EXHIBIT 10.1
FACILITY LOAN
AGREEMENT
This FACILITY LOAN AGREEMENT
(this “ Agreement ”), dated as of August 2,
2004, is made by and between BioDelivery Sciences International,
Inc. (the “ Company ”) and Hopkins Capital Group
II, LLC (the “ Lender ”).
WHEREAS , the Company is in need of up to $4,000,000 of
subordinated debt financing, which it desires to obtain through the
Facility (as defined herein);
WHEREAS , the Lender desires to make the Facility
available to the Company;
WHEREAS , the Lender owns certain equity interests in
the Company and has direct and indirect interests in the financial
success and viability of the Company; and
WHEREAS , the Lender is willing to make the Loan to the
Company on the terms and conditions contained in the
herein;
NOW, THEREFORE
, in consideration of the premises
and the mutual agreements contained herein, the parties hereto
agree as follows:
ARTICLE 1.
RECITALS AND
DEFINITIONS
1.1 Incorporation of Recitals
. It is expressly agreed that the recitals to this Agreement are
incorporated herein and made an operative part of this
Agreement.
1.2 Defined Terms . As used
in this Agreement, the following terms shall have the following
meanings. Other capitalized terms are defined elsewhere
herein.
“ Business Day ”
shall mean a day other than a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or
required by law to close.
“ 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.
“ Change in Control
” shall mean the occurrence of one or more of the following
events: (a) the acquisition of ownership, directly or indirectly,
beneficially or of record, by any Person (together with such
Person’s affiliates and associates within the meanings set
forth in Rule 12b-2 under the Securities Exchange Act of 1934, as
amended), in a single transaction or through a series of related
transactions, of securities of the Company ordinarily having the
right to elect a majority of directors or other individuals
performing similar functions, (b) any sale or disposition, in a
single transaction or through a series of related transactions, of
all or substantially all of the assets of the Company, other than
leases, licenses and/or distribution arrangements entered into by
the Company consistent with industry practice with respect to
non-sale transactions, (c) any merger or consolidation of the
Company with or into another Person, or (d) the adoption of a plan
relating to the liquidation or dissolution of the
Company.
“ Commitment Termination
Date ” shall mean March 31, 2006.
“ Common Stock ”
shall mean the shares of common stock, par value $0.01 per share,
of the Company.
“ Company Equity
Securities ” shall mean any Capital Stock of the Company
or options, warrants or other rights 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 contact, agreement,
instrument or other undertaking to which such Person is a party or
by which it or any of its property is bound.
“ Conversion Notice
” shall mean a written notice given by Lender to the Company
of its election to convert the Loan Amount into Common
Stock.
“ Conversion Price
” shall mean $4.25 per share, subject to proportional
adjustment in the event the Company: (a) pays a dividend or makes a
distribution on its Common Stock in the form of Common Stock; (b)
subdivides its outstanding shares of Common Stock into a greater
number of shares; (c) combines its outstanding shares of Common
Stock into a smaller number of shares; or (d) issues by
reclassification of its Common Stock, or by merger or
reorganization, any interests of the Company or any successor
entity. In the event of any such occurrences, the Conversion Price
shall be proportionately adjusted to a price that would have
permitted the Lender to receive the same Conversion Stock
Percentage which the Lender would have been entitled to receive
immediately following such action if the Lender had exercised its
right to convert the Loan Amount immediately prior to such action.
The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately
after the effective date in the case of a subdivision, combination
or reclassification. The term “ Conversion Stock
Percentage ” shall mean a percentage derived by dividing
the maximum number of shares of Conversion Stock receivable at any
given time by the then aggregate outstanding shares of Common Stock
at such time.
“ Conversion Stock
” shall mean only those shares of Common Stock (or equity
securities of any successor to the Company, as the case may be,
receivable by the Lender upon conversion of Loan Amounts in
accordance with the terms hereof.
“ Default ” shall
mean any event, act or condition which with notice or lapse of
time, or both, would constitute an Event of Default.
