Document:

Registration Rights Agreement

 Exhibit 10.4 
  
 REGISTRATION RIGHTS AGREEMENT 
  

This Registration Rights Agreement (this “Agreement”) is made and entered into as of May 31, 2005, by and between BioDelivery Sciences
International, Inc., a Delaware corporation (the “Company”), and Laurus Master Fund, Ltd. (the “Purchaser”). 
  
 This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date hereof, by and between the Purchaser and the Company (as
amended, modified or supplemented from time to time, the “Securities Purchase Agreement”), and pursuant to the Note and the Warrants referred to therein. 
  
 The Company and the Purchaser hereby agree as follows: 
  
 1. Definitions. Capitalized terms used and not otherwise defined herein that are defined in the Securities Purchase
Agreement shall have the meanings given such terms in the Securities Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings: 
  
 “Commission” means the Securities and Exchange Commission. 
  
 “Common Stock” means shares of the Company’s common
stock, par value $0.001 per share. 
  
 “Effectiveness
Date” means (i) with respect to the initial Registration Statement required to be filed hereunder, a date no later than one hundred five (105) days following the date hereof and (ii) with respect to each additional Registration Statement
required to be filed hereunder, a date no later than forty-five (45) days following the applicable Filing Date. 
  
 “Effectiveness Period” has the meaning set forth in Section 2(a). 
  
 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor statute.

  
 “Filing Date” means, with respect to (i) the
initial Registration Statement required to be filed hereunder, a date no later than thirty (30) days following the date hereof; provided, however, that if that certain registration statement on Form SB-2 of the Company, File No. 333-123569,
has not been declared effective by the Commission by such date, then the Filing Date shall be 5 business days after such registration statement is declared effective by the Commission; and, provided, further, that, notwithstanding the
foregoing proviso, in no event shall the Filing Date referred to in this clause (i) be later than seventy-five (75) days following the date hereof, (ii) with respect to shares of Common Stock issuable to the Holder as a result of adjustments to the
Fixed Conversion Price or Exercise Price made pursuant to Section 3.4 of the Note or Section 4 of the Warrant or otherwise, thirty (30) days after the occurrence of such event or the date of the adjustment of the Fixed Conversion Price or Exercise
Price and (iii) with respect to any Warrant issued after the date hereof, the date which is thirty (30) days after the issuance of such Warrant. 

 “Holder” or “Holders” means the Purchaser or any of its affiliates or
transferees to the extent any of them hold Registrable Securities, other than those purchasing Registrable Securities in a market transaction. 
  
 “Indemnified Party” has the meaning set forth in Section 5(c). 
  
 “Indemnifying Party” has the meaning set forth in Section 5(c). 
  
 “Note” has the meaning set forth in the Securities Purchase
Agreement. 
  
 “Proceeding” means an action,
claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened. 
  
 “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 offering of 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. 
  
 “Registrable Securities” means the shares of Common Stock issued upon the conversion of the Note and issuable upon exercise of the
Warrants. 
  
 “Registration Statement” means each
registration statement required to be filed hereunder, including the Prospectus therein, 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. 
  
 “Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. 
  
 “Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. 
  
 “Securities Act” means the Securities Act of 1933, as amended, and any successor statute. 
  
 “Securities Purchase Agreement” has the meaning given to
such term in the Preamble hereto. 
  

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 “Trading Market” means any of the NASD OTC Bulletin Board, NASDAQ SmallCap Market, the
Nasdaq National Market, the American Stock Exchange or the New York Stock Exchange. 
  
 “Warrants” means the Common Stock purchase warrants issued pursuant to the Securities Purchase Agreement. 
  
 2. Registration. 
  
 (a) On or prior to the Filing Date the Company shall prepare and file with the Commission a Registration Statement covering the Registrable Securities for
a selling stockholder resale offering to be made on a continuous basis pursuant to Rule 415. The Registration Statement shall be on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3,
in which case such registration shall be on another appropriate form in accordance herewith). The Company shall cause each Registration Statement to become effective and remain effective as provided herein. The Company shall use its reasonable
commercial efforts to cause each Registration Statement to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event no later than the Effectiveness Date. The Company shall use its reasonable
commercial efforts to keep each Registration Statement continuously effective under the Securities Act until the date which is the earlier date of when (i) all Registrable Securities have been sold or (ii) all Registrable Securities covered by such
Registration Statement may be sold immediately without registration under the Securities Act and without volume restrictions pursuant to Rule 144(k), as determined by the counsel to the Company pursuant to a written opinion letter to such effect,
addressed and acceptable to the Company’s transfer agent and the affected Holders (the “Effectiveness Period”). 
  
