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EXHIBIT 10.2
SETTLEMENT AND SECURITY AGREEMENT
WHEREAS Xxxxxx X. Xxxxxxxx ("Xxxxxxxx"), Xxxxxxxx X. Xxxxxxxx and
Xxxxxx X. Xxxxxxxx (collectively, the "Bersteins") are shareholders of
Biodelivery Sciences, Inc. ("BDS");
WHEREAS, at various times, Xxxxxxxx and/or Xxxxxxxx Technology
Corporation ("BTC") entered into agreements with BDS, including, but not limited
to, a Consulting Agreement dated as of July 1, 1995, a Consulting Agreement
dated as of January 1996, and a Deferred Compensation Agreement (collectively,
together with any other agreements or relationships with BDS and/or BDSI, the
"Xxxxxxxx Agreements");
WHEREAS the Bersteins and BTC commenced an action against BDS and
certain of its officers and directors in the United States District Court for
the District of New Jersey (the "Court") entitled Xxxxxxxx, et al. x. Xxxxxxx,
et al., Civil Action No. 99-5786 (the "Action");
WHEREAS, BDS asserted various counterclaims in the Action against
Xxxxxxxx and BTC (the "Counterclaims");
WHEREAS, without admitting the validity of any claims, Counterclaims or
defenses in the Action, the parties are desirous of settling the litigation
between and among them, which would be expensive, burdensome and distracting,
and to put to rest all disputes between them; and
WHEREAS the Bersteins are desirous of selling their shares in BDS to
Biodelivery Sciences International Inc. ("BDSI") (formerly MAS Acquisition XXIII
Corp., an Indiana corporation) and BDSI is desirous of purchasing those shares;
NOW, in consideration of the promises and payments contained herein,
the parties agree as follows:
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1. BDS.and BDSI agree to pay the Bersteins and BTC the aggregate
sum of $275,000, payable as follows:
(a) Upon the execution of this agreement by the last
party to sign (the "Execution Date"), BDS will pay to Xxxxxxx Xxxxxx Xxxx
Xxxxxxxxxx & Xxxxx, P.C., as attorneys for the Bersteins and BTC, the sum of
$150,000; and
(b) BDS and BDSI will pay the aggregate sum of $125,000,
together with interest at the rate of 9% per annum, in 12 monthly installments
payable to the Bersteins in accordance with the terms of the promissory note
(the "BDS Note") annexed hereto as Exhibit B. The monthly installment payments
shall be made by wire transfer in accordance with written instructions provided
by Xxxxxxx Xxxxxx Xxxx Xxxxxxxxxx & Xxxxx, P.C. Any changes in those
instructions thereafter shall be in writing, signed by all of the Bersteins, and
must be received by BDS and BDSI not less than three business days before the
next payment is due. Payments will be accelerated in accordance with the terms
and conditions provided in the BDS Note.
2. Upon payment of the amount in paragraphs 1 (a) and 4(a), the
parties will instruct their attorneys to enter into and file a stipulation for
the dismissal of the claims and Counterclaims in the Action with prejudice and
without costs to any party, in the form annexed hereto as Exhibit A (the
"Stipulation of Dismissal").
3. The Bersteins represent that they are the sole owners of an
aggregate of 175,000 shares of BDS (together with any and all other interests,
claims or entitlements to securities of BDS, collectively, the "Xxxxxxxx
Shares"); that they have not sold, transferred, pledged or granted any interest
in the Xxxxxxxx Shares to any other person; that they own, and will transfer
pursuant to this agreement the Xxxxxxxx Shares
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free of any adverse claim; and that they have no other interest in any
securities of BDS or BDSI.
4. The Bersteins agree to sell, and BDSI agrees to purchase, the
Xxxxxxxx Shares for the aggregate sum of $500,000, payable as follows:
(a) upon the execution of this Agreement, BDS and BDSI
will pay to Xxxxxxx Xxxxxx Xxxx Xxxxxxxxxx & Xxxxx P.C., as attorneys for the
Bersteins, the sum of $200,000, at which time the Bersteins shall sell, convey
and deliver all right, title and interest in and to the Xxxxxxxx Shares to BDSI;
and
(b) BDS and BDSI will pay the aggregate sum of $300,000,
together with interest at the rate of 9% per annum, in 36 monthly installments
payable to the Bersteins in accordance with the terms of the promissory note
(the "Shares Note") annexed hereto as Exhibit C. The monthly installment
payments shall be made by wire transfer in accordance with written instructions
provided by Xxxxxxx Xxxxxx Xxxx Xxxxxxxxxx & Xxxxx, P.C. Any changes in those
instructions thereafter shall be in writing, signed by all of the Bersteins, and
must be received by BDS not less than three business days before the next
payment is due. Payments will be accelerated in accordance with the terms and
conditions provided for in the Shares Note.
