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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made and entered into
as of this 5th day of September 2000 (the "Effective Date"), by and among MAS
ACQUISITION XXIII CORP., an Indiana corporation ("Purchaser"), and BioDelivery
Sciences, Inc., a Delaware Corporation ("BDS").
WITNESSETH:
WHEREAS, BDS and Purchaser have entered into a Letter of Intent, a
copy of which is attached as Exhibit "A" ("Letter of Intent"); and
WHEREAS, the parties hereto wish to enter into this Agreement as the
Definitive Agreement between the parties to set forth the terms and conditions
of Purchaser's investment in BDS.
NOW, THEREFORE, for good and valuable consideration, including, but
not limited to, the mutual representations, warranties and covenants included
herein, the receipt and sufficiency of which are acknowledged hereby, the
parties mutually agree as follows:
ARTICLE I.
Transaction.
1.01 Purchase of Shares. BDS hereby agrees to sell and transfer to
Purchaser at closing that number of shares which represents 80% of the Capital
Stock of BDS which will be outstanding immediately following said purchase for
a purchase price of $15,000,000 to be paid as hereinafter provided. The shares
of Capital Stock to be issued hereunder shall be in the form of preferred stock
having the terms and provisions specified in Exhibit 1.01 (the "Preferred
Stock"). The purchase price shall be paid as follows: (i) $1,000,000 by
certified check or wire transfer at the closing, as defined in Section 2.09,
which amount shall be reduced by the amount of any advances which have been
paid by Purchaser under the Letter of Intent or this Agreement; (ii) $500,000
by promissory note in the form of Exhibit 1.02 (the "Promissory Note A"), which
Promissory Note A shall bear interest at eight percent (8%) per annum and be
due and payable in one installment on January 1, 2001; and (iii) $13,500,000 by
promissory note in the form of Exhibit 1.03 (the "Promissory Note B"), which
shall bear interest at eight percent (8%) per annum and be payable in four (4)
installments as follows: (a) $1,750,000 due on April 1, 2001; (b) $1,750,000
due on September 30, 2001; (c) $5,000,000 due on May 31, 2002 and (d)
$5,000,000 due on December 30, 2002. The Promissory Note A shall be
collateralized by shares of stock of BDS representing seventeen percent (17%)
of the shares of BDS outstanding immediately following the closing. The
Promissory Note A shall be a corporate obligation of Purchaser and personally
guaranteed as to payment by Dr. Frank O'Donnell. The Promissory Note B shall be
collateralized by a pledge of shares of BDS as provided in Exhibit 1.04.
Promissory Note B shall be a corporate obligation of Purchaser.
1.02 Security Agreement (the "Security Agreement"). At closing,
Purchaser shall execute and deliver to BDS, the Security Agreement in the form
of Exhibit 1.04 collateralizing the Promissory Note A and Promissory Note B with
a portion of the shares of Preferred Stock being acquired hereunder.
1.03 Adjustments in the Event of Litigation or Settlement. In the
event that, as part of the litigation described in Exhibit 3.11 or any
settlement thereof, BDS shareholders surrender shares (or
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"Delta Shares") of BDS to the treasury of BDS, Purchaser shall likewise
surrender that number of shares of Preferred Stock required to maintain the
outstanding shares of Purchaser at eighty percent (80%) of the then outstanding
shares of BDS. On the other hand, in the event that BDS issues additional
shares (or "Delta Shares") as part of said litigation or settlement thereof,
Purchaser shall receive such additional shares of BDS Preferred Stock without
any further Purchase Price or consideration as may be necessary to maintain its
ownership at eighty percent (80%) of the then outstanding shares of Capital
Stock of BDS. The foregoing percentages are subject to adjustment to reflect
any issuance of shares of Common Stock (or securities which may give rise to a
right to purchase, convert or exchange into shares of Common Stock) subsequent
to the closing and in circumstances where Purchaser has determined to exercise
its rights as provided in Paragraph 5.03 hereof.
ARTICLE II.
Definitions.
For all purposes of this Agreement, the following terms shall have the
following respective meanings:
2.01 Stock of BDS. The term "Stock of BDS" shall mean and refer to
the Capital Stock of BDS regardless of Class or Series.
2.02 Equity Security. The term "Equity Security" shall mean and
refer to capital stock and other securities of a type generally regarded as
Equity Securities and options, warrants, rights or other securities convertible
into, exchangeable for or entitling the holder thereof, under any circumstances,
to purchase or subscribe for any Equity Security.
2.03 Debt Security. The term "Debt Security" shall mean and refer
to notes, bonds, debentures, guarantees and other types of securities which are
direct or assumed obligations (whether secured or unsecured) that impose a
general liability upon the maker for the payment thereof, including notes and
other obligations of others discounted with banks or other financial
institutions or endorsed or guaranteed.
2.04 Intellectual Property. The term "Intellectual Property" shall
mean and refer to all applications for patents, trademarks and trade names, all
issued patents, trademark registrations and trade name registrations, and all
material proprietary trade secrets relating to information, processes or other
matters which are not in the public domain.
2.05 Mortgage Indebtedness. The term "Mortgage Indebtedness" shall
mean and refer to all mortgages (real, personal and mixed), vendor's liens,
deeds of trust, conditional bills of sale, security interests, pledges and other
types of liens generally regarded as mortgages affecting, relating to, or
pertaining to real or personal property, whether or not personal liability for
the payment or discharge thereof exists.
2.06 Preferred Stock. The term "Preferred Stock" shall mean and
refer to the Preferred Stock of BDS containing the terms and provisions as set
forth in Exhibit 1.01.
2.07 INTENTIONALLY OMITTED.
2.08 Material Contracts. The term "Material Contracts" shall mean
and refer to every contract or arrangement to which the specified person or
entity is a party, or by which it is bound, which contract satisfies one of the
following requirements: (i) contract for employment which is not terminable at
will; (ii) labor union or other collective bargaining agreement; (iii) bonuses,
deferred compensation, pension, profit sharing, retirement, insurance or other
fringe benefit, plan or
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arrangement; (iv) franchise, distributorship or other similar contract which
will extend beyond the closing; (v) contracts or commitments of any sort or
nature relating to the financing or refinancing of Mortgage Indebtedness; (vi)
bonds, bills of sale, bank loans, construction loans, liens, security interest
of credit agreements not otherwise specified or excluded from the above; and
(vii) any contract or commitment involving more than $10,000 and/or extending
beyond the closing Date.
2.09 Closing. The term "Closing" shall mean and refer to the
closing of the transaction contemplated by this Agreement.
2.10 Closing Date. The term "Closing Date" shall mean and refer to
the date upon which the closing of this transaction occurs as set forth in
Paragraph 6.01.
ARTICLE III.
Representations and Warranties of BDS.