 (b) If: (i) any Registration Statement is not filed on or prior to the applicable Filing Date; (ii) a Registration Statement filed hereunder is not
declared effective by the Commission by the applicable Effectiveness Date; (iii) after a Registration Statement is filed with and declared effective by the Commission, a Discontinuation Event (as hereafter defined) shall occur and be continuing, or
such Registration Statement ceases to be effective (by suspension or otherwise) as to all Registrable Securities to which it is required to relate at any time prior to the expiration of the Effectiveness Period (without being succeeded immediately
by an additional registration statement filed and declared effective), for a period of time which shall exceed 45 days in the aggregate per year or more than 30 consecutive calendar days (defined as a period of 365 days commencing on the date the
Registration Statement is declared effective); or (iv) the Common Stock is not listed or quoted, or is suspended from trading on any Trading Market for a period of three (3) consecutive Trading Days (provided the Company shall not have been able to
cure such trading suspension within 30 days of the notice thereof or list the Common Stock on another Trading Market); (any such failure or breach being referred to as an “Event,” and for purposes of clause (i) or (ii) the date on which
such Event occurs, or for purposes of clause (iii) the date which such 45 day or 30 consecutive day period (as the case may be) is exceeded, or for purposes of clause (iv) the date on which such three (3) Trading Day period is exceeded, being
referred to as “Event Date”), then as partial relief for the damages to the Purchaser by reason of the occurrence of any such Event (which remedy shall not be exclusive of any other remedies available at law or in equity), the Company
shall pay to the 

  

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Purchaser for each day that an Event has occurred and is continuing, an amount in cash equal to one-thirtieth (1/30th) of the product of: (A) the then outstanding principal amount of the Note multiplied by (B) 0.02 (or, with respect to an Event of the type referred
to in clause (ii) of this Section 2(b) that occurs in connection with the initial Registration Statement required to be filed hereunder, 0.015 for the first 30 day period following the applicable Effectiveness Date, and 0.02 thereafter). In the
event the Company fails to make any payments pursuant to this Section 2(b) in a timely manner, such payments shall bear interest at the rate of 1.5% per month (prorated for partial months) until paid in full. 
  
 (c) Within three business days of the Effectiveness Date, the Company shall
cause its counsel to issue a blanket opinion substantially in the form attached hereto as Exhibit A, to the transfer agent stating that the shares are subject to an effective registration statement and that any previously issued shares can be
reissued free of restrictive legend upon notice of a sale by the Purchaser and confirmation by the Purchaser that it has complied with the prospectus delivery requirements, provided that the Company has not advised the transfer agent orally or in
writing that the opinion has been withdrawn. Copies of the blanket opinion required by this Section 2(c) shall be delivered to the Purchaser within the time frame set forth above. 
  
 3. Registration Procedures. If and whenever the Company is required by the provisions hereof to effect the
registration of any Registrable Securities under the Securities Act, the Company will, as expeditiously as possible: 
  
 (a) prepare and file with the Commission a Registration Statement with respect to such Registrable Securities, respond as promptly as possible to any
comments received from the Commission, and use its best efforts to cause the Registration Statement to become and remain effective for the Effectiveness Period with respect thereto, and promptly provide to the Purchaser copies of all filings and
Commission letters of comment relating thereto; 
  
 (b) prepare
and file with the Commission such amendments and supplements to the Registration Statement and the Prospectus used in connection therewith as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such Registration Statement and to keep such Registration Statement effective until the expiration of the Effectiveness Period applicable to such Registration Statement; 
  
 (c) furnish to the Purchaser such number of copies of the Registration
Statement and the Prospectus included therein (including each preliminary Prospectus) as the Purchaser reasonably may request to facilitate the public sale or disposition of the Registrable Securities covered by the Registration Statement;

  
 (d) use its commercially reasonable efforts to register or
qualify the Purchaser’s Registrable Securities covered by such Registration Statement under the securities or “blue sky” laws of such jurisdictions within the United States as the Purchaser may reasonably request, provided, however,
that the Company shall not for any such purpose be required to qualify generally to transact business as a foreign corporation in any jurisdiction where it is not so qualified or to consent to general service of process in any such jurisdiction;

  

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 (e) list the Registrable Securities covered by such Registration Statement with any securities exchange
on which the Common Stock of the Company is then listed; 
  
 (f)
immediately notify the Purchaser at any time when a Prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event of which the Company has knowledge as a result of which the Prospectus contained in
such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances
then existing; and 
  
 (g) make available for inspection by the
Purchaser and any attorney, accountant or other agent retained by the Purchaser, all publicly available, non-confidential financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s
officers, directors and employees to supply all publicly available, non-confidential information reasonably requested by the attorney, accountant or agent of the Purchaser. 
  
