BioDelivery Sciences International, Inc. (NASDAQ:BDSI) Files An 8-K Entry into a Material Definitive Agreement

Item1.01.

On February21, 2017 (the Closing Date), BioDelivery Sciences
International, Inc. (the Company) and its wholly-owned
subsidiaries, Arius Pharmaceuticals, Inc. (Arius) and Arius Two,
Inc. (Arius Two and collectively with Arius, the Subsidiary
Guarantors) entered into a Term Loan Agreement (the Loan
Agreement) with CRG Servicing LLC (CRG), as administrative agent
and collateral agent, and the lenders named in the Loan Agreement
(the Lenders).

to the Loan Agreement, the Company borrowed $45.0million from the
Lenders as of the Closing Date, and may be eligible to borrow up
to an additional $30.0million in two tranches of $15.0million
each contingent upon achievement of certain conditions,
including: (i)in the case of the first tranche, representing the
second potential draw under the Loan Agreement (the Second Draw),
satisfying both (a)certain minimum net revenue thresholds on or
before September30, 2017 or December31, 2017 and (b)a certain
minimum market capitalization threshold for a period of time
prior to the funding of the Second Draw (provided, that if the
Company does not achieve the minimum net revenue thresholds
necessary for the Second Draw but does achieve a certain minimum
market capitalization threshold for a period of time prior to
December31, 2017, the Company would be eligible for a Second Draw
funding in the amount of $5.0 million); and (ii)in the case of
the second tranche, representing the third potential draw under
the Loan Agreement (the Third Draw), satisfying both (a)certain
minimum net revenue thresholds on or before June30, 2018 or
September30, 2018 and (b)a certain minimum market capitalization
threshold for a period of time prior to the funding of the Third
Draw.

The Company utilized approximately $29.5million of the initial
loan proceeds to repay all of the amounts owed by the Company
under its existing Amended and Restated Loan and Security
Agreement, dated May29, 2015, with MidCap Financial Trust (the
Prior Agreement). Upon the repayment of all amounts owed by the
Company under the Prior Agreement, all commitments under the
Prior Agreement have been terminated and all security interests
granted by the Company and the Subsidiary Guarantors to the
lenders under the Prior Agreement have been released. The Company
intends to use the remainder of the initial loan proceeds (after
deducting loan origination costs and broker and other fees) of
approximately $14.0million, plus any additional amounts that may
be borrowed in the future, for general corporate purposes and
working capital.

The Loan Agreement has a six-year term with three years of
interest-only payments (which can be extended to four years if
the Company achieves certain net revenue and market
capitalization thresholds prior to December31, 2019), after which
quarterly principal and interest payments will be due through the
December31, 2022 maturity date. Interest on the amounts borrowed
under the Loan Agreement accrues at an annual fixed rate of
12.50%, 3.5% of which (i.e., a resultant 9.0% rate) may be
deferred during the interest-only period by adding such amount to
the aggregate principal loan amount. On each borrowing date
(including the Closing Date), the Company is required to pay CRG
a financing fee based on the loan drawn on that date. The Company
is also required to pay the Lenders a final payment fee upon
repayment of the Loans in full, in addition to prepayment amounts
described below.

The Company may prepay all or a portion of the outstanding
principal and accrued unpaid interest under the Loan Agreement at
any time upon prior notice to the Lenders subject to a certain
prepayment fees during the first five years of the term (which
fees are lowered over time) and no prepayment fee thereafter. In
certain circumstances, including a change of control and certain
asset sales or licensing transactions, the Company is required to
prepay all or a portion of the loan, including the applicable
prepayment premium of on the amount of the outstanding principal
to be prepaid.

As security for its obligations under the Loan Agreement, on the
funding date of the initial borrowing, the Company and the
Subsidiary Guarantors entered into a security agreement with CRG

whereby the Company and the Subsidiary Guarantors granted to CRG,
as collateral agent for the Lenders, a lien on substantially all
of its assets including intellectual property (subject to certain
exceptions). The Loan Agreement requires the Company to maintain
an agreed to minimum cash and cash equivalents balance and, each
year through the end of 2022, to meet a minimum net annual
revenue threshold. In the event that the Company does not meet
the minimum net annual revenue threshold, then the Company can
satisfy the requirement for that year by raising two (2)times the
shortfall by way of raising equity or subordinated debt.

The Loan Agreement also contains customary affirmative and
negative covenants for a credit facility of this size and type,
including covenants that limit or restrict the Companys ability
to, among other things (but subject in each case to negotiated
exceptions), incur indebtedness, grant liens, merge or
consolidate, dispose of assets, make investments, make
acquisitions, enter into transactions with affiliates, pay
dividends or make distributions, license intellectual property
rights on an exclusive basis or repurchase stock.

