Exhibit 10.1
EQUITY LINE OF CREDIT
AGREEMENT
This EQUITY LINE OF CREDIT
AGREEMENT (the “ Agreement ”) is made and
entered into as of the 3rd day of September 2004 (the “
Execution Date ”) and effective for all purposes as of
August 23, 2004 (the “ Effective Date ”) by and
between Hopkins Capital Group II, LLC (the “ Investor
”) and BioDelivery Sciences International, Inc. (the “
Company ”).
WHEREAS , the Investor and the Company are parties to
that certain Binding Letter of Intent and Termination Agreement,
dated August 23, 2004 (the “ Binding Letter Agreement
”);
WHEREAS , the parties desire to amend and restate the
Binding Letter Agreement in its entirety and provide that, upon the
terms and subject to the conditions contained herein, the Company
shall issue and sell to the Investor, from time to time as provided
herein, and the Investor shall purchase from the Company, up to
Four Million Dollars ($4,000,000) of the Company’s Series B
Convertible Preferred Stock, par value $.001 per share (the “
Preferred Stock ”) at a purchase price per share of
Preferred Stock of $4.25 (the “ Purchase Price
”); and
WHEREAS , such investments will be made in reliance upon
the provisions of Regulation D (“ Regulation D
”) of the Securities Act of 1933, as amended, and the
regulations promulgated thereunder (the “ Securities
Act ”), and or upon such other exemption from the
registration requirements of the Securities Act as may be available
with respect to any or all of the investments to be made
hereunder.
NOW, THEREFORE
, the parties hereto agree as
follows:
ARTICLE 1.
DEFINITIONS AND OTHER
MATTERS
Section 1.1 Amendment and
Restatement of Binding Letter Agreement . In accordance with
Section 4 of the Binding Letter Agreement, the Company and the
Investor hereby amend and restate, in its entirety, the Binding
Letter Agreement effective for all purposes as of the Effective
Date and agree that the terms and conditions of this Agreement
shall govern the relationship of the Company and the Investor from
and as of the Effective Date, but solely with respect to the
Investor’s investment in the Preferred Stock and to the
matters addressed in this Agreement and the Binding Letter
Agreement. The Investor and the Company hereby confirm the
termination of that certain Facility Loan Agreement, dated August
2, 2004, by and between the Investor and the Company, in accordance
with the provisions of Section 1 of the Binding Letter
Agreement.
Section 1.2 Incorporation of
Recitals . It is expressly agreed that the recitals to this
Agreement are incorporated herein and made an operative part of
this Agreement.
Section 1.3 Defined Terms .
As used in this Agreement, the following terms shall have the
following meanings. Other capitalized terms are defined elsewhere
herein
“ Advance ” shall
mean the portion of the Commitment Amount requested by the Company
in the Advance Notice.
“ Advance Date ”
shall mean the date the Company is in receipt of the funds from the
Investor. No Advance Date shall be less than five (5) Business Days
after an Advance Notice Date.
“ Advance Notice
” shall mean a written notice to the Investor setting forth
the Advance amount that the Company requests from the Investor and
the Advance Date.
“ Advance Notice Date
” shall mean each date the Company delivers to the Investor
an Advance Notice requiring the Investor to advance funds to the
Company, subject to the terms of this Agreement.
“Business
Day” shall mean any
day except Saturday, Sunday or any other day on which commercial
banks located in New York, New York are required by law or
otherwise to be closed for business.
“ Capital Stock ”
shall mean: (a) any and all shares, interests, participations or
other equivalents of or interests in (however designated) corporate
stock, including shares of preferred or preference stock and (b)
all equity or ownership interests in any Person of any other type,
including any securities convertible into or exchangeable for any
of the foregoing or any options, warrants or other rights to
subscribe for, purchase or acquire any of the forgoing.
“ COD ” shall
mean the Certificate of Designations, Preferences and Rights of the
Preferred Stock, in the form attached hereto as Exhibit A ,
dated and filed with Secretary of State of Delaware as of the
Execution Date.
“ Commitment Amount
” shall mean the aggregate amount of up to Four Million
Dollars ($4,000,000) which the Investor has agreed to provide to
the Company in order to purchase the Company’s Preferred
Stock pursuant to the terms and conditions of this
Agreement.