 4. Registration Expenses. All expenses relating to the Company’s compliance with Sections 2 and 3 hereof,
including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel and independent public accountants for the Company, fees and expenses (including reasonable counsel fees) incurred in connection
with complying with state securities or “blue sky” laws, fees of the NASD, transfer taxes, fees of transfer agents and registrars, reasonable fees of, and disbursements incurred by, one counsel for the Holders approved in advance by the
Company, are called “Registration Expenses.” All selling commissions applicable to the sale of Registrable Securities, including any fees and disbursements of any special counsel to the Holders beyond those included in Registration
Expenses, are called “Selling Expenses.” The Company shall only be responsible for all Registration Expenses. 
  
 5. Indemnification. 
  
 (a) In the event of a registration of any Registrable Securities under the Securities Act pursuant to this Agreement, the Company will indemnify and hold
harmless the Purchaser, and its officers, directors and each other person, if any, who controls the Purchaser within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which the Purchaser, or
such persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement under which such Registrable Securities were registered under the Securities Act pursuant to this Agreement, any preliminary Prospectus or final Prospectus contained therein, or any amendment or
supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Purchaser, and
each such person for any reasonable legal or other expenses incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such
case if and to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or 

  

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alleged untrue statement or omission or alleged omission so made in conformity with information furnished by or on behalf of the Purchaser or any such person
in writing specifically for use in any such document, or the failure of the Purchaser to deliver a Prospectus, to the extent that the Purchaser was required to do so under applicable securities laws. 
  
 (b) In the event of a registration of the Registrable Securities under the
Securities Act pursuant to this Agreement, the Purchaser will indemnify and hold harmless the Company, and its officers, directors and each other person, if any, who controls the Company within the meaning of the Securities Act, against all losses,
claims, damages or liabilities, joint or several, to which the Company or such persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material fact which was furnished in writing by the Purchaser to the Company expressly for use in (and such information is contained in) the Registration Statement under which
such Registrable Securities were registered under the Securities Act pursuant to this Agreement, any preliminary Prospectus or final Prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company and each such person for any reasonable legal or other expenses incurred by
them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Purchaser will be liable in any such case if and only to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished in writing to the Company by or on behalf of the Purchaser specifically for use
in any such document. Notwithstanding the provisions of this paragraph, the Purchaser shall not be required to indemnify any person or entity in excess of the amount of the aggregate net proceeds received by the Purchaser in respect of Registrable
Securities in connection with any such registration under the Securities Act. 
  
 (c) Promptly after receipt by a party entitled to claim indemnification hereunder (an “Indemnified Party”) of notice of the commencement of any action, such Indemnified Party shall, if a claim for
indemnification in respect thereof is to be made against a party hereto obligated to indemnify such Indemnified Party (an “Indemnifying Party”), notify the Indemnifying Party in writing thereof, but the omission so to notify the
Indemnifying Party shall not relieve it from any liability which it may have to such Indemnified Party other than under this Section 5(c) and shall only relieve it from any liability which it may have to such Indemnified Party under this Section
5(c) if and to the extent the Indemnifying Party is prejudiced by such omission. In case any such action shall be brought against any Indemnified Party and it shall notify the Indemnifying Party of the commencement thereof, the Indemnifying Party
shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel satisfactory to such Indemnified Party, and, after notice from the Indemnifying Party to such Indemnified Party of its
election so to assume and undertake the defense thereof, the Indemnifying Party shall not be liable to such Indemnified Party under this Section 5(c) for any legal expenses subsequently incurred by such Indemnified Party in connection with the
defense thereof; if the Indemnified Party retains its own counsel, then the Indemnified Party shall pay all fees, costs and expenses of such counsel, provided, however, that, if the defendants in any such action include both the
Indemnified Party and the Indemnifying 

  

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Party and the Indemnified Party shall have reasonably concluded that there may be reasonable defenses available to it which are different from or additional
to those available to the Indemnifying Party or if the interests of the Indemnified Party reasonably may be deemed to conflict with the interests of the Indemnifying Party, the Indemnified Party shall have the right to select one separate counsel
and to assume such legal defenses and otherwise to participate in the defense of such action, with the reasonable expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the Indemnifying Party
as incurred. 
  