BDS, intending for Purchaser and its officers and directors to rely
thereon, represents, warrants and agrees as follows:
3.01 Corporate Standing. BDS is a duly organized, validly existing
corporation in good standing under the laws of the State of Delaware. BDS has
full corporate power and authority to own its assets and operate its business
in the manner that such business is presently being conducted. BDS is qualified
to transact business in every state where the activities of BDS require that it
qualify to transact business. BDS has all governmental permits, licenses and
other authorizations necessary to conduct its business as presently being
conducted, and none of the transactions contemplated by this Agreement will
terminate or violate any such permits, licenses or authorizations.
3.02 Outstanding Equity Securities. Exhibit 3.02 attached hereto
and incorporated herein by reference lists each class of Equity Securities,
the number of shares, and the holders of all outstanding shares of BDS. There
are no shares of Capital Stock of BDS or any option, warrant, right or any
other obligation of any nature to issue shares of BDS Capital Stock not fully
disclosed on Exhibit 3.02. All shares of outstanding Capital Stock of BDS are
duly and validly issued and are fully paid and nonassessable.
3.03 Power to Agree. The execution and delivery of this Agreement,
the consummation of the transactions herein contemplated and compliance with
the terms of this Agreement will not result in a breach of any of the terms or
provisions of, or constitute a default under the Certificate of Incorporation
or Bylaws of BDS, any indenture or other agreement or instrument to which BDS
is a party or by which it or its assets are bound; or any applicable
regulation, judgment, order or decree of any government instrumentality or
court, domestic or foreign, having jurisdiction over BDS, its securities or its
properties.
3.04 Outstanding Debts of BDS. Attached as Exhibit 3.04 is a list
of each debt in excess of $1,000, which is outstanding and due by BDS as of the
date reflected on Exhibit 3.04. Exhibit 3.04 reflects the name of each debtor
and the principal amount due and payable.
3.05 Outstanding Material Contracts. BDS shall be subject to no
Material Contracts which shall survive the Closing, except those fully
disclosed on Exhibit 3.05. All Material Contracts listed on Exhibit 3.05 are
not in default on the part of BDS or, to the knowledge of BDS, on the part of
any other party thereto except as otherwise stated in Exhibit 3.05.
3.06 INTENTIONALLY OMITTED.
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3.07 Financial Condition. BDS represents that, except as set forth
in Exhibits 3.04, 3.05 or 3.07:
(a) BDS has no liabilities or obligations, except those reflected
on Exhibits 3.04, 3.05 or 3.07, or arising in the ordinary course of business
from the date of this Agreement through the Closing Date. BDS's management does
not have any knowledge of facts which would result in additional liabilities or
obligations not reflected on Exhibit 3.04, 3.05 or 3.07, or arising in the
ordinary course of business from the date of this Agreement through the Closing
Date;
(b) BDS is not in default under or in breach of the provisions of
any debt, security, Mortgage Indebtedness, Material Contract or agreement to
which it is party, or by which it is bound, which default or breach would
materially, adversely affect its business or properties or condition, financial
or otherwise, or would result in creation of a lien or charge upon any of the
properties or assets of BDS;
(c) No waiver, indulgence or postponement of any other
obligations of BDS hereunder has been granted by the obligee;
(d) There exists no event, current condition or act which, with
the giving of notice or the lapse of time or the happening of any other event or
condition, would become a default by BDS under, or breach by BDS of any such
debt, security, Mortgage Indebtedness, or Material Contract, or would result in
the creation of a lien or charge upon the properties or assets of BDS. None of
the terms of any debt, security, Mortgage Indebtedness, or Material Contract, or
any other contract or agreement would prevent the consummation of the
transaction contemplated by this Agreement; and
(e) BDS has duly paid or provided for any and all due or payable
franchise or annual corporation taxes, license fees, duties tax, withholding or
charges levied, assessed or imposed upon it, or levied, assessed or imposed
upon any of its property, and for all income, unemployment, social security,
occupancy, sales, use, franchise, or other taxes, duties or charges levied,
assessed or imposed upon it by the United States or by any state, municipality,
or subdivision thereof, and all income, sales and use or franchise returns and
reports, as well as all other applicable tax returns and reports required by
law or regulation, have either been duly filed or are under an extension and
are not under audit or examination known to BDS. BDS has not received any
notice of tax deficiency, and there is no reasonable basis to expect that any
tax deficiency will be asserted against BDS. BDS has received no notice of a
tax audit by any state or federal taxing authority. Except as set forth on
Exhibit 3.07, BDS has not executed or filed with the Internal Revenue Service
any agreement extending the period for assessment or collection of federal
income taxes.
3.08 Employees.
(a) At Closing, except as set forth on Exhibit 3.08, all BDS's
shareholder obligations, including those to pension, profit sharing, employee
withholding, medical benefits, retirement plans and other employee benefit
plans, shall be fully funded and in compliance in all material respects with
the requirements of said plans and the requirements of all laws, rules, and
regulations applicable to said plans;
(b) Except as set forth on Exhibit 3.08, BDS's employees shall
not be organized into members of any union;
(c) BDS shall be in compliance in all material respects with all
rules and requirements of a safe workplace including, but not limited to, those
imposed by OSHA and by applicable state regulatory agencies.
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3.09 Intellectual Property.
(a) Exhibit 3.09 is a summary of all Intellectual Property owned
or licensed by BDS.
(b) To the knowledge of BDS, except as set forth on Exhibit 3.09,
the Intellectual Property described in Exhibit 3.09 shall, at the Closing, be
owned or licensed exclusively and solely by BDS subject to no debt, lien or
encumbrance of any third party, except as indicated therein.
(c) BDS does not know nor does it have reasonable grounds to know
of any basis for any action challenging the enforceability or validity of the
BDS Intellectual Property listed in Exhibit 3.09 or claiming infringement by the
Intellectual Property upon the rights of any third party.
(d) To the knowledge of BDS, each of the patent applications
which have been submitted by BDS was accurate and truthful and contained no
material misrepresentations of fact.
(e) Exhibit 3.09 describes all royalty or other payment
obligations to which BDS or its Intellectual Property is subject with regard to
its Intellectual Property.
(f) Exhibit 3.09 lists every person or entity which, to the
knowledge of BDS, has a right to claim an interest in or to the Intellectual
Property of BDS.
3.10 Business Plan. Attached as Exhibit 3.10 is the Offering
Document which has been delivered by BDS to Purchaser. BDS represents that the
Offering Document has not been updated and may not be accurate in all respects.
Notwithstanding the foregoing, BDS represents that the Offering Document is
materially accurate in its description of the Intellectual Property of BDS and
its plans to commercialize same.
3.11 Litigation and Government Compliance.
(a) To the knowledge of BDS, there are not material actions,
suits, proceedings or governmental investigations pending or threatened against
or affecting either BDS or the business of BDS except as set forth on Exhibit
3.11, and BDS is not in violation of or in default under any order, rule or
regulation of any governmental agency or branch which, in any case, involves
the possibility of materially and adversely affecting the business or condition
of BDS except as set forth on Exhibit 3.11.