5. For so long as any portion of the BDS Note or the Shares Note
or any portion due under this Settlement Agreement remains outstanding, BDS
grants to the Bersteins a first lien and security interest in all of the
tangible and intangible assets of BDS that are now currently held ("the BDS
Assets") including, but not limited to, (a) its license agreements with the
University of Medicine and Dentistry of New Jersey ("UMDNJ") (including the
License Agreement between UMDNJ and Albany Medical
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College, and BDS, dated September 26, 1995), and (b) all equipment currently
owned by BDS, which are identified in the annexed Exhibit D, together with all
proceeds thereof, if any. BDS represents and warrants that it has title to the
BDS Assets; that there is currently no lien or security interest senior to the
security interest being granted to the Bersteins in the BDS Assets; and that it
has full authority and all necessary consents to grant such security interest to
the Bersteins. Copies of the UCC-1s which the Bersteins are authorized to file
are annexed as Exhibit E. A copy of the notice which the Bersteins are
authorized to file with the United States Patent and Trademark Office (the
"Patent Office Notice") is annexed as Exhibit F. BDS and BDSI agree to grant any
further consents and execute any documents necessary to enable the Bersteins to
perfect such liens or security interests in the BDS Assets.
6. The parties agree that this Agreement is subject to the
condition that the Bersteins enter into a Memorandum of Understanding with UMDNJ
and Albany Medical College acceptable to the Bersteins, BDS and BDSI,
substantially in the form annexed hereto as Exhibit G, concerning an option to
develop certain of BDS's intellectual property. Provided that the Bersteins
comply with the terms of this Agreement, BDS, BDSI and the individual
signatories to this Agreement (other than the Bersteins) agree not to challenge
or otherwise interfere with any of the rights granted by the Memorandum of
Understanding.
7. Simultaneously with the execution of this Settlement
Agreement, counsel for BDS and BDSI shall deliver to counsel for the Bersteins
an executed copy of the Consent Judgment in the form annexed hereto as Exhibit
H. Counsel for the Bersteins shall hold such Consent Judgment in escrow and may
file the same with the
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Court only as provided and permitted pursuant to paragraph 9 of this Settlement
Agreement. Upon the satisfaction of the BDS Note and the Shares Note, (i)
counsel for the Bersteins shall return to counsel for BDS and BDSI the executed
Consent Judgment and (ii) the Bersteins shall provide BDS and BDSI with
evidence, satisfactory to BDS's and BDSI's counsel, that they have withdrawn or
revoked the Patent Office Notice.
8. The Court shall retain jurisdiction to enforce and interpret
the terms of this Settlement Agreement and, for that purpose, BDSI consents to
the jurisdiction of the Court.
9. (a) Payment of the BDS Note and the Shares Note shall be due
and payable on the first of each month, commencing May 1, 2001. If payment has
not been received by the fifth of any month during the term of either the BDS
Note or the Shares Note, then (i) BDS and/or BDSI shall also pay an amount equal
to 5% of the overdue payment as a "Late Payment Charge"; and (ii) the Bersteins
may send notice of such non-payment to BDS and/or BDSI (the date upon which such
notice is actually sent shall be the "Notice Date"). BDS and BDSI shall have ten
days from the Notice Date (provided that the tenth day is not a Saturday, Sunday
or bank holiday, in which case, BDS and BDSI shall have until the next business
day thereafter) to make payment of that monthly installment, together with any
Late Payment Charge (the "Cure Period"). Following the expiration of the Cure
Period, the BDS Note and/or the Shares Note, as the case may be, shall
accelerate and be due and payable in full. In the event of three successive late
payments, the right to cure shall thereafter no longer be available to BDS and
BDSI.
