence of an Event of Default, all dividends and all other distributions in respect of any of the Collateral, shall be delivered to the Pledgee
to hold as Collateral and shall, if received by any Pledgor, be received in trust for the benefit of the Pledgee, be segregated from the other property or funds of any other Pledgor, and be forthwith delivered to the Pledgee as Collateral in the
same form as so received (with any necessary endorsement). 
  

 4 

 7. Event of Default. An Event of Default shall be deemed to have occurred and may be declared by
the Pledgee upon the happening of any of the following events: 
  
 (a) An “Event of Default” under any Document or any agreement or note related to any Document shall have occurred and be continuing beyond any applicable cure period; 
  
 (b) Any Pledgor shall default in the performance of any of its obligations under any agreement between any Pledgor and
Pledgee, including, without limitation, this Agreement, and such default shall not be cured during any applicable cure period; 
  
 (c) Any representation or warranty of any Pledgor made herein, in any Document or in any agreement, statement or certificate given in writing pursuant
hereto or thereto or in connection herewith or therewith shall be false or misleading in any material respect; 
  
 (d) Any portion of the Collateral is subjected to a levy of execution, attachment, distraint or other judicial process or any portion of the Collateral is
the subject of a claim (other than by the Pledgee) of a Lien or other right or interest in or to the Collateral and such levy or claim shall not be cured, disputed or stayed within a period of fifteen (15) business days after the occurrence thereof;
or 
  
 (e) Any Pledgor shall (i) apply for, consent to, or suffer
to exist the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or other fiduciary of itself or of all or a substantial part of its property, (ii) make a general assignment for the benefit of creditors, (iii)
commence a voluntary case under any state or federal bankruptcy laws (as now or hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition seeking to take advantage of any other law providing for the relief of debtors,
(vi) acquiesce to, or fail to have dismissed, within sixty (60) days, any petition filed against it in any involuntary case under such bankruptcy laws, or (vii) take any action for the purpose of effecting any of the foregoing. 
  
 8. Remedies. In case an Event of Default shall have occurred and been
declared by the Pledgee, the Pledgee may: 
  
 (a) Transfer any or
all of the Collateral into its name, or into the name of its nominee or nominees; 
  
 (b) Exercise all corporate rights with respect to the Collateral including, without limitation, all rights of conversion, exchange, subscription or any other rights, privileges or options pertaining to any shares of
the Collateral as if it were the absolute owner thereof, including, but without limitation, the right to exchange, at its discretion, any or all of the Collateral upon the merger, consolidation, reorganization, recapitalization or other readjustment
of the Issuer thereof, or upon the exercise by the Issuer of any right, privilege or option pertaining to any of the Collateral, and, in connection therewith, to deposit and deliver any and all of the Collateral with any committee, depository,
transfer agent, registrar or other designated agent upon such terms and conditions as it may determine, all without liability except to account for property actually received by it; and 
  

 5 

 (c) Subject to any requirement of applicable law, sell, assign and deliver the whole or, from time to
time, any part of the Collateral at the time held by the Pledgee, at any private sale or at public auction, with or without demand, advertisement or notice of the time or place of sale or adjournment thereof or otherwise (all of which are hereby
waived, except such notice as is required by applicable law and cannot be waived), for cash or credit or for other property for immediate or future delivery, and for such price or prices and on such terms as the Pledgee in its sole discretion may
determine, or as may be required by applicable law. 
  
 Each
Pledgor hereby waives and releases any and all right or equity of redemption, whether before or after sale hereunder. At any such sale, unless prohibited by applicable law, the Pledgee may bid for and purchase the whole or any part of the Collateral
so sold free from any such right or equity of redemption. All moneys received by the Pledgee hereunder, whether upon sale of the Collateral or any part thereof or otherwise, shall be held by the Pledgee and applied by it as provided in Section 10
hereof. No failure or delay on the part of the Pledgee in exercising any rights hereunder shall operate as a waiver of any such rights nor shall any single or partial exercise of any such rights preclude any other or future exercise thereof or the
exercise of any other rights hereunder. The Pledgee shall have no duty as to the collection or protection of the Collateral or any income thereon nor any duty as to preservation of any rights pertaining thereto, except to apply the funds in
accordance with the requirements of Section 10 hereof. The Pledgee may exercise its rights with respect to property held hereunder without resort to other security for or sources of reimbursement for the Indebtedness. In addition to the foregoing,
Pledgee shall have all of the rights, remedies and privileges of a secured party under the Uniform Commercial Code of New York (the “UCC”) regardless of the jurisdiction in which enforcement hereof is sought. 
  