“ Commitment Period
” shall mean the period commencing on the Effective Date and
expiring on the earliest to occur of: (i) the date on which the
Investor shall have made payment of Advances pursuant to this
Agreement in the aggregate amount of Four Million Dollars
($4,000,000) and (ii) March 31, 2006.
“ Common Stock ”
shall mean the Company’s common stock, par value $.001 per
share.
“ Company Equity
Securities ” shall mean any Capital Stock of the Company
or options, warrants or other rights to acquire Capital Stock of
the Company.
“ Contractual
Obligation ” shall mean, as to any Person, any provision
of any security issued by such Person or of any contract,
agreement, instrument or other undertaking to which such Person is
a party or by which it or any of its property is bound.
“ Conversion Stock
” shall mean only those shares of Common Stock (or equity
securities of any successor to the Company, as the case may be),
which may be received by the Investor upon conversion of Preferred
Stock in accordance with the terms hereof and the COD.
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“ Exchange Act ”
shall mean the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
“Governmental
Authority” shall
mean any government or any state, department or other political
subdivision thereof, or any governmental body, agency, authority or
instrumentality in any jurisdiction exercising executive,
legislative, regulatory or administrative functions of or
pertaining to government.
“ NASD ” shall
mean the National Association of Securities Dealers,
Inc.
“ Person ” shall
mean an individual, a corporation, limited liability company, a
general or limited partnership, an association, a trust or other
entity or organization, including any Governmental
Authority.
“ Principal Market
” shall mean the Nasdaq National Market, the Nasdaq SmallCap
Market, the American Stock Exchange, the OTC Bulletin Board or the
New York Stock Exchange, whichever is at the time the principal
trading exchange or market for the Common Stock.
“ Requirement of Law
” shall mean as to any Person, the certificate of
incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation
or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person
or any of its material property or to which such Person or any of
its material property is subject.
“ SEC ” shall
mean the Securities and Exchange Commission.
“ SEC Documents ”
shall mean all filings made by the Company with the SEC under the
Securities Act and the Exchange Act, including all exhibits
thereto.
ARTICLE 2.
ADVANCES
Section 2.1 Advances
.
(a) General . Upon the terms
and conditions set forth in this Agreement, on any Advance Notice
Date the Company may request an Advance by the Investor by the
delivery of an Advance Notice. The number of shares of Preferred
Stock that the Investor shall receive for each Advance shall be
determined by dividing the amount of the Advance by the Purchase
Price. No fractional shares shall be issued. Fractional shares
shall be rounded to the next higher whole number of shares. The
aggregate maximum amount of all Advances that the Investor shall be
obligated to make under this Agreement shall not exceed the
Commitment Amount.
(b) Acknowledgement of Prior
Advance . The Company hereby acknowledges and agrees that on
August 23, 2004, Investor contributed $1,250,000 to the capital of
the Company (the “ Initial Advance ”) and that
such Initial Advance shall be deemed an Advance in consideration of
shares of Preferred Stock properly made in accordance with this
Agreement and that the Commitment Amount as of the Execution Date
shall be reduced by such contributed amount. The Company agrees to
issue 294,118 shares of Preferred Stock to the Investor in
consideration of the Initial Advance.
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Section 2.2 Mechanics
.
(a) Advance Notice . At any
time during the Commitment Period, the Company may deliver an
Advance Notice to the Investor, subject to the conditions set forth
in this Agreement. The amount of each individual Advance made
pursuant to this Agreement shall not be less than $50,000 in any
one (1) month period. The aggregate amount of all Advances pursuant
to this Agreement shall not exceed the Commitment
Amount.
(b) Date of Delivery of Advance
Notice . An Advance Notice shall be deemed delivered on the
Business Day it is received by facsimile or email by the Investor
if such notice is received prior to 5:00 pm Eastern Time or the
immediately succeeding Business Day if it is received by facsimile
or email after 5:00 pm Eastern Time on a Business Day or at any
time on a day which is not a Business Day.
Section 2.3 Closings . The
Investor shall deliver each Advance to the Company by wire transfer
of immediately available funds on the applicable Advance Date.