“ Event of Default
” shall mean any of the events specified in Section 8;
provided that any requirement for the giving of notice, the
lapse of time, or both, or any other condition, has been
satisfied.
“ GAAP ” shall
mean generally accepted accounting principles in the United States
of America in effect from time to time.
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“ Indebtedness ”
shall mean (without double counting), at any time and with respect
to any Person: (i) indebtedness of such Person for borrowed money
(whether by loan or the issuance and sale of debt securities) or
for the deferred purchase price of property or services purchased
(other than amounts constituting trade payables (payable within 90
days or such longer terms as may be customary in the industry)
arising in the ordinary course of business); (ii) obligations of
such Person in respect of letters of credit, acceptance facilities,
or drafts or similar instruments issued or accepted by banks and
other financial institutions for the account of such Person; (iii)
obligations of such Person under capital leases and any financing
lease involving substantially the same economic effect; (iv)
deferred payment obligations of such Person resulting from the
adjudication or settlement of any litigation to the extent not
already reflected as a current liability on the balance sheet of
such Person; and (v) indebtedness of others of the type described
in clauses (i), (ii), (iii) and (iv) which such Person has (a)
directly or indirectly assumed or guaranteed in connection with a
guaranty, or (b) secured by a Lien on the assets of such Person
whether or not such Person has assumed such
indebtedness.
“ Lien ” shall
mean any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, encroachment, lien (statutory or
otherwise), claim of property interest, reservation of title or
property rights, easement, or encumbrance of any kind.
“ Loan Amount ”
shall mean the amount of any Loan outstanding including any
interest accrued thereon.
“ Obligations ”
shall mean all money, debts, obligations and liabilities which now
are or have been or at any time hereafter may be or become due,
owing or incurred by the Company to the Lender pursuant to this
Agreement or any Note, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter
incurred, whether on account of principal, interest (including,
without limitation, interest accruing after the Maturity Date of
the Note and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization
or like proceeding, relating to the Company, whether or not a claim
for post-filing or post-petition interest is allowed in such
proceeding), royalties, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise.
“ Facility ”
shall mean the $4,000,000 convertible credit facility to be
provided by the Lender to the Company pursuant to this
Agreement.
“ Person ” shall
mean an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity
of whatever nature.
“ Prime Rate ”
shall mean the “prime rate” or equivalent (non-LIBOR)
base rate from time to time, as reported in the Wall Street Journal
from time to time, determined on the first day of each calendar
quarter and remaining constant at such rate for the balance of such
calendar quarter, adjusted quarterly for any interim change
therein, if any, on the first day of the next succeeding calendar
quarter.
“ 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
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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.
“ Securities Act
” shall mean the Securities Act of 1933, as amended from time
to time.
“ Subsidiary ”
shall mean, with respect to any Person, any other Person whose
shares of stock or other security having a majority of the general
voting power in electing the board of directors or equivalent
governing body of such other Person are, at the time as of which
any determination is made, owned by such Person either directly or
indirectly through one or more entities constituting
subsidiaries.
1.3 Other Definitional
Provisions . The words “hereof,”
“herein” and “hereunder” and words of
similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement, and Section, subsection and Exhibit references are to
this Agreement unless otherwise specified. The meanings given to
terms defined herein shall be equally applicable to both the
singular and plural forms of such terms. “Includes,”
“including” and like expressions are not limiting,
i.e., “including” implies “including, without
limitation,” etc.
ARTICLE 2.
THE LOANS
2.1 Agreement to Make Loans .
Subject to the terms and conditions hereof, upon the written
request of the Company at any time, the Lender agrees to make loans
to the Company on any Business Day (each, a “ Funding
Date ”) from time to time beginning on the date hereof up
to but excluding the Commitment Termination Date, each in the
aggregate principal amount which, when added together, shall not
exceed $4,000,000. As used herein, the term “ Loan
” or “ Loans ” shall mean the loans made
by the Lender in accordance with this Section 2.1. Any Loan, when
repaid, may not be reborrowed.