 9. Private Sale. Each Pledgor recognizes that the Pledgee may be
unable to effect (or to do so only after delay which would adversely affect the value that might be realized from the Collateral) a public sale of all or part of the Collateral by reason of certain prohibitions contained in the Securities Act, and
may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obliged to agree, among other things, to acquire such Collateral for their own account, for investment and not with a view to the distribution or
resale thereof. Each Pledgor agrees that any such private sale may be at prices and on terms less favorable to the seller than if sold at public sales and that such private sales shall be deemed to have been made in a commercially reasonable manner.
Each Pledgor agrees that the Pledgee has no obligation to delay sale of any Collateral for the period of time necessary to permit the Issuer to register the Collateral for public sale under the Securities Act. 
  
 10. Proceeds of Sale. The proceeds of any collection, recovery,
receipt, appropriation, realization or sale of the Collateral shall be applied by the Pledgee as follows: 
  
 (a) First, to the payment of all costs, reasonable expenses and charges of the Pledgee and to the reimbursement of the Pledgee for the prior payment of
such costs, reasonable expenses and charges incurred in connection with the care and safekeeping of the Collateral (including, without limitation, the reasonable expenses of any sale or any other disposition of any 

  

 6 

 
of the Collateral), attorneys’ fees and reasonable expenses, court costs, any other fees or expenses incurred or expenditures or advances made by
Pledgee in the protection, enforcement or exercise of its rights, powers or remedies hereunder; 
  
 (b) Second, to the payment of the Indebtedness, in whole or in part, in such order as the Pledgee may elect, whether or not such Indebtedness is then due;

  
 (c) Third, to such persons, firms, corporations or other
entities as required by applicable law including, without limitation, Section 9-615(a)(3) of the UCC; and 
  
 (d) Fourth, to the extent of any surplus to the Pledgors or as a court of competent jurisdiction may direct. 
  
 In the event that the proceeds of any collection, recovery, receipt,
appropriation, realization or sale are insufficient to satisfy the Indebtedness, each Pledgor shall be jointly and severally liable for the deficiency plus the costs and fees of any attorneys employed by Pledgee to collect such deficiency.

  
 11. Waiver of Marshaling. Each Pledgor hereby waives
any right to compel any marshaling of any of the Collateral. 
  
 12. No Waiver. Any and all of the Pledgee’s rights with respect to the Liens granted under this Agreement shall continue unimpaired, and Pledgor shall be and remain obligated in accordance with the terms hereof, notwithstanding
(a) the bankruptcy, insolvency or reorganization of any Pledgor, (b) the release or substitution of any item of the Collateral at any time, or of any rights or interests therein, or (c) any delay, extension of time, renewal, compromise or other
indulgence granted by the Pledgee in reference to any of the Indebtedness. Each Pledgor hereby waives all notice of any such delay, extension, release, substitution, renewal, compromise or other indulgence, and hereby consents to be bound hereby as
fully and effectively as if such Pledgor had expressly agreed thereto in advance. No delay or extension of time by the Pledgee in exercising any power of sale, option or other right or remedy hereunder, and no failure by the Pledgee to give notice
or make demand, shall constitute a waiver thereof, or limit, impair or prejudice the Pledgee’s right to take any action against any Pledgor or to exercise any other power of sale, option or any other right or remedy. 
  
 13. Expenses. The Collateral shall secure, and each Pledgor shall pay
to Pledgee on demand, from time to time, all reasonable costs and expenses, (including but not limited to, reasonable attorneys’ fees and costs, taxes, and all transfer, recording, filing and other charges) of, or incidental to, the custody,
care, transfer, administration of the Collateral or any other collateral, or in any way relating to the enforcement, protection or preservation of the rights or remedies of the Pledgee under this Agreement or with respect to any of the Indebtedness.

  
 14. The Pledgee Appointed Attorney-In-Fact and Performance
by the Pledgee. Upon the occurrence of an Event of Default, each Pledgor hereby irrevocably constitutes and appoints the Pledgee as such Pledgor’s true and lawful attorney-in-fact, with full power of substitution, to execute, acknowledge
and deliver any instruments and to do in such Pledgor’s name, place and stead, all such acts, things and deeds for and on behalf of and in the name of such Pledgor, which 

  

 7 

 
such Pledgor could or might do or which the Pledgee may deem necessary, desirable or convenient to accomplish the purposes of this Agreement, including,
without limitation, to execute such instruments of assignment or transfer or orders and to register, convey or otherwise transfer title to the Collateral into the Pledgee’s name. Each Pledgor hereby ratifies and confirms all that said
attorney-in-fact may so do and hereby declares this power of attorney to be coupled with an interest and irrevocable. If any Pledgor fails to perform any agreement herein contained, the Pledgee may itself perform or cause performance thereof, and
any costs and expenses of the Pledgee incurred in connection therewith shall be paid by the Pledgors as provided in Section 10 hereof. 
  
 15. Waivers. THE PARTIES HERETO DESIRES THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST
COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN
LAURUS, AND/OR ANY COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEN IN CONNECTION WITH THIS AGREEMENT, ANY OTHER DOCUMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO. 
  