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(b) If the BDS Note and/or the Shares Note, as the case
may be, is not paid in full by the twentieth day following the expiration of the
Cure Period (Provided that the twentieth day is not a Saturday, Sunday or bank
holiday, in which case, BDS and BDSI shall have until the next business day
thereafter), the Bersteins may file with the Court the executed Consent Judgment
(completed to reflect accurately the then existing amounts due from BDS and/or
BDSL respectively), together with an affidavit, executed under oath, by any one
of the Bersteins (the "Affidavit") attesting to (i) the giving of timely and
appropriate notice by the Bersteins as required in paragraphs 9 and 14 of this
Agreement, (ii) the failure of BDS and/or BDSI to make payment on a timely basis
in accordance with paragraph 9 of this Agreement; (iii) the failure of BDS
and/or BDSI to make timely cure in accordance with paragraph 9 of this
Agreement; (iv) compliance by the Bersteins with this Settlement Agreement; and
(v) an accurate statement of the amount then due and payable. The Bersteins
shall provide BDS and BDSI with written notice of the filing of the Consent
Judgment and a copy of the supporting affidavit at the time that it is filed,
whereupon, unless the Court shall direct otherwise, the Bersteins shall have all
the rights, and be subject to all of the responsibilities of a judgment creditor
under the Uniform Commercial Code. Except with the consent of the Bersteins,
which they may withhold in their sole discretion, neither BDS, BDSI, the
defendants in the Action nor their parents, subsidiaries, affiliates, successors
or assigns may bid for the BDS Assets at a sale which has been ordered by the
Court or by any bankruptcy court in which BDS or BDSI is the debtor.
(c) BDS and BDSI shall have the unqualified and
irrevocable right to redeem the BDS Assets upon the payment in full of the
amount then due and
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payable on the BDS Note and/or the Share Note, together with interest, Late
Payment Charges, and reasonable costs of collection, including, but not limited
to, the Bersteins' reasonable attorneys' fees and litigation expenses, which
right of redemption shall expire upon the day following the filing of the
Affidavit and Consent Judgment, unless extended by order of the Court.
10. BDS and BDSI, respectively, represents and warrants that they
are not insolvent, as that term is defined in 11 U.S.C. ss. 101 (32), and that
neither intends to file a petition under the Bankruptcy Code within 120 days of
the date of this Agreement. Simultaneously with the execution of this Settlement
Agreement, Xxxxxxx Xxxxxxx, Xxxxx Xxxxx Fogerite, Xxxxx Xxxxx, Xxxxxx X.
Xxxxxxxx and Xxxxxxx X. X'Xxxxxxx will deliver to the Bersteins the Undertaking
and Guaranty annexed hereto as Exhibit 1.
11. BDS and BDSI agree that if they merge or transfer between them
substantially all of their respective assets, then they shall give the Bersteins
notice of the consummation of such transaction within ten days of such
consummation.
12. This Agreement supersedes any and all other agreements and
relationships between the Bersteins or BTC, and BDS or BDSI, including, but not
necessarily limited to, the Xxxxxxxx Agreements, which are hereafter null and
void, and the Bersteins shall have no right, title, claim, entitlement,
receivable or interest of any nature against BDS or BDSI or their assets or
securities except pursuant to this Settlement Agreement, the BDS Note and the
Shares Note.
13. Except for the representations, promises and obligations
contained herein and in such other documents executed hereunder, the Bersteins
and BTC hereby release and discharge BDS and BDSI and each of their respective
present and former
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parents, subsidiaries, affiliates, members, predecessors, successors and
assigns, shareholders, directors, officers, employees, representatives and
agents, as applicable (including, but not limited to, Xxxxxxx Xxxxxxx, Xxxxx
Xxxxx Fogerite, Xxxxx Xxxxx, Xxxxxx Xxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxx X'Xxxxxxx,
Xxx Xxxxxx and Xxx Xxxxxxxx), (collectively, the "BDS RELEASEES"), from all
actions, causes of action, contracts, damages, judgments, executions, and claims
of any kind whatsoever, in law or equity, which the Bersteins and BTC and their
respective present and former parents, subsidiaries, affiliates, predecessors,
heirs, executors, administrators, successors and assigns, as applicable, ever
had, now have or hereafter can, shall or may have against the BDS RELEASEES,
from the beginning of the world up until the date of this release, for, upon or
by reason of any matter, cause or thing whatsoever.