3.12 INTENTIONALLY OMITTED.
3.13 INTENTIONALLY OMITTED.
3.14 Corporate Records. The Certificate of Incorporation of BDS,
as amended through the date hereof, its Bylaws and Minutes contained in the
Minute Book of BDS constitute the existing Certificate of Incorporation, as
amended, Bylaws and records of proceedings of BDS. The Certificate of
Incorporation and Bylaws of BDS are attached as Exhibit 3.14.
3.15 Accuracy of Deliveries. The representations and warranties of
BDS in this Agreement, including all Schedules and Exhibits hereto, and all
documents to be delivered by BDS at the Closing in connection with this
transaction, are (or at Closing, will be) true and correct in all material
respects.
3.16 Interpretation; Survival of Warranties. The foregoing
representations and warranties shall be true and correct as of the Closing
Date. Each representation, warranty and agreement shall survive the Closing.
The representations and warranties of BDS do not contain, or as of the Closing
Date, shall not contain any false or misleading statement of a material fact or
omit, as of the Closing Date, to state any material fact necessary in order to
make the representations and warranties not misleading.
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3.17 Deal Points and Outlines. All prior Letters of Intent, Deal
Points or Outlines and other communications or correspondence concerning the
subject matter of this Agreement are superseded by this Agreement and are merged
into this Agreement and shall not survive the Closing of this Agreement.
3.18 Brokers. BDS has not engaged any broker in connection with
this transaction. Notwithstanding the foregoing, the parties may have been
introduced by Michael Pennessi, and as a result thereof, Michael Pennessi may
have a claim to a finder's or introducer's fee.
ARTICLE IV.
Representations, Warranties and Agreements of Purchaser.
Purchaser, intending BDS and its officers and directors to rely
thereon, represents, warrants and agrees as follows:
4.01 Corporate Standing. Purchaser is a duly organized, validly
existing corporation in good standing under the laws of the state of Indiana.
Purchaser has full corporate power and authority to own its assets and operate
its business in the manner that such business is presently being conducted.
Purchaser is qualified to transact business in the state of Indiana, and
Purchaser's activities do not require that it qualify to transact business in
any other state. Purchaser has all governmental permits, licenses and other
authorizations necessary to conduct its business as presently being conducted,
and none of the transactions contemplated by this Agreement will terminate or
violate any such permits, licenses or authorizations.
4.02 Power to Agree.
(a) The execution and delivery of this Agreement, the Security
Agreement and Promissory Note A and Promissory Note B, the consummation of the
transactions herein contemplated and compliance with the terms of this
Agreement, the Security Agreement and Promissory Note A and Promissory Note B
will not result in a breach of any of the terms or provisions of, or constitute
a default under, the Articles of Incorporation or Bylaws of Purchaser, any
indenture or other agreement or instrument to which Purchaser is a party or by
which it or its assets are bound; or any applicable regulation, judgment, order
or decree of any government instrumentality or court, domestic or foreign,
having jurisdiction over Purchaser, its securities or its properties.
(b) The execution, delivery and performance of this Agreement, the
Security Agreement and Promissory Note A and Promissory Note B and the
transactions contemplated hereby do not require the consent, authority or
approval of any other person or entities except such as have been obtained.
(c) The entering into of this Agreement, the Security Agreement
and Promissory Note A and Promissory Note B and the performance thereof has been
duly and validly authorized by all required corporate action and does not
require any consents other than such as have been unconditionally obtained.
4.03 Deal Points and Outlines. All prior Letters of Intent, Deal
Points or Outlines and other communication or correspondence concerning the
subject matter of this Agreement are superseded by this Agreement and are merged
into this Agreement and shall not survive the Closing of this Agreement.
4.04 Brokers. Purchaser has not engaged any broker in connection
with this transaction. Notwithstanding the foregoing, the parties may have been
introduced by Michael Pennessi, and as a result thereof, Michael Pennessi may
have a claim to a finder's or introducer's fee.
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4.05 Accuracy of Deliveries. This Agreement, all exhibits to this
Agreement and all documents to be delivered by Purchaser at the Closing in
connection with this transaction are true and correct.
4.06 Sophisticated Investor. Purchaser is a sophisticated investor
and is experienced in evaluating high risk investments such as the investment
contemplated by this Agreement. Purchaser has knowledge and experience in
financial and business matters and is capable of evaluating the merits and
risks of Purchaser's prospective investment in BDS. Purchaser has the ability
to bear the economic risks of the investment. Purchaser has been furnished
access to information and documents as it has requested and has been afforded
an opportunity to ask questions and expect answers from representatives of BDS
concerning the terms and conditions of this Agreement. Purchaser has relied
upon its own investigation, together with this Agreement, and representations
and warranties contained herein, in determining to purchase shares of the
Preferred Stock of BDS under this Agreement.
4.07 Guarantee. The Guarantee of Promissory Note A has been duly
executed by Frank O'Donnell and is legally binding and enforceable upon the
Guarantor.
4.08 Interpretation; Survival of Warranties. The foregoing
representations, warranties and agreements shall be true and correct as of the
Closing Date. Each representation, warranty and agreement shall survive the
Closing. None of such representations, warranties and agreements contain or
shall contain, as of the Closing Date, any false or misleading statement of a
material fact or omit, as of the Closing Date, to state any material fact
necessary in order to make the representations, warranties and agreements not
misleading.
ARTICLE V.
Covenants.
5.01 Conduct of BDS Prior to Closing Date. From and after the date
of this Agreement and up until and including the Closing Date, BDS shall:
(a) Carry on its business in substantially the same manner as
heretofore carried on;
(b) BDS shall maintain, in all material respects, compliance with
all governmental rules and regulations applicable to its business;
(c) Not sell, mortgage, pledge, subject to lien or otherwise
encumber or dispose of any of its assets, except in the ordinary course of
business, and not engage in any transaction other than in the ordinary course
of business, without the written consent of Purchaser, which will not be
unreasonably withheld or delayed and except that it may settle the Berstein
litigation referenced in Exhibit 3.11, provided that Purchaser shall be
reasonably satisfied with the terms of any such settlement;
(d) Maintain its fixed assets and its operating assets in a good
and operating state of repair, order and condition, reasonable wear and tear
and damage by fire or other casualty excepted;
(e) Maintain its books, accounts and records in accordance with
good accounting practices;
(f) Maintain in full force and effect insurance comparable in
amount and scope of coverage to that which is now maintained;
(g) Perform, in all material respects, all of its existing
obligations relating to or affecting its assets, properties and business in the
same manner as heretofore performed;
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(h) Use its best efforts to maintain and preserve its business
organizations intact and retain its present employees so that they will be
available after the Closing Date;
(i) Not increase any salary or other form of compensation payable
to, or to become payable to, any of the employees of BDS;
(j) Not pay or accrue any bonuses;
(k) Not issue any Equity Securities or debt securities without
the prior written consent of Purchaser; and
(l) BDS shall stand still and conduct or engage in, either
directly or indirectly, no negotiations or discussions of any nature with any
potential investor by or financial source other than Purchaser or Hopkins
Capital Group until the Closing Date or any extension thereof as provided in
Paragraph 6.01 (the "Standstill Period").