2.2 Notes . In order to
evidence each Loan, the Company will execute and deliver to the
Lender on the date of funding a promissory note substantially in
the form of Exhibit A hereto (each, a “ Note
”), payable to the order of the Lender and in a principal
amount equal to amount loaned. Each Note: (i) shall be dated as of
the applicable Funding Date, (ii) shall be payable as provided in
Section 2.4, and (iii) shall provide for the payment of interest in
accordance with Section 3.1.
2.3 Procedures for Making
Loans .
(a) Subject to the terms and
conditions herein, each Loan shall be made as the Company shall
request subject to and in accordance with this Section 2.3. The
Company shall give the Lender at least three (3) Business
Days’ prior written notice of each requested borrowing
(unless the Lender in its sole discretion consents to a shorter
period of notice). Each such notice shall be irrevocable and shall
specify the amount requested and the date that such Loan is to be
made. On the Funding Date specified in such notice, the Lender
shall make the Loan available to the Company by wire transfer of
immediately available funds. Unless otherwise agreed by the Lender,
the amount of any borrowing hereunder shall be in the minimum
aggregate principal amount of US$50,000.
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2.4 Repayment of Loan Amounts
. The aggregate amount of the Loans, if not earlier converted into
Common Stock in accordance with Section 3.2 hereof or accelerated
upon or following an Event of Default, and subject to the mandatory
repayment requirements set forth below, shall be due and payable,
together with all accrued and unpaid interest thereon on March 31,
2006 (the “ Maturity Date ”). Unless a payment
is received at a time when no Default or Event of Default exists
and is earmarked for a specific purpose (e.g., a periodic interest
payment), the general rule for application of payments hereunder
shall be: (i) first, to accrued expense or indemnity Obligations
then due under this Agreement or any Note; (ii) second, to accrued
interest under any Note; and (iii) third, to principal of the
Loans.
2.5 Voluntary Prepayment .
The Company may voluntarily prepay all or any portion of the
outstanding Obligations on ten (10) days’ prior written
notice to the Lender without penalty. A prepayment notice, once
given by the Company to the Lender, shall be irrevocable unless the
Lender, in its sole discretion, agrees to the revocation of such
notice.
ARTICLE 3.
OTHER LOAN-RELATED
PROVISIONS
3.1 Interest Rate and
Payments .
(a) General . The outstanding
principal of the Loans shall accrue interest from the applicable
Funding Date pursuant to the terms hereunder until paid in full at
a rate per annum (computed on the basis of the actual number of
days elapsed over a year of 365 days) equal to the Prime Rate. All
interest and principal outstanding under any Note shall be payable
on the Maturity Date or such earlier date upon which the Note or
any relevant portion thereof shall be repayable in accordance with
the terms hereof.
(b) Acceleration Upon a Change in
Control . Upon the occurrence of a Change in Control of the
Company, the Lender may: (i) by written notice to the Company,
declare the then outstanding Loan Amount hereunder (including
accrued but unpaid interest thereon) and all other amounts owing
under this Agreement or any Note to be due and payable forthwith,
whereupon the same shall immediately become due and payable,
without presentment, demand, protest or further notice of any kind,
all of which are expressly waived by the Company, (ii) exercise all
rights and remedies available to it in equity, at law, or pursuant
to the provisions of this Agreement or otherwise and (iii)
terminate its commitment to make any future Loans to the
Company.
3.2 Conversion of the
Facility . The Loan Amount shall be convertible into shares of
Common Stock of the Company, subject to and in accordance with the
provisions set forth below:
(a) Optional Conversion
.
(i) Upon a Change in Control
. Upon the occurrence of a Change in Control of the Company, even
prior to the Maturity Date, the Lender may, in its sole discretion
and in
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accordance with the terms hereof, convert all or
any portion of the interest and principal then outstanding on any
Loan into shares of Common Stock by providing a Conversion Notice
to the Company.