 16. Recapture. Notwithstanding anything to the contrary in this
Agreement, if the Pledgee receives any payment or payments on account of the Indebtedness, which payment or payments or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid
to a trustee, receiver, or any other party under the United States Bankruptcy Code, as amended, or any other federal or state bankruptcy, reorganization, moratorium or insolvency law relating to or affecting the enforcement of creditors’ rights
generally, common law or equitable doctrine, then to the extent of any sum not finally retained by the Pledgee, each Pledgor’s obligations to the Pledgee shall be reinstated and this Agreement shall remain in full force and effect (or be
reinstated) until payment shall have been made to Pledgee, which payment shall be due on demand. 
  
 17. Captions. All captions in this Agreement are included herein for convenience of reference only and shall not constitute part of this Agreement
for any other purpose. 
  
 18. Miscellaneous. 

 
 (a) This Agreement constitutes the entire and final agreement among the
parties with respect to the subject matter hereof and may not be changed, terminated or otherwise varied except by a writing duly executed by the parties hereto. 
  
 (b) No waiver of any term or condition of this Agreement, whether by delay, omission or otherwise, shall be effective unless
in writing and signed by the party sought to be charged, and then such waiver shall be effective only in the specific instance and for the purpose for which given. 
  

 8 

 (c) In the event that any provision of this Agreement or the application thereof to any Pledgor or any
circumstance in any jurisdiction governing this Agreement shall, to any extent, be invalid or unenforceable under any applicable statute, regulation, or rule of law, such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform to such statute, regulation or rule of law, and the remainder of this Agreement and the application of any such invalid or unenforceable provision to parties, jurisdictions, or circumstances other
than to whom or to which it is held invalid or unenforceable shall not be affected thereby, nor shall same affect the validity or enforceability of any other provision of this Agreement. 
  
 (d) This Agreement shall be binding upon each Pledgor, and each Pledgor’s successors and assigns, and shall inure to
the benefit of the Pledgee and its successors and assigns. 
  
 (e)
Any notice or other communication required or permitted pursuant to this Agreement shall be given in accordance with the Securities Purchase Agreement. 
  
 (f) This Agreement and the other Documents shall be governed by and construed and enforced in accordance with the laws of the State of New York applicable
to contracts made and performed in such State, without regard to principles of conflicts of law (other than the principles set forth in Section 5-1401 of the General Obligations Law of the State of New York). 
  
 (g) EACH PLEDGOR HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS
LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY PLEDGOR, ON THE ONE HAND, AND THE PLEDGEE, ON THE OTHER HAND, PERTAINING TO THIS AGREEMENT OR ANY OF THE
OTHER DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OF THE OTHER DOCUMENTS, PROVIDED, THAT EACH PLEDGOR ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE
COUNTY OF NEW YORK, STATE OF NEW YORK; AND FURTHER PROVIDED, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE PLEDGEE FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE
INDEBTEDNESS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE INDEBTEDNESS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE PLEDGEE. EACH PLEDGOR EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION
OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH PLEDGOR HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. EACH PLEDGOR HEREBY WAIVES PERSONAL SERVICE OF
THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PLEDGOR AT THE ADDRESS SET FORTH IN THE
[THE SECURITIES 

  

 9 

 
PURCHASE AGREEMENT] [THE SECURITY AGREEMENT] AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF THE SUCH PLEDGOR’S ACTUAL RECEIPT
THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. 
  
 (h) It is understood and agreed that any person or entity that desires to become a Pledgor hereunder, or is required to execute a counterpart of this Agreement after the date hereof pursuant to the requirements of any
Document, shall become a Pledgor hereunder by (x) executing a Joinder Agreement in form and substance satisfactory to the Pledgee, (y) delivering supplements to such exhibits and annexes to such Documents as the Pledgee shall reasonably request and
(z) taking all actions as specified in this Agreement as would have been taken by such Pledgor had it been an original party to this Agreement, in each case with all documents required above to be delivered to the Pledgee and with all documents and
actions required above to be taken to the reasonable satisfaction of the Pledgee. 
  
 (i) This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which when taken together shall constitute one and the same agreement. Any signature delivered by a
party by facsimile transmission shall be deemed an original signature hereto. 
  
 [Remainder of Page Intentionally Left Blank] 
  

 10 

 IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day and year first written
above. 
  

			
	BIODELIVERY SCIENCES INTERNATIONAL, INC.
		
	By:	 	 /S/ James A. McNulty

	Name:	 	James A. McNulty
	Title:	 	Chief Financial Officer
	
	ARIUS PHARMACEUTICALS, INC.
		
	By:	 	 /S/ James A. McNulty

	Name:	 	James A. McNulty
	Title:	 	Chief Financial Officer
	
	BIORAL NUTRIENT DELIVERY, LLC
		
	By:	 	 /S/ James A. McNulty

	Name:	 	James A. McNulty
	Title:	 	Chief Financial Officer of its managing member
	
	LAURUS MASTER FUND, LTD.
		
	By:	 	 /S/ David Grin

	Name:	 	David Grin
	Title	 	Director

  

 11

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