 (d) In order to provide for just and equitable
contribution in the event of joint liability under the Securities Act in any case in which either: (i) the Purchaser, or any officer, director or controlling person of the Purchaser, makes a claim for indemnification pursuant to this Section 5 but
it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 5 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of the Purchaser or such officer, director or controlling person of the Purchaser in
circumstances for which indemnification is provided under this Section 5; then, and in each such case, the Company and the Purchaser will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after
contribution from others) in such proportion so that the Purchaser is responsible only for the portion represented by the percentage that the public offering price of its securities offered by the Registration Statement bears to the public offering
price of all securities offered by such Registration Statement; provided, however, that, in any such case, (A) the Purchaser will not be required to contribute any amount in excess of the public offering price of all such securities offered
by it pursuant to such Registration Statement; and (B) no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 10(f) of the Act) will be entitled to contribution from any person or entity who was not guilty of such
fraudulent misrepresentation. 
  
 6. Representations and
Warranties. 
  
 (a) The Common Stock is registered pursuant
to Section 12(b) or 12(g) of the Exchange Act and, except with respect to certain matters which the Company has disclosed to the Purchaser on Schedule 4.21 to the Securities Purchase Agreement, the Company has filed all proxy statements, reports,
schedules, forms, statements and other documents required to be filed by it under the Exchange Act. The Company has filed: (i) its Annual Report on Form 10-KSB for each of its fiscal years ended December 31, 2003 and December 31, 2004 and (ii) its
Quarterly Report on Form 10-QSB for the fiscal quarters ended on each of March 31, 2004, June 30, 2004, September 30, 2004 and March 31, 2005 (collectively, the “SEC Reports”). Each SEC Report was, at the time of its filing, in substantial
compliance with the requirements of its respective form and none of the SEC Reports, nor the financial statements (and the notes thereto) included in the SEC Reports, as of their respective filing dates, contained any untrue statement of a material
fact or omitted 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. The financial statements of the Company included in the SEC
Reports comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the Commission or other applicable rules and regulations with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting 

  

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principles (“GAAP”) applied on a consistent basis during the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed) and fairly present in all material respects the financial condition, the results of operations and
the cash flows of the Company and its subsidiaries, on a consolidated basis, as of, and for, the periods presented in each such SEC Report. 
  
 (b) The Common Stock is listed for trading on the Nasdaq SmallCap Market and satisfies all requirements for the continuation of such listing, and the
Company shall do all things necessary for the continuation of such listing. The Company has not received any notice that its Common Stock will be delisted from the Nasdaq SmallCap Market (except for prior notices which have been fully remedied) or
that the Common Stock does not meet all requirements for the continuation of such listing. 
  
 (c) Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales of any security or solicited any offers to buy any security under
circumstances that would cause the offering of the Securities pursuant to the Securities Purchase Agreement to be integrated with prior offerings by the Company for purposes of the Securities Act which would prevent the Company from selling the
Common Stock pursuant to Rule 506 under the Securities Act, or any applicable exchange-related stockholder approval provisions, nor will the Company or any of its affiliates or subsidiaries take any action or steps that would cause the offering of
the Securities to be integrated with other offerings. 
  
 (d) The
Warrants, the Note and the shares of Common Stock which the Purchaser may acquire pursuant to the Warrants and the Note are all restricted securities under the Securities Act as of the date of this Agreement. The Company will not issue any stop
transfer order or other order impeding the sale and delivery of any of the Registrable Securities at such time as such Registrable Securities are registered for public sale or an exemption from registration is available, except as required by
federal or state securities laws. 
  
 (e) The Company understands
the nature of the Registrable Securities issuable upon the conversion of the Note and the exercise of the Warrant and recognizes that the issuance of such Registrable Securities may have a potential dilutive effect. The Company specifically
acknowledges that its obligation to issue the Registrable Securities is binding upon the Company and enforceable regardless of the dilution such issuance may have on the ownership interests of other shareholders of the Company. 
  
 (f) Except for agreements made in the ordinary course of business, there is
no agreement that has not been filed with the Commission as an exhibit to a registration statement or to a form required to be filed by the Company under the Exchange Act, the breach of which could reasonably be expected to have a material and
adverse effect on the Company and its subsidiaries, or would prohibit or otherwise interfere with the ability of the Company to enter into and perform any of its obligations under this Agreement in any material respect. 
  

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 (g) The Company will at all times have authorized and reserved a sufficient number of shares of Common
Stock for the full conversion of the Note and exercise of the Warrants. 
  
 7. Miscellaneous. 
  
 (a) Remedies.
In the event of a breach by the Company or by a Holder, of any of their respective obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this
Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. 
  