5.02 Indemnification. Purchaser acknowledges and agrees that BDS
will provide for indemnification of its officers and directors for the matters
described on Exhibit 3.11 to the fullest extent permitted by law.
5.03 Right to Purchase Additional Shares. If no uncured Event of
Default has occurred as described in Promissory Note A and Promissory Note B,
and until the earlier of: (i) the consummation of BDS's Initial Public Offering
of Common Stock by a recognized and experienced underwriter pursuant to a
Registration Statement filed with, and declared effective by, the Securities and
Exchange Commission pursuant to the Securities Act of 1933 as amended, which
results in the Common Stock of the Company being listed on a national securities
exchange or the NASDAQ stock market; or (ii) 5:00 p.m. Newark, New Jersey time
on September 15, 2005, the right to purchase additional shares, as provided in
Paragraph 5(a) of Exhibit 1.01, shall continue to be in effect and to be a
contractual right of Purchaser under this Agreement for shares of Preferred
Stock subsequent to conversion of such shares to Common Stock for a period of
one year for Rights, as defined in Paragraph 5(a) of Exhibit 1.01, which are
outstanding on the date of conversion of such shares of Preferred Stock. The
right to purchase additional shares, following conversion of such shares of
Preferred Stock, shall be under the same terms as provided in Paragraph 5(a) of
Exhibit 1.01 for the shares of Preferred Stock before conversion except that, in
all calculations, the converted shares of Preferred Stock shall continue to be
treated as outstanding Preferred Stock instead of Common Stock. In the event of
conversion of part but not all of the shares of Preferred Stock, the converted
shares of Preferred Stock shall have the right to purchase additional shares as
specified in this Section 5.03 and the shares of Preferred Stock which have not
been converted will continue to have the rights to purchase additional shares as
specified in Paragraph 5(a) of Exhibit 1.01.
ARTICLE VI.
Closing.
6.01 Time and Place of Closing. The Closing shall take place no
later than three (3) weeks from the execution of this Agreement. Purchaser may
extend the Closing Date for two (2) additional weeks by making the $100,000
Extension Advance to BDS which, once paid, shall constitute part of the payment
of the Purchase Price. The Closing shall occur at such place as the parties may
mutually agree.
6.02 Items to be Delivered at the Closing. At the Closing, and
subject to terms and conditions of this Agreement:
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(a) BDS shall deliver or cause to be delivered to Purchaser the
following:
(i) Certificates representing the Preferred Stock being
purchased by Purchaser pursuant to Paragraph 1.01 hereof, fully executed and
in form and substance reasonably acceptable to Purchaser and its counsel;
(ii) Certified copy of the Meeting of the Board of
Directors establishing the rights and terms of the Preferred Stock in
accordance with the provisions of Exhibit 1.01;
(iii) Certified copy of the minutes of Minutes of the
meeting of the Board of Directors of BDS, reflecting the consent to and
approval of this Agreement and of all actions required by this Agreement;
(iv) Certificate of Status reflecting that BDS is an
active corporation in its state of incorporation;
(v) Any and all other documents which may be reasonably
requested by Purchaser to effectuate and perfect the transaction contemplated
by this Agreement;
(vi) Legal opinion of counsel for BDS in the form and
substance reasonably acceptable to Purchaser; and
(b) Purchaser shall deliver or cause to be delivered, the
following documents to BDS at the Closing:
(i) Certified check or wire transfer in the amount of
the cash portion of the purchase price as provided in Paragraph 1.02 hereof;
(ii) Promissory Note A in the form of Exhibit 1.02;
(iii) Promissory Note B in the form of Exhibit 1.03;
(iv) The Security Agreement in the form of Exhibit 1.04;
(v) Certified Resolution of the Board of Directors of
Purchaser authorizing this Agreement and all actions required by this Agreement;
(vi) Any and all other documents which may be reasonably
requested by BDS to effectuate and perfect the transaction contemplated in this
Agreement; and
(vii) Legal opinion of counsel for Purchaser in the form
and substance reasonably acceptable to BDS.
ARTICLE VII.
Conditions--Obligations of Parties.
7.01 Conditions to Obligations of Purchaser. The obligations of
Purchaser hereunder are subject to the conditions (any of which may be waived in
writing by Purchaser) that, on the Closing Date:
(a) All material representations and warranties on the part of
BDS made herein shall be true and correct, in all material respects, as of the
date hereof and as of the Closing Date (without regard to the exception in
Section 3.16), with the same force and effect as if made on the Closing Date,
and BDS shall not have materially breached any of its obligations under this
Agreement;
(b) BDS shall have substantially performed and complied with all
the material agreements, covenants and conditions required by this Agreement to
be performed and complied with by it;
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7.02 Conditions and Obligations of BDS. The obligations of BDS
hereunder are subject to the conditions (any of which may be waived in writing)
on the Closing Date:
(a) All material representations and warranties on the part of
Purchaser made herein shall be true and correct, in all material respects, as
of the date hereof and as of the Closing Date, with the same force and effect
as if made on the Closing Date, and Purchaser shall not have materially
breached any of its obligations under this Agreement; and
(b) Purchaser shall have substantially performed and complied
with all the material agreements, covenants and conditions required by this
Agreement to be performed and complied with by them.
ARTICLE VIII.
General.
9.01 Assignability. This Agreement shall be binding upon and shall
inure to the benefit of the successors and assigns of the Parties hereto.
9.02 Applicable Law. This Agreement shall be construed in
accordance with the laws of the state of Delaware.
9.03 Survival of Representations, Warranties and Agreements. All
representations, warranties, covenants, undertakings and agreements made herein
shall survive the Closing, notwithstanding any custom or law to the contrary
and notwithstanding the delivery of the Preferred Stock and the acceptance
thereof. No oral representations or warranties shall survive Closing and all
such oral representations and warranties shall be merged into the Closing.
9.04 Headings. All paragraph headings herein are inserted for the
convenience of the parties only and are not a part of and shall not in any way
modify or affect the construction or interpretation of any of the provisions of
this Agreement.
9.05 Counterparts. This Agreement may be executed in more than one
counterpart, each of which shall be deemed to be an original and which together
shall constitute one and the same instrument.
9.06 Construction. Except where the context otherwise requires,
words in the plural numbers include the singular thereof, and vice versa, and
words of the male gender shall include the female and neuter gender and vice
versa.
