Exhibit 10.2
Hopkins Capital Group II,
LLC
709 The Hamptons
Lane
St. Louis, MO
63017
BINDING LETTER OF INTENT AND
TERMINATION AGREEMENT
August 23, 2004
BioDelivery Sciences International,
Inc.
UMDNJ-New Jersey Medical School
185 South Orange Avenue, Administrative Building
4
Newark, NJ 07103
Ladies and Gentlemen:
Reference is made to that certain
Facility Loan Agreement, dated August 2, 2004 (the “ Loan
Agreement ”), by and between BioDelivery Sciences
International, Inc. (“ BDSI ”) and Hopkins
Capital Group II, LLC (“ HCG ”). Subject to
formal approval of BDSI’s Board of Directors and completion
of legal documentation satisfactory to all parties, we are pleased
to provide you with this letter agreement (this “
Agreement ”) to set forth the agreement of BDSI and
HCG with respect to: (i) the termination of the Loan Agreement and
(ii) the entry into by the parties of an Equity Line of Credit
Agreement (the “ Equity Line Agreement ”) to
replace the Loan Agreement upon the terms set forth
herein.
By executing this Agreement, the
parties confirm their intentions specified herein with respect to
the Equity Line Agreement. This Agreement is intended by the
parties to be, and is and shall be, legally binding and enforceable
upon the execution of this Agreement unless and until modified or
terminated by the final Equity Line Agreement. For the avoidance of
doubt, should the Equity Line Agreement not be entered into, the
terms of this Agreement shall nonetheless remain enforceable and
binding on the parties.
1. Termination of Loan
Agreement . Pursuant to the terms of the Loan Agreement, BDSI
and HCG hereby unconditionally terminate the Loan Agreement, agree
that no party thereto shall hereinafter have any rights or
obligations thereunder and release each other and their respective
affiliates from any and all claims of action that the parties may
have against one another thereunder. Any and all amounts funded as
of or prior to the date hereof under the Loan Agreement shall be
deemed for all purposes to have been contributed to BDSI in
consideration for shares of BDSI Series B Preferred (as defined
below) and otherwise on the terms set forth herein and in the
Equity Line Agreement.
2. Equity Line Agreement .
Pursuant to the Equity Line Agreement, HCG agrees, at the request
of BDSI, to invest up to $4,000,000 in BDSI from August 23, 2004
through March 31, 2006 in consideration of shares of a newly
created class of Series B Convertible Series B Preferred of BDSI
(the “ Series B Preferred ”). The terms of the
Series B Preferred shall be as follows:
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Rights, Preferences
Privileges and Restrictions:
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Designation
and Amount; Rank: The
Series B Preferred shall be a newly designated series of shares of
preferred stock of BDSI. The Series B Preferred shall rank senior
to the shares of common stock, par value $0.01 per share, of BDSI
(the “ BDSI Common Stock ”) and the shares of
BDSI’s Series A Non-Voting Convertible Preferred
Stock
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(collectively,
with the BDSI Common Stock and all shares of capital stock of BDSI
which are junior to the Series B Preferred, the “ Junior
Stock ”).
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Dividends: The holders of the Series B Preferred shall be
entitled to receive a 4.5% annual cumulative dividend in preference
to the holders of Junior Stock.
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Liquidation Preference: In the event of any liquidation or winding up of
the Company, the holders of the Series B Preferred shall be
entitled to receive, pro rata and in preference to the holders of
Junior Stock, an amount (the “ Preferential Amount
”) equal to the
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