(ii) At Maturity . Upon the
giving of a Conversion Notice at any time following the Maturity
Date, the Lender may, in its sole discretion and in accordance with
the terms hereof, convert all or any portion of the interest and
principal then outstanding on any Loan into shares of Common
Stock.
(ii) Conversion Price . The
number of shares of Conversion Stock into which the applicable Loan
Amount may be converted pursuant to this Section 3.2(a) shall be
equal to the number resulting from dividing the applicable Loan
Amount by the applicable Conversion Price then in
effect.
(b) Mechanics of Conversion .
Upon receipt by the Company of a Conversion Notice as provided for
in Section 3.2(a) above, the Company shall promptly issue and
deliver to the Lender a certificate or certificates for the number
of shares of Conversion Stock to which the Lender is entitled based
upon the then applicable Conversion Price. To the extent that
principal is being converted, in exchange for such certificate or
certificates, Lender shall surrender the original copy of the
applicable Note to the Company marked “cancelled” (or
an appropriate lost note indemnification agreement, reasonably
acceptable to the Company, if applicable).
(c) Fractional Shares . No
fractional shares of Common Stock shall be issued upon conversion
of all or any portion of the Loan Amount as provided for herein.
All fractional shares shall be rounded to the near whole
share.
(d) Piggyback Registration
Rights . The Lender shall have the following rights with
respect to any shares of Common Stock received by the Lender upon
conversion of the Loan Amount as provided for herein:
(i) Whenever the Company proposes to
register any Company Equity Securities under the Securities Act
(other than pursuant to a registration statement on Form S-4, Form
S-8 or any successor form) and the registration statement form to
be used may be used for the registration of shares of Common Stock
received by the Lender pursuant to this Agreement (such shares of
Common Stock only, and no other shares of Capital Stock held by the
Lender or its affiliates, are referred to herein as the “
Registrable Securities ”), the Company shall give
prompt written notice to the Lender of its intention to effect such
a registration. The Company shall include in such registration and
use commercially reasonable efforts to include in any underwriting
all shares of Registrable Securities held by the Lender with
respect to which the Company has received a written request from
the Lender for inclusion therein within 30 days after the receipt
of the Company’s notice (such registration, a “
Piggyback Registration ”).
(ii) If a Piggyback Registration is
an underwritten primary registration on behalf of the Company, and
the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in
such registration exceeds the number which can be sold without
materially and adversely affecting the marketability of such
offering or the timing thereof, the Company shall include in such
registration all Registrable
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Securities held by the Lender on the condition
that the Lender will agree to refrain from selling a reasonable
number of such Registrable Securities (as determined in good faith
by the Company based on the impact on the timing and marketability
of the offering of the sale immediate by the Lender of all of its
Registrable Securities) for a three (3) month period following the
declaration of effectiveness of the applicable registration
statement.
(iii) Whenever the Lender requests
that any Registrable Securities be registered pursuant to this
Agreement, the Company shall use its commercially reasonable
efforts to effect the registration and the sale of such Registrable
Securities in accordance with the intended method of disposition
thereof (subject in all instances to the requirements of the
Securities Act, the rules and regulations promulgated thereunder,
and all other applicable laws, rules and regulations), and pursuant
thereto the Company shall as expeditiously as possible take all
reasonable and customary actions necessary to effect such
registration and sale.
(iv) All expenses incident to the
Company’s performance of or compliance with this Section
3.2(d), including without limitation all registration and filing
fees, fees and expenses of compliance with securities or blue sky
laws, printing expenses, messenger and delivery expenses, fees and
disbursements of custodians, and fees and disbursements of counsel
for the Company and all independent certified public accountants,
underwriters (excluding underwriting discounts and commissions
relating to the Registrable Securities) and other Persons retained
by the Company shall be borne by the Company.
(v) In connection with any
registration statement in which the Lender is participating
pursuant t