This Agreement shall be deemed to have been prepared mutually by all
parties and shall not be construed against any particular party as the
draftsman.
9.07 Exhibits. Exhibits are incorporated as material terms and
provisions of the Agreement. Disclosures made in an Exhibit are deemed to have
been made in and for the purposes of all Exhibits, and omissions from any
particular Exhibit shall not be deemed a breach of warranty or representation
to the extent the relevant information is contained in one or more other
Exhibits attached hereto.
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9.08 Notices. Any notice, request or instruction to be given
hereunder by any party to any other shall be in writing delivered personally or
sent by certified mail to the address or telecopy number set forth below:
Purchaser: MAS
MAS Acquisition XXIII Corp.
865 Longboat Key Club Road
Longboat Key, Florida 34228
Fax: (314) 434-7030
Copy To: Samuel S. Duffey
677 N. Washington Blvd., Suite 1
Sarasota, Florida 34236
Fax: (941) 957-3630
BDS: BioDelivery Sciences, Inc.
University Heights Science Park
111 Lock Street
Newark, NJ 07103
Fax: (973) 972-0323
Copy to: Mel Epstein, Esq.
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, NY 10038
Fax: (212) 806-6006
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the day and year first above written.
Purchaser
MAS Acquisition XXIII, Corp.
By:
-------------------------
Its: Chairman
BDS
BioDelivery Sciences, Inc.
By:
-------------------------
Its:
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9.08 Notices. Any notice, request or instruction to be given
hereunder by any party to any other shall be in writing delivered personally or
sent by certified mail to the address or telecopy number set forth below:
Purchaser: MAS
MAS Acquisition XXIII Corp.
865 Longboat Key Club Road
Longboat Key, Florida 34228
Fax: (314) 434-7030
Copy To: Samuel S. Duffey
677 N. Washington Blvd., Suite I
Sarasota, Florida 34236
Fax: (941) 957-3630
BDS: BioDelivery Sciences, Inc.
University Heights Science Park
111 Lock Street
Newark, NJ 07103
Fax: (973) 972-0323
Copy To: Mel Epstein, Esq.
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, NY 10038
Fax: (212) 806-6006
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
as of the day and year first above written.
Purchaser
MAS Acquisition XXIII, Corp.
By:
------------------------------
Its:
BDS
BioDelivery Sciences, Inc.
By: /s/ Raphael J. Mannino
------------------------------
Its: President and CEO
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EXHIBIT 1.01
CERTIFICATE OF DESIGNATION,
PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER
SPECIAL RIGHTS OF THE SERIES A CONVERTIBLE PREFERRED STOCK
AND QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF
OF
BIODELIVERY SCIENCES, INC.
-------------
Under Section 151 of the
Delaware General Corporation Law
-------------
BioDelivery Sciences Inc. (the "Corporation"), a corporation organized
and existed under and by virtue of the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section 151 of the General
Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors by
the Certificate of Incorporation, said Board of Directors, at a meeting held on
July 19, 2000, at which a quorum was present and acting throughout, adopted a
resolution providing for the authorization of a series of Preferred Stock
consisting of 273,200 shares, designated Series A Convertible Preferred Stock,
which resolution is as follows:
RESOLVED, that pursuant to the authority expressly granted to and
vested in the Corporation's Board of Directors by the Corporation's Certificate
of Incorporation, as amended to date, the Board of Directors hereby creates a
series of Preferred Stock of the Corporation, par value $0.01 per share, to be
designated "Series A Convertible Preferred Stock" (hereinafter referred to as
the "Series A Preferred Stock") and to consist
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of Two Hundred Seventy-Three Thousand Two Hundred (273,200) shares, and hereby
fixes the voting powers, designations, preferences and relative, participating,
optional or other rights, and the qualifications, limitations or restrictions
thereof, of the Series A Preferred Stock, as follows:
1. Liquidation.
(a) In the event of a voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the holders of
Series A Preferred Stock shall be entitled to receive, for each share of Series
A Preferred Stock held by them, the Liquidation Preference (as defined below)
plus 8% per annum on the Liquidation Preference calculated from the date the
shares of Series A Preferred Stock are initially issued, before any
distribution or payment is made to the holders of Common Stock or any Junior
Stock. The term "Liquidation Preference" means the quotient of $15,000,000
divided by 210,006, as such number may be adjusted pursuant to Section 1.03 of
the Stock Purchase Agreement dated September ___, 2000, (the "Stock Purchase
Agreement") between the Corporation and MAS Acquisition XXIII Corp. ("MAS").
If, upon any such liquidation, dissolution or winding up of the Corporation,
the assets distributable among the holders of all Series A Preferred Stock
shall be insufficient to permit the payment in full to such holders of the
amount per share hereinabove provided, then the entire assets of the
Corporation shall be applied ratably to the payment of such amount to the
holders of Series A Preferred Stock then outstanding. Neither the merger or the
consolidation of the Corporation, nor the sale, lease or conveyance of all or a
part of its property and business as an entirety or substantially as an
entirety, shall be deemed to be a liquidation, dissolution or winding up of the
Corporation within
2
15
the meaning of this paragraph 1(a), unless such sale, lease or conveyance shall
be in connection with a plan of liquidation, dissolution or winding up of the
Corporation.
(b) The Corporation shall give the holders of Series A
Preferred Stock at least thirty (30) days prior notice of liquidation,
dissolution or winding up of the Corporation.
2. Redemption. The Corporation shall not have a right of
redemption with respect to the Series A Preferred Stock.
3. Conversion.
(a) The holder of any share or shares of Series A
Preferred Stock shall have the right, at its option, to convert all or any
portion of such shares into fully paid and nonassessable shares of Common Stock
of the Corporation, at any time and from time to time after the date of
issuance, at the rate of 50.0 shares of Common Stock for each share of Series A
Preferred Stock, or at the rate which results from the making of any adjustment
specified in subparagraph (g) hereof (the number of shares of Common Stock
issuable at any time, giving effect to the latest prior adjustment pursuant to
subparagraph (g) hereof, if any, in exchange for one share of Series A Preferred
Stock being hereinafter called the "Conversion Rate").