 (b) No Piggyback on Registrations. Except as and to the extent specified in Schedule 7(b) hereto, neither the Company nor any of its security
holders (other than the Holders in such capacity pursuant hereto) may include securities of the Company in any Registration Statement required to be filed hereunder other than the Registrable Securities, and the Company shall not after the date
hereof enter into any agreement providing any such right for inclusion of shares in any such Registration Statement to any of its security holders. Except as and to the extent specified in Schedule 7(b) hereto, the Company has not previously entered
into any agreement granting any registration rights with respect to any of its securities to any person or entity that have not been fully satisfied. 
  
 (c) Compliance. Each Holder covenants and 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. 
  
 (d) Discontinued Disposition. Each Holder agrees by its acquisition of such Registrable Securities that, upon receipt of a notice from the Company
of the occurrence of a Discontinuation Event (as defined below) such Holder will forthwith discontinue disposition of such Registrable Securities under the applicable Registration Statement until such Holder’s receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement 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. For
purposes of this Agreement, a “Discontinuation Event” shall mean (i) when the Commission notifies the Company whether there will be a “review” of such Registration Statement and whenever the Commission comments in writing on such
Registration Statement (the Company shall provide true and complete copies thereof and all written responses thereto to each of the Holders); (ii) any request by the Commission or any other Federal or state governmental authority for amendments or
supplements to such Registration Statement or Prospectus or for additional information; (iii) the issuance by the Commission of any stop order suspending the effectiveness of such Registration Statement covering any or all of the Registrable
Securities or the initiation of any Proceedings for that purpose; (iv) the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale
in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose; and/or (v) the 

  

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occurrence of any event or passage of time that makes the financial statements included in such Registration Statement ineligible for inclusion therein or
any statement made in such Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to such Registration Statement, Prospectus
or other documents so that, in the case of such Registration Statement or Prospectus, as the case may be, 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. 
  
 (e) Piggy-Back Registrations. If at any time during the Effectiveness Period there is not an effective Registration Statement covering all of the
Registrable Securities and the Company shall determine to prepare and file with the Commission 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 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, then the Company shall send to each Holder written notice of such determination and, if within fifteen (15) days after receipt of such notice, any such Holder shall so request in
writing, the Company shall include in such registration statement all or any part of such Registrable Securities such Holder requests to be registered to the extent the Company may do so without violating registration rights of others which exist as
of the date of this Agreement, subject to customary underwriter cutbacks applicable to all holders of registration rights and subject to obtaining any required consent of any selling stockholder(s) to such inclusion under such registration
statement. 
  
 (f) Amendments and Waivers. The provisions
of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the
Company and the Holders of the then outstanding Registrable Securities. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of certain Holders and
that does not directly or indirectly affect the rights of other Holders may be given by Holders of at least a majority of the Registrable Securities to which such waiver or consent relates; provided, however, that the provisions of this
sentence may not be amended, modified, or supplemented except in accordance with the provisions of the immediately preceding sentence. 
  
 (g) Notices. Any notice or request hereunder may be given to the Company or the Purchaser at the respective addresses set forth below or as may
hereafter be specified in a notice designated as a change of address under this Section 7(g). Any notice or request hereunder shall be given by registered or certified mail, return receipt requested, hand delivery, overnight mail, Federal Express or
other national overnight next day carrier (collectively, “Courier”) or telecopy (confirmed by mail). Notices and requests shall be, in the case of those by hand delivery, deemed to have been given when delivered to any party to whom it is
addressed, in the case of those by mail or overnight mail, deemed to have been given three (3) business days after the date when deposited in the mail or with the overnight mail carrier, in the case of a Courier, the next business day following
timely delivery of the package with the 
  

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 Courier, and, in the case of a telecopy, when confirmed. The address for such notices and communications shall be as
follows: 
  

					
	 	  	If to the Company:
		
	 	  	BioDelivery Sciences International, Inc.
	 	  	2501 Aerial Center Parkway, Suite 205
	 	  	Morrisville, North Carolina 27560
	 	  	Attention:	  	Mark Sirgo
	 	  	Facsimile:	  	(919) 653-5161
		
	 	  	with a copy to:
		
	 	  	Ellenoff Grossman & Schole LLP
	 	  	370 Lexington Ave.
	 	  	New York, New York 10017
	 	  	Attention:	  	Barry I. Grossman
	 	  	Facsimile:	  	(212) 370-7889
		
	If to a Purchaser:	  	 To the address set forth under such
 Purchaser name on the signature pages hereto.