14. Except for the representations promises and obligations
contained herein and in such other documents executed hereunder, BDS and BDSL
Xxxxxxx Xxxxxxx, Xxxxx Xxxxx Fogerite, Xxxxx Xxxxx, Xxxxxx Xxxxxxx, Xxxxxxx
Xxxxxxxx, Xxxxx X'Xxxxxxx, Xxx Xxxxxx and Xxx Xxxxxxxx (collectively, the "BDS
RELEASORS") hereby release and discharge the Bersteins and BTC, and each of
their respective present and former parents, subsidiaries, affiliates, members,
predecessors, successors and assigns, shareholders, directors, officers,
employees, representatives and agents, as applicable (collectively, the
"Xxxxxxxx RELEASEES"), from all actions, causes of action, contracts, damages,
judgments, executions, and claims of any kind whatsoever, in law or equity,
which the BDS RELEASORS and their respective present and former parents,
subsidiaries, affiliates, predecessors, heirs, executors, administrators,
successors and assigns, as applicable, ever had, now have or hereafter can,
shall or may have against the
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Xxxxxxxx RELEASEES, from the beginning of the world up until the date of this
release, for, upon or by reason of any matter, cause or thing whatsoever.
15. Any notice to BDS or BDSI under this Settlement Agreement or
the related BDS Note or Share Note shall be sent by certified mail, return
receipt requested, to:
Biodelivery Sciences, Inc.
Biodelivery Sciences International
UMDNJ New Jersey Medical School
185 So. Orange Avenue - Building 4
Xxxxxx, Xxx Xxxxxx 00000
with a copy faxed or hand delivered to:
Xxxxx X. Xxxxxxxxx, Esq.
Xxxxxx Xxxxxxx, Esq.
Stroock & Stroock & Xxxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
-and-
Xxx Xxxxxxxx
00000 Xxx Xxxxxx Xxxx - Xxxxx 000
Xx. Xxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Any notice to the Bersteins under this Settlement Agreement or the related BDS
Note or Share Note shall be sent by certified mail, return receipt requested,
to:
Xxxxxx Xxxxxxxx
Xxxxxxxx Technology Corp.
00 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
with a copy faxed or hand delivered to:
Xxxxx Xxxxxxxxxx, Esq.
Xxxxxxx Xxxxxx Xxxx Xxxxxxxxxx & Xxxxx, P C
000X Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000)-000-0000
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and a copy sent by overnight delivery to:
Xxxxxx X. Xxxxxxxx
00 X. 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
16. This Agreement constitutes the entire agreement of the parties
regarding the subject matter hereof, superseding all prior understandings,
whether oral or in writing. This Agreement may be modified only in a writing
signed by the parties whose obligations hereunder will be affected by the
modifications.
17. This Agreement shall be construed in accordance with the laws
of the State of New Jersey, without giving effect to that state's choice of law
rules.
18. This Agreement may be executed in one or more counterparts,
and by the parties hereto in separate counterparts, each of which shall be
deemed to be an original, but all of which together shall constitute one and the
same agreement.
Dated: March___, 2001 ------------------------------
XXXXXX X. XXXXXXXX
Dated: March___, 2001 ------------------------------
XXXXXXXX X. XXXXXXXX
Dated: April 25, 2001 ------------------------------
XXXXXX X. XXXXXXXX
Dated: March_, 2001 XXXXXXXX TECHNOLOGY CORPORATION
By:
------------------------------
Title:
---------------------------
Dated: March__,2001 ----------------------------
XXXXXXX XXXXXXX
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Dated: March 2001 -----------------------------
XXXXX XXXXX FOGERITE
Dated: March 2001 -----------------------------
XXXXX XXXXX
Dated: March_, 2001 -----------------------------
XXXXXX XXXXXXX
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Dated: March __, 2001 BIODELIVERY SCIENCES, INC
By: ______________________
Title: ___________________
Dated: March __, 2001 BIODELIVERY SCIENCES INTERNATIONAL, INC.
By: ______________________
Title: ___________________
Dated: March __, 2001
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XXXXXXX XXXXXXXX
Dated: March __, 2001
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XXXXX X'XXXXXXX
Dated: March __, 2001 /s/ Xxx Xxxxxx
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XXX XXXXXX
Dated: March __, 2001
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XXX XXXXXXXX
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