(b) In order to convert shares of Series A Preferred
Stock into shares of Common Stock pursuant to the right of conversion set forth
in subparagraph (a) above, the holder thereof shall surrender the certificate
or certificates representing such shares of Series A Preferred Stock, duly
endorsed to the Corporation or in blank, at the principal office of the
Corporation and shall give written notice to the Corporation that such holder
elects to convert the same, stating in such notice the name or names in which
such holder wishes the certificate or certificates representing shares of
Common Stock to be issued. The Corporation shall, within
3
16
five (5) business days, deliver at said office or other place to such holder of
Series A Preferred Stock, or to such holder's nominee or nominees, a
certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled as aforesaid, together with any cash to which
such holder shall be entitled in lieu of fractional shares in an amount equal
to the same fraction of the Liquidation Preference on the business day
preceding the day of conversion. Shares of Series A Preferred Stock shall be
deemed to have been converted as of the date of the surrender of such shares
for conversion as provided above, and the person or persons entitled to receive
the shares of Common Stock issuable upon such conversion shall be treated for
all purposes as the record holder or holders of such shares of Common Stock on
such date. Upon conversion of only a portion of the number of shares covered by
a certificate representing shares of Series A Preferred Stock surrendered for
conversion, the Corporation shall issue and deliver to, or upon the written
order of, the holder of the certificate so surrendered for conversion, at the
expense of the Corporation, a new certificate covering the number of shares of
Series A Preferred Stock representing the unconverted portion of the
certificate so surrendered, which new certificate shall entitle the holder
thereof to the rights of the shares of Series A Preferred Stock represented
thereby to the same extent as if the certificate theretofore covering such
unconverted shares had not been surrendered for conversion.
(c) Notwithstanding the provisions of subparagraph (a)
hereof, the issued and outstanding shares of Series A Preferred Stock shall be
automatically converted into fully paid and nonassessable shares of Common
Stock at the Conversion Rate immediately upon the earlier of (i) the
consummation of the Corporation's initial public offering of Common Stock by a
recognized and experienced underwriter pursuant to a registration statement
filed with, and
4
17
declared effective by, the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, which results in the Common Stock of the
Corporation being listed on a national securities exchange or The Nasdaq Stock
Market or (ii) 5:00 p.m. Newark, New Jersey time on September 15, 2005
(d) Notwithstanding the provisions of subparagraph (a)
hereof, upon the occurrence and during the continuance of an Event of Default,
as defined in either promissory note A or promissory note B, both dated as of
September __, 2000, issued by MAS, the Corporation, at its option, in
connection with the exercise of its rights under the security agreement, dated
as of September __, 2000, between MAS and the Corporation, may effect the
conversion of the issued and outstanding shares of Series A Preferred Stock
into fully paid and nonassessable shares of Common Stock at the Conversion Rate;
(e) (i) At least ten (10) days prior to the earlier of
an anticipated closing of a sale of Common Stock which meets the requirements
of paragraph 3(c)(i), or 5:00 p.m. Newark, New Jersey time on September 15,
2000, and (ii) at least five (5) days prior to conversion effected by the
Corporation pursuant to subparagraph (d), the Corporation shall give written
notice to each holder of record of shares of Series A Preferred Stock, by
certified mail enclosed in a postage paid envelope addressed to such holder at
such holder's address as the same shall appear on the books of the Corporation.
Such notice shall (i) state that such shares are being converted pursuant to
paragraphs 3(c) or (d) hereof, (ii) state the date of conversion and (iii) call
upon such holder to exchange on or after such date at the principal place of
business of the Corporation a certificate or certificates representing the
number of shares of Series A Preferred Stock to be converted in accordance with
such notice. On or after such date, the holder of Series
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A Preferred Stock shall present and surrender the certificate or certificates
for the shares of Series A Preferred Stock to the Corporation at the place
designated in such notice, and thereupon the Corporation shall deliver to such
holder, or to such holder's nominee or nominees, a certificate or certificates
for the number of shares of Common Stock to which such holder shall be entitled
as aforesaid. Shares of Series A Preferred Stock shall be deemed to have been
converted and cancelled on such conversion date and the person or persons
entitled to receive the shares of Common Stock issuable upon such automatic
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on such conversion date. In the case of automatic
conversion pursuant to paragraph 3(c) or (d) hereof, the Corporation shall not
be obligated to issue certificates for shares of Common Stock unless
certificates evidencing the converted shares of Series A Preferred Stock are
delivered to the Corporation.
(f) The issuance of certificates for shares of Common
Stock upon the conversion of shares of Series A Preferred Stock shall be made
without charge to the converting stockholder for any original issue or transfer
tax in respect of the issuance of such certificates and any such tax shall be
paid by the Corporation.
(g) The Conversion Rate shall be subject to the following
adjustments:
(i) If the Corporation shall declare and pay to
the holders of Common Stock a dividend or other distribution payable in shares
of Common Stock, the Conversion Rate in effect immediately prior thereto shall
be adjusted so that the holders of Series A Preferred Stock thereafter
surrendered for conversion shall be entitled to receive the number of shares of
Common Stock which such holders would have owned or been entitled to receive
after the declaration and payment of such dividend or other distribution if such
shares of Series A
6
19
Preferred Stock had been converted immediately prior to the record date for the
determination of stockholders entitled to receive such dividend or other
distribution.
(ii) If the Corporation shall subdivide the
outstanding shares of Common Stock into a greater number of shares of Common
Stock, or combine the outstanding shares of Common Stock into a lesser number
of shares, or issue by reclassification of its shares of Common Stock any
shares of the Corporation, the Conversion Rate in effect immediately prior
thereto shall be adjusted so that the holders of Series A Preferred Stock
thereafter surrendered for conversion shall be entitled to receive the number
of shares of Common Stock which such holders would have owned or been entitled
to receive after the happening of any of the events described above if such
shares of Series A Preferred Stock had been converted immediately prior to the
happening of such event on the day upon which such subdivision, combination or
reclassification, as the case may be, becomes effective.
4. Right of First Refusal.
(a) If the Corporation offers to sell Additional Shares
of Capital Stock (as defined in paragraph 8) to a third party, the holders of
the shares of Series A Preferred Stock, in accordance with paragraph 4(b),
shall have a right of first refusal to purchase the Additional Shares of
Capital Stock for the same dollar value of Consideration (as defined below) and
on the same terms as such third party; provided that the right of first refusal
shall not be applicable to a public offering of the Corporation's Capital
Stock. The Consideration shall be deemed to be the per share amount of cash and
the value of any form of non-cash consideration to be received by the
Corporation for the sale of Additional Shares of Capital Stock to such third
party. The value of non-cash consideration shall be determined by the
Corporation's board of directors, provided
7
20
that if such value is disputed and/or challenged by holders of the shares of
Series A Preferred Stock and the Corporation cannot reach a mutually acceptable
agreement within 10 business days, all disputes and challenges shall be settled
through arbitration to be commenced in the City of Newark under the auspices of
the American Arbitration Association.
(b) In the event of an offer contemplated by paragraph
4(a), the Corporation shall provide written notice to the holders of the Series
A Preferred Stock, setting forth the Consideration and other material terms and
conditions of the offer. Such holders shall have ten business days from the date
of receipt of any such notice (the "Exercise Period") to agree to purchase in
such proportion as they may agree, or failing such agreement, in proportion to
the respective numbers of shares of Series A Preferred Stock held by them, the
number of Additional Shares of Capital Stock covered by the offer for the same
Consideration and otherwise on the same terms and conditions and at the same
time specified in the offer; provided that such holders must agree to purchase
all of such Additional Shares of Capital Stock and, if they do not so agree
during the Exercise Period, the Corporation may sell such Additional Shares of
Capital Stock in accordance with such offer.