		
	 If to any other Person who is
 then the
registered Holder:
	  	 To the address of such Holder as it appears
 in the stock transfer books of the Company

  
 or such other address
as may be designated in writing hereafter in accordance with this Section 7(g) by such Person. 
  
 (h) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder. The
Company may not assign its rights or obligations hereunder without the prior written consent of each Holder. Each Holder may assign their respective rights hereunder in the manner and to the persons and entities as permitted under the Note, Warrant
and the Securities Purchase Agreement with the prior written consent of the Company, which consent shall not be unreasonably withheld. 
  
 (i) Execution and Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be
an original and, all of which taken together shall constitute one and the same agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof. 
  
 (j) Governing Law, Jurisdiction and Waiver of Jury Trial. This Agreement shall be governed by and construed and enforced in accordance with the
laws of the 

  

 11 

 
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). The Company hereby consents and agrees that the state or federal courts located in the County of New York, State of New York shall have exclusion jurisdiction to hear
and determine any Proceeding between the Company, on the one hand, and the Purchaser, on the other hand, pertaining to this Agreement or to any matter arising out of or related to this Agreement; provided, that the Purchaser and the Company
acknowledge 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 Purchaser from bringing a Proceeding 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 the Purchaser. The
Company expressly submits and consents in advance to such jurisdiction in any Proceeding commenced in any such court, and the Company hereby waives any objection which it may have based upon lack of personal jurisdiction, improper venue or forum
non conveniens. The Company hereby waives personal service of the summons, complaint and other process issued in any such Proceeding and agrees that service of such summons, complaint and other process may be made by registered or certified mail
addressed to the Company at the address set forth in Section 7(g) and that service so made shall be deemed completed upon the earlier of the Company’s actual receipt thereof or three (3) days after deposit in the U.S. mails, proper postage
prepaid. The parties hereto 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 Proceeding brought to resolve any dispute, whether arising in contract, tort, or otherwise between the Purchaser and/or the Company arising out of, connected with, related or incidental to the relationship established between
then in connection with this Agreement. If either party hereto shall commence a Proceeding to enforce any provisions of this Agreement, the Securities Purchase Agreement or any Related Agreement, then the prevailing party in such Proceeding shall be
reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Proceeding. 
  
 (k) Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any remedies provided by
law. 
  
 (l) Severability. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect
and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable. 
  
 (m)
Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. 
  

 12 

 IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first
written above. 
  

							
	 BIODELIVERY SCIENCES
 INTERNATIONAL,
INC.
	 	LAURUS MASTER FUND, LTD.
				
	By:	 	 /s/ Francis E. O’Donnell, Jr.

	 	By:	 	 /s/ Eugene Grin

	Name:	 	Francis E. O’Donnell, Jr.	 	Name:	 	Eugene Grin
	Title:	 	Chairman and Chief Executive Officer	 	Title:	 	Director
			
	 	 	 	 	Address for Notices:
			
	 	 	 	 	825 Third Avenue, 14th Floor
	 	 	 	 	New York, NY 10022
	 	 	 	 	Attention:    David Grin
	 	 	 	 	Facsimile:    212-541-4434

  

 13 

 EXHIBIT A 
  

[                    
    , 200        ] 
  
 VIA FACSIMILE (718) 921-8326 
  
 American Stock Transfer & Trust Company 
 40 Wall Street 
 New York, NY 10005 
 Attn: Isaac Freilich 
  

			
	Re:	  	BioDelivery Sciences International, Inc. Registration Statement on Form [S-3]

  
 Ladies and Gentlemen: 
  
 As counsel to BioDelivery Sciences International, Inc., a Delaware
corporation (the “Company”), we have been requested to render our opinion to you in connection with the resale by the individuals or entitles listed on Schedule A attached hereto (the “Selling Stockholders”), of an aggregate of
             shares (the “Shares”) of the Company’s Common Stock. 
  
 A Registration Statement on Form [S-3] under the Securities Act of 1933, as amended (the “Act”), with respect to the resale of the Shares was
declared effective by the Securities and Exchange Commission on [date]. Enclosed is the Prospectus dated [date]. We understand that the Shares are to be offered and sold in the manner described in the Prospectus. 
  
 Based upon the foregoing, upon request by the Selling Stockholders at any
time while the registration statement remains effective, it is our opinion that the Shares have been registered for resale under the Act and new certificates evidencing the Shares upon their transfer or re-registration by the Selling Stockholders
may be issued without restrictive legend. We will advise you if the registration statement is not available or effective at any point in the future. 
  