Within five (5) Business Days of each such Advance Date, the
Company shall deliver to the Investor the applicable number of
shares of Preferred Stock (by certificate or book entry or
otherwise as may be agreed to by the Company and Investor)
representing the amount of the Advance by the Investor pursuant to
Section 2.1 herein, registered in the name of the Investor. In
addition, on or prior to the Advance Date, each of the Company and
the Investor shall deliver to each other all documents, instruments
and writings required to be delivered by either of them pursuant to
this Agreement in order to implement and effect the transactions
contemplated herein. Neither the shares of Preferred Stock nor the
Conversion Shares thereunder so delivered share be registered with
the SEC, except as provided for in Section 6.1 hereof.
Section 2.4 Conditions to
Advances . The Investor agrees to advance to the Company the
amount specified in any Advance Notice delivered by the Company
subject to the following conditions precedent and the other terms
and conditions set forth in this Agreement, each of which may be
waived in the discretion of the Investor (it being understood and
agreed that the following conditions will be deemed waived or
satisfied by, respectively, the Investor and the Company in
connection with the Initial Advance):
(a) the COD shall have been filed
with the Secretary of State of Delaware and shall be in full force
and effect;
(b) the shares of Conversion Stock
underlying the shares of Preferred Stock issued in connection with
such Advance have been duly reserved for future issuance on the
books and records of the Company;
(c) the Company shall have obtained
all material permits and qualifications required by any applicable
state for the offer and sale of the Preferred Stock, or shall have
the availability of exemptions therefrom. The sale and issuance of
the Preferred Stock shall be legally permitted by all laws and
regulations to which the Company is subject;
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(d) the Company shall have filed
with the SEC in a timely manner all reports, notices and other
documents required of a “reporting company” under the
Exchange Act and applicable SEC regulations;
(e) each of the representations and
warranties made by the Company pursuant to this Agreement (or in
any amendment, modification or supplement hereto or thereto) shall,
except to the extent that they relate to a particular date, be true
and correct in all material respects on and as of such date as if
made on and as of the applicable Advance Date; and
(f) the Company shall have complied
with each and every covenant and agreement applicable to it
contained in this Agreement as of the applicable Advance
Date.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF
INVESTOR
Investor hereby represents and
warrants to, and agrees with, the Company that the following are
true and as of the date hereof and as of each Advance
Date:
Section 3.1 Organization and
Authorization . The Investor is duly incorporated or organized
and validly existing in the jurisdiction of its incorporation or
organization and has all requisite power and authority to purchase
and hold the securities issuable hereunder. The decision to invest
and the execution and delivery of this Agreement by such Investor,
the performance by such Investor of its obligations hereunder and
the consummation by such Investor of the transactions contemplated
hereby have been duly authorized and requires no other proceedings
on the part of the Investor. The Investor has the right, power and
authority to execute and deliver this Agreement and all related
instruments. This Agreement has been duly executed and delivered by
the Investor and, assuming the execution and delivery hereof and
acceptance thereof by the Company, will constitute the legal, valid
and binding obligations of the Investor, enforceable against the
Investor in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors’ rights
generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law)
Section 3.2 Accredited
Investor . The Investor is an “accredited investor”
within the meaning of Rule 501 promulgated under the Securities
Act.
Section 3.3 Investment
Experience ; Access; Investigation.
(a) Access to Information .
The Investor, in making its investment decision hereunder,
represents that: (a) it has read, reviewed and relied solely on the
publicly available information concerning the Company and any
independent investigation made by it and its representatives, if
any; (b) it has been afforded an opportunity to request from the
Company to review, and has received, all additional information
requested from the Company, (c) it acknowledges that no person has
been authorized to give any information or to make any
representation concerning the Company or the Preferred Stock, other
than as contained in this Agreement, and if given or made, any such
other information or representation has not been relied upon as
having been authorized by the Company.
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(b) Reliance on Own Advisors
. The Investor has relied completely on the advice of, or has
consulted with, its own tax, investment, legal or other advisors
and has not relied on the Company, or any of its officers,
directors, attorneys, accountants, representatives