5. Right to Purchase Additional Shares.
(a) If the Corporation shall issue any warrants or stock
options or other rights to purchase shares of Common Stock (such warrants, stock
options or other rights being hereinafter called "Rights") entitling the holders
thereof to purchase shares of Common Stock, the holders of the shares of Series
A Preferred Stock, in accordance with paragraph 5(b), shall also have the right
to purchase shares of Common Stock for the same dollar value of Consideration
(as defined below), and otherwise on the same terms as set forth in the Rights.
8
21
The Consideration shall be deemed to be the per share amount of cash and the
value of any form of non-cash consideration to be received by the Corporation
upon exercise of the Rights, plus in the case of Rights issued for cash or
non-cash consideration the amount thereof attributable to each share of Common
Stock subject to the Rights. The value of non-cash consideration shall be
conclusively determined by the Corporation's board of directors, provided that
if such value is disputed and/or challenged by holders of the Series A Preferred
Stock and the Corporation cannot reach a mutually acceptable agreement within 10
business days, all disputes and challenges shall be settled through arbitration
to be commenced in the City of Newark under the auspices of the American
Arbitration Association.
(b) The Corporation shall notify the holders of the
Series A Preferred Stock of the issuance of Rights and the terms thereof
promptly after such issuance. In the event that at least 1,000 shares of Common
Stock are issued at any time or from time to time pursuant to the exercise of
Rights, the Corporation shall provide written notice thereof to the holders of
the Series A Preferred Stock identifying such Rights in reasonable detail. Such
holders shall have ten business days from the date of receipt of any such notice
(the "Exercise Period") to purchase, in such proportion as they may agree, or,
failing such agreement in proportion to the respective numbers of shares of
Series A Preferred Stock held by them, the number of shares of Common Stock
(the "Percentage Maintenance Shares") that, when added to the aggregate number
of shares of Common Stock issued or issuable upon conversion of the Series A
Preferred Stock (the "Aggregate Shares"), would constitute the same percentage
of the outstanding Common Stock (assuming conversion of all the then outstanding
Series A Preferred Stock) immediately after the purchase of the Percentage
Maintenance Shares, as the Aggregate Shares constituted of the
9
22
outstanding Common Stock (assuming conversion of all the then outstanding
Series A Preferred Stock) immediately before the issuance of such shares of
Common Stock pursuant to the exercise of such Rights.
6. Voting Rights.
(a) For so long as the Minimum Number (as defined below)
of shares of Series A Preferred Stock designated herein are issued and
outstanding, the holders of the Series A Preferred Stock shall have the right,
voting separately as a class, to elect a majority of the Board of Directors of
the Corporation, with the holders of the Common Stock having the right, voting
separately as a class, to elect the remaining directors (the "Common Stock
Directors"), provided, however, that at all times during such period, the
minimum number of Common Stock Directors shall be fixed at three. The term
"Minimum Number" means the number that is 50% of 210,006 as such latter number
may be adjusted pursuant to Section 1.03 of the Stock Purchase Agreement.
(b) For so long as the Minimum Number of shares of
Series A Preferred Stock designated herein are issued and outstanding, any
decision by the Board of Directors of the Corporation with respect to the
merger, sale of substantially all the assets, or liquidation of the
Corporation, a disposition (through licensing out of the ordinary course of
business or otherwise) of the Corporation's intellectual property, any decrease
in executive compensation, any affiliate transaction, the declaration of
dividends or distributions or any amendment to the Corporation's Certificate of
Incorporation or by-laws shall require the favorable vote of one of the Common
Stock Directors, at the time in office.
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(c) For matters other than as set forth in paragraphs
6(a) and 6(b) and except as otherwise required by the Delaware General
Corporation Law, the holders of shares of Series A Preferred Stock shall have
the right to vote, together with the holders of all the outstanding shares of
Common Stock and not by classes, on all matters on which holders of Common
Stock shall have the right to vote. The holders of shares of Series A Preferred
Stock shall have the right to cast one vote for each share of Common Stock into
which each share of Series A Preferred Stock held by them is at the time
convertible.
(d) Without the prior approval of the holders of a
majority of the shares of Series A Preferred Stock outstanding, the Corporation
will not (i) authorize, create or issue any series or shares of capital stock
senior or pari passu to the Series A Preferred Stock, or (ii) take any action
which would alter or adversely affect the rights of the holders of the Series A
Preferred Stock.
7. General Provisions.
(a) The number of shares of Common Stock outstanding at
any given time shall not include shares owned or held by or for the account of
the Corporation, and the disposition of such shares shall be considered an
issue or sale of Common Stock, for the purposes of paragraphs 4 and 5.
(b) The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of effecting the conversion of Series A Preferred Stock, the full
number of shares of Common Stock then deliverable upon the conversion of all
shares of Series A Preferred Stock at the time outstanding. The Corporation
shall take such corporate action as shall be necessary in order that the
11
24
Corporation may validly and legally issue fully paid and nonassessable shares
of Common Stock upon the conversion of Series A Preferred Stock in accordance
with the provisions hereof.
(c) No fractional shares of Common Stock or scrip
representing fractional shares of Common Stock shall be issued upon any
conversion of Series A Preferred Stock, but, in lieu thereof, there shall be
paid an amount in cash equal to the same fraction of the Liquidation Preference
on the business day preceding the day of conversion.
(d) Except as otherwise provided herein, the holders of
the shares of Series A Preferred Stock have the right to participate in all
matters on a share-by-share basis with outstanding shares of Common Stock
without regard to class of stock.
8. Definitions.
(a) "Additional Shares of Capital Stock" shall mean all
shares of stock of the Corporation issued by the Corporation after the date
hereof, except Common Stock which may be issued pursuant to (i) conversion of
the Series A Preferred Stock and (ii) shares of stock issued pursuant to the
exercise of Rights.
(b) "Common Stock" shall mean the common stock, par
value $0.0001 per share, of the Corporation.
(c) "Junior Stock" shall mean any class or series of
capital stock of the Corporation which may be issued which, at the time of
issuance, is not declared to be on a parity with or senior to the Series A
Preferred Stock as to all of the following: dividends, rights upon liquidation
or redemption or voting rights.
12
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IN WITNESS WHEREOF, the undersigned has executed this certificate
this __ day of September, 2000.
BIODELIVERY SCIENCES, INC.