	
	Very truly yours,
	
	 [Company counsel]Reaffirmation Agreement

 Exhibit 10.5 
  
 REAFFIRMATION AND RATIFICATION AGREEMENT AND AMENDMENT 
  
 May 31, 2005 
  
 Laurus Master Fund, Ltd. 
 c/o Laurus Capital Management, LLC 
 825 Third Avenue 
 New York, New York 10022 
  
 Ladies and Gentlemen:

  
 Reference is made to the (a) Subsidiary Guaranty dated as of
February 22, 2005 made by Arius Pharmaceuticals, Inc., a Delaware corporation (“Arius”) and Bioral Nutrient Delivery, LLC, a Delaware limited liability company (“BND”) in favor of Laurus Master Fund, Ltd., a Cayman Islands
company (“Laurus”) (as amended, modified or supplemented from time to time, the “Subsidiary Guaranty”), (b) Master Security Agreement dated as of February 22, 2005 made by BioDelivery Sciences International, Inc., a Delaware
corporation (the “Company”), Arius and BND in favor of Laurus (as amended, modified or supplemented from time to time, the “Master Security Agreement”), (c) Stock Pledge Agreement dated as of February 22, 2005 made by the
Company, Arius and BND in favor of Laurus (as amended, modified or supplemented from time to time, the “Stock Pledge Agreement”) and (d) Control Agreement Regarding Limited Liability Company Interests dated as of February 22, 2005 by and
among the Company, BND and Laurus (as amended, modified or supplemented from time to time, the “Control Agreement”) (the Subsidiary Guaranty, the Master Security Agreement, the Stock Pledge Agreement and the Control Agreement,
collectively, the “Existing Security and Guaranty Agreements”). 
  
 To induce Laurus to provide additional financial accommodations to the Company evidenced by (i) that certain Secured Convertible Term Note, dated May 31, 2005, made by the Company in favor of Laurus (as amended,
modified or supplemented from time to time, the “May 2005 Term Note”), (ii) the Purchase Agreement referred to in the May 2005 Term Note (as amended, modified or supplemented from time to time, the “May 2005 Purchase Agreement”)
and (iii) the Related Agreements referred to in, and defined in, the May 2005 Purchase Agreement (the agreements set forth in the preceding clauses (i) through (iii), inclusive, collectively, the “May 2005 Agreements”), each of the
Company, Arius and BND hereby: 
  
 (a) represents
and warrants to Laurus that it has reviewed and approved the terms and provisions of the May 2005 Agreements and the documents, instruments and agreements entered into in connection therewith; 
  
 (b) acknowledges, ratifies and confirms that all
indebtedness incurred by, and all other obligations and liabilities of, each of the Company, Arius and BND under the May 2005 Agreements are (i) “Obligations” under, and as defined in the Subsidiary Guaranty, (ii) “Obligations”
under, and as defined in, the Master Security Agreement and (iii) “Indebtedness” under, and as defined in, the Stock Pledge Agreement; 

 (c) acknowledges, ratifies and confirms that the May 2005 Agreements are
“Documents” under, and as defined in, each of the Subsidiary Guaranty, the Master Security Agreement and the Stock Pledge Agreement; 
  
 (d) acknowledges, ratifies and confirms that all of the terms, conditions, representations and covenants contained in the Existing
Security and Guaranty Agreements are in full force and effect and shall remain in full force and effect after giving effect to the execution and effectiveness of the May 2005 Agreements; 
  
 (e) represents and warrants that no offsets, counterclaims or defenses exist as of the date hereof with
respect to any of the undersigned’s obligations under any Existing Security and Guaranty Agreement; 
  
 (f) acknowledges, ratifies and confirms the grant by each of the Company, Arius and BND to Laurus of a security interest in the assets of
(including the equity interests owned by) each of the Company, Arius and BND, respectively, as more specifically set forth in the Existing Security and Guaranty Agreements; and 
  
 Additionally: 
  
 (I) the Company and Laurus hereby agree that that certain Secured Convertible Term Note, dated February 22, 2005, issued by the Company in favor of Laurus
is amended by adding the following new clause (m) to the end of Section 4.1 thereof: 
  
 “(m) May 2005 Note and Related Agreements. An Event of Default, under and as defined in any of (i) that certain Secured
Convertible Term Note, dated May 31, 2005, issued by the Company to the Holder (as amended, modified or supplemented from time to time, the “May 2005 Note”), (ii) the Purchase Agreement referred to in the May 2005 Note (as amended,
modified or supplemented from time to time, the “May 2005 Purchase Agreement”) or (iii) any Related Agreement referred to in the May 2005 Purchase Agreement, as each are amended, modified or supplemented from time to time, shall have
occurred and be continuing.”; 
  
 (II) each of the Company,
Arius, BND and Laurus hereby agree that: 
  
 (A) the second
paragraph of Section 1 of the Master Security Agreement (including, without limitation, the definition of “Excluded Collateral” set forth therein) is hereby deleted in its entirety and the following new second paragraph of Section 1 of the
Master Security Agreement (including, without limitation, the new definition of “Excluded Collateral”) is hereby inserted in lieu thereof: 
  
 “The term “Collateral”, however, shall specifically exclude the following (collectively, the “Excluded
Collateral”): (i) any “in-licensed” intellectual property (collectively, “In-Licensed Intellectual Property”) of any Assignor arising on or prior to May 31, 2005, that are either (I) licensed to any Assignor from third
parties or (II) co-owned by any Assignor and a third party or parties, in each case pursuant to the licensing agreements listed on Schedule A hereto and (ii) any In-Licensed Intellectual Property of any Assignor arising after May 31,

  

 2 

 2005, that are either (I) licensed to any Assignor from third parties or (II) co-owned by any Assignor
and a third party or parties, in each case pursuant to the applicable licensing agreement (but, in each of the cases referred to in the preceding clauses (i) and (ii), such In-Licensed Intellectual Property shall only constitute “Excluded
Collateral” solely to the extent that (x) such In-Licensed Intellectual Property are not wholly-owned by such Assignor (it being agreed that wholly-owned In-Licensed Intellectual Property shall be included in the definition of
“Collateral”) and (y) the applicable agreement entered into between such Assignor and such licensor contains a prohibition (other than a prohibition that is ineffective under Sections 9-406, 9-407, 9-408 and 9-409 of the Uniform Commercial
Code as in effect on the date hereof in the State of New York or other applicable law) preventing such Assignor from assigning such In-Licensed Intellectual Property to, and/or granting a security interest in, such In-Licensed Intellectual Property
for the benefit of, Laurus). 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.” 
  
 ; and (B) Schedule A to the Master Security Agreement is hereby deleted in
its entirety and Schedule A attached hereto is hereby inserted in lieu thereof; 
  
 (III) Each of the Company, Arius and BND hereby represent and warrant that all of their respective patents, copyrights and trademarks (and, in each case, any and all applications therefor) that constitute a portion of
the Collateral (as defined in the Master Security Agreement after giving effect to the agreements set forth in this letter) are set forth in Schedule I and Schedule II hereto. Each of the Company, Arius and BND hereby covenants that upon the
acquisition by it of any patent, copyright or trademark that constitutes a portion of the Collateral (or, in each of the foregoing cases, the making of any application therefore or the obtaining of any right in respect thereof) it shall promptly
furnish to Laurus an updated version of Schedule I and Schedule II so that Laurus may be informed of the current Collateral and take such actions as it deems appropriate regarding the perfection and maintenance of its security interest in such
Collateral; and 
  
 (IV) Each the Company, Arius, BND and Laurus
hereby agrees that this letter agreement shall constitute a “Related Agreement” under, and as defined in, each of the February 2005 Purchase Agreement (as defined in the May 2005 Note) and the May 2005 Purchase Agreement . 
  
 [The remainder of this page is intentionally left blank] 
  

 3 

 This letter agreement shall be governed by and construed in accordance with the laws of the State of New
York. 
  

			
	Very truly yours,
	
	BIODELIVERY SCIENCES INTERNATIONAL, INC.
		
	By:	 	 /s/ Francis E. O’Donnell, Jr.

	Name:	 	Francis E. O’Donnell, Jr.
	Title:	 	Chairman and Chief Executive Officer
	
	ARIUS PHARMACEUTICALS, INC.
		
	By:	 	 /s/ Mark Sirgo

	Name:	 	Mark Sirgo
	Title:	 	President and Chief Executive Officer
	
	BIORAL NUTRIENT DELIVERY, LLC
	By:	 	BioDelivery Sciences International, Inc., its managing member
		
	By:	 	 /s/ Francis E. O’Donnell, Jr.

	Name:	 	Francis E. O’Donnell, Jr.
	Title:	 	Chairman and Chief Executive Officer of the managing member

  
 Acknowledged and Agreed to by:

  
 LAURUS MASTER FUND, LTD. 
  

			
	By:	 	 /s/ Eugene Grin

	Name:	 	Eugene Grin
	Title:	 	Director

  
 [SIGNATURE PAGE TO
REAFFIRMATION AGREEMENT] 
  

 4

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