By:
----------------------
13
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EXHIBIT 1.02
PROMISSORY NOTE A
$500,000 SEPTEMBER ____, 2000
FOR VALUE RECEIVED, MAS Acquisition XXIII, Inc. ("Payor") promises to
pay to BioDelivery Sciences, Inc. ("Lender") at University Heights Science
Park, 111 Lock Street, Newark, New Jersey 07103, the principal sum of Five
Hundred Thousand ($500,000) Dollars, together with interest from the date
hereof at the rate of eight percent (8%) per annum as follows: $500,000 shall
be paid on January 1, 2001 together with interest accrued through that date
(the "Installment").
This Promissory Note A is secured by a Security Agreement between
Payor and Lender, dated September ____, 2000.
In the case of the happening of any of the following events (each
called an "Event of Default"):
(a) Payor shall default in the payment of the
Installment, or interest on this Promissory Note A, as and when due and
payable, and such default continues unremedied for a period of ten (10)
business days;
(b) Payor shall (A) become insolvent or admit in writing
its inability to pay its debts as they mature, (B) apply for, consent to, or
acquiesce in the appointment of a receiver, trustee, liquidator or similar
official for itself or any of its assets, (C) make a general assignment for the
benefit of creditors, (D) be adjudicated a bankrupt or insolvent, (E)
voluntarily commence a proceeding or file a petition under any law relating to
bankruptcy, insolvency, the relief of debtors or the liquidation or adjustment
of indebtedness or (F) consent to the institution of, or fail to contest in a
timely and appropriate manner, any proceeding or the filing of any petition
described in paragraph (c) below;
(c) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed under any law relating to bankruptcy,
insolvency, the relief of debtors or the liquidation or adjustment of
indebtedness, against Payor, or the assets of Payor, and such proceeding or
petition shall not be dismissed within sixty (60) days; or
(d) any of Payor's representations or warranties in
Article IV of the Stock Purchase Agreement between Payor and Lender, dated
September 5, 2000, or any of its representations in Section 5 of the Security
Agreement shall prove to have been false or incorrect in any material respect
as of the date when made and which is not cured within twenty (20) days
following written notice by the Lender;
then Lender may, upon and during the continuance of such Event of Default, upon
written notice, accelerate all unpaid amounts due under this Promissory Note A;
provided that, in the case of an Event of Default specified in paragraphs (b)
and (c) above, such acceleration shall automatically
27
occur. In addition, upon the occurrence and during the continuance of an Event
of Default, Lender may exercise any or all of the rights, powers and remedies
vested in it by the Security Agreement and/or any or all rights, powers and
remedies available to Lender at law or in equity or by statute or otherwise for
the protection and enforcement of the rights of Lender. In the event of an
Event of Default, the Lender may recover all reasonable costs of collection
including, but not limited to, reasonable attorney fees.
This Promissory Note A is made and executed hereunder and is governed
by the laws of the State of Delaware.
MAS Acquisition XXIII, Inc.
By:
---------------------------------------
Name:
Title:
Payment of the principal of and interest on the above Promissory Note
A when due (whether at maturity, by acceleration or otherwise) is
unconditionally and irrevocably guaranteed by the undersigned as a primary
obligation. The undersigned hereby waives notice of acceptance of this
guarantee and any other notice, agrees that the Lender may modify the
obligation of the Payor under the above Promissory Note A or under the Security
Agreement referred to above (including releasing or changing the collateral
referred to therein) without affecting the undersigned's obligation under this
guarantee which is absolute and continuing, and waives any rights of
subrogation and any defenses of a surety or guarantor (except payment strictly
in accordance with the terms of the above Promissory Note A).
------------------------------------------
Frank O'Donnell, M.D.
28
EXHIBIT 1.03
PROMISSORY NOTE B
$13,500,000 SEPTEMBER ____, 2000
FOR VALUE RECEIVED, MAS Acquisition XXIII, Inc. ("Payor") promises to
pay to BioDelivery Sciences, Inc. ("Lender") at University Heights Science
Park, 111 Lock Street, Newark, New Jersey 07103, the principal sum of Thirteen
Million Five Hundred Thousand ($13,500,000) Dollars, together with interest
from the date hereof at the rate of eight percent (8%) per annum as follows:
(i) $1,750,000 shall be paid on April 1, 2001 together with interest accrued
through that date (the "Initial Installment"); (ii) $1,750,000 shall be paid on
September 30, 2001 together with interest accrued through that date (the
"Second Installment"); (iii) $5,000,000 shall be paid on May 31, 2002 together
with interest accrued through that date (the "Third Installment"); and (iv)
$5,000,000 shall be paid on December 30, 2002 together with interest accrued
through that date (the "Final Installment").
This Promissory Note B is secured by a Security Agreement between
Payor and Lender, dated September ____, 2000.
In the case of the happening of any of the following events (each
called an "Event of Default"):
(a) Payor shall default in the payment of any of the
Promissory Note A, dated September ____, 2000 issued by Payor to Lender, the
Initial Installment, the Second Installment, the Third Installment or the Final
Installment or interest on this Promissory Note B, as and when due and payable,
and such default continues unremedied for a period of ten (10) business days;
(b) Payor shall (A) become insolvent or admit in writing
its inability to pay its debts as they mature, (B) apply for, consent to, or
acquiesce in the appointment of a receiver, trustee, liquidator or similar
official for itself or any of its assets, (C) make a general assignment for the
benefit of creditors, (D) be adjudicated a bankrupt or insolvent, (E)
voluntarily commence a proceeding or file a petition under any law relating to
bankruptcy, insolvency, the relief of debtors or the liquidation or adjustment
of indebtedness or (F) consent to the institution of, or fail to contest in a
timely and appropriate manner, any proceeding or the filing of any petition
described in paragraph (c) below;
(c) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed under any law relating to bankruptcy,
insolvency, the relief of debtors or the liquidation or adjustment of
indebtedness, against Payor, or the assets of Payor, and such proceeding or
petition shall not be dismissed within sixty (60) days; or
(d) any of Payor's representations or warranties in
Article IV of the Stock Purchase Agreement between Payor and Lender, dated
September 5, 2000, or any of its representations in Section 5 of the Security
Agreement shall prove to have been false or incorrect
29
in any material respect as of the date when made and which is not cured within
twenty (20) days following written notice by the Lender;
then Lender may, upon and during the continuance of such Event of Default, upon
written notice, accelerate all unpaid amounts due under this Promissory Note B;
provided that, in the case of an Event of Default specified in paragraphs (b)
and (c) above, such acceleration shall automatically occur. In addition, upon
the occurrence and during the continuance of an Event of Default, Lender may
exercise any or all of the rights, powers and remedies vested in it by the
Security Agreement and/or any or all rights, powers and remedies available to
Lender at law or in equity or by statute or otherwise for the protection and
enforcement of the rights of Lender. In the event of an Event of Default, the
Lender may recover all reasonable costs of collection including, but not
limited to, reasonable attorney fees.
This Promissory Note B is made and executed hereunder and is governed
by the laws of the State of Delaware.
MAS Acquisition XXIII, Inc.
By:
-----------------------
Name:
Title