The Loan Agreement includes customary events of default that
include, among other things, non-payment, inaccuracy of
representations and warranties, covenant breaches, a material
adverse change (as defined in the Loan Agreement), cross default
to material indebtedness or material agreements, bankruptcy and
insolvency, material judgments and a change of control. The
occurrence and continuance of an event of default could result in
the acceleration of the obligations under the Loan Agreement.
Under certain circumstances, a default interest rate of an
additional 4.00%per annum will apply on all outstanding
obligations during the existence of an event of default under the
Loan Agreement.

In connection with the initial borrowing made under the Loan
Agreement on February21, 2017, the Company issued to CRG and
certain of its affiliates five separate warrants to purchase an
aggregate of 1,701,582 shares of the Companys common stock (the
CRG Warrants).The CRG Warrants are exercisable any time prior to
February21, 2027 at a price of $2.38 per share, with typical
provisions for cashless exercise and stock-based anti-dilution
protection. The exercise of the CRG Warrants could have a
dilutive effect to the Companys common stock to the extent that
the market price per share of the Companys common stock, as
measured under the terms of the CRG Warrants, exceeds the
exercise price of the CRG Warrants. CRG is also entitled to
receive a smaller amount of similar warrants concurrently with
the funding, if applicable, of the Second Draw and the Third
Draw.

The foregoing description of the Loan Agreement is only a summary
of its material terms and does not purport to be complete. Copies
of the Loan Agreement, the form of security agreement and the
form of Warrant are attached as Exhibits 10.1, 10.2 and 10.3,
respectively to this Current Report on Form 8-K and are
incorporated herein by reference. The Loan Agreement is not
intended to be a source of factual, business or operational
information about the Company or its subsidiaries. The
representations, warranties and covenants contained in the Loan
Agreement were made only for purposes of such agreement and as of
specific dates, were solely for the benefit of the parties to
such agreement, and may be subject to limitations agreed upon by
the parties, including being qualified by disclosures for the
purpose of allocating contractual risk between the parties
instead of establishing matters as facts; and may be subject to
standards of materiality applicable to the contracting parties
that differ from those applicable to investors or security
holders. Accordingly, investors should not rely on the
representations, warranties and covenants or any descriptions
thereof as characterizations of the actual state of facts or
condition of the parties.

The information set forth above in Item1.01 relating to the Prior
Agreement is incorporated herein by reference.

The information set forth in Item1.01 above with respect to the
Loan Agreement is incorporated herein by reference.

In connection with the Loan Agreement described in Item 1.01 of
this Current Report, the Company issued a press release on
February23, 2017. This press release is attached to this Current
Report as Exhibit 99.1.

Cautionary Note Regarding Forward-Looking
Statements

This Current Report on Form 8-K, the press release included
herein, the upcoming presentation referenced in such press
release, and any statements of representatives and partners of
BioDelivery Sciences International, Inc. (the Company) related
thereto, contain, or may contain, among other things, certain
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements involve significant risks and uncertainties. Such
statements may include, without limitation, statements with
respect to the Companys plans, objectives, projections,
expectations and intentions and other statements identified by
words such as projects, may, will, could, would, should,
believes, expects, anticipates, estimates, intends, plans,
potential or similar expressions. These statements are based upon
the current beliefs and expectations of the Companys management
and are subject to significant risks and uncertainties, including
those detailed in the Companys filings with the Securities and
Exchange Commission. Actual results (including, without
limitation, the impact of the Companys new debt facility
described herein) may differ significantly from those set forth
in the forward-looking statements. These forward-looking
statements involve certain risks and uncertainties that are
subject to change based on various factors (many of which are
beyond the Companys control). The Company undertakes no
obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or
otherwise, except as required by applicable law.

About BioDelivery Sciences International, Inc. (NASDAQ:BDSI)

BioDelivery Sciences International, Inc. is a specialty pharmaceutical company. The Company develops and commercializes, either on its own or in partnerships with third parties, applications of approved therapeutics to address unmet medical needs using drug delivery technologies. The Company develops pharmaceutical products aimed principally in the areas of pain management and addiction. The Company’s products utilize the BioErodible MucoAdhesive (BEMA) drug delivery technology, a small, erodible polymer film for application to the buccal mucosa (the lining inside the cheek). The Company’s United Sates Food and Drug Administration (FDA) approved product, ONSOLIS (fentanyl buccal soluble film), as well as its approved products BUNAVAIL (buprenorphine and naloxone buccal film) buccal film and BELBUCA (buprenorphine) buccal film, utilize BEMA technology.

BioDelivery Sciences International, Inc. (NASDAQ:BDSI) Recent Trading Information

BioDelivery Sciences International, Inc. (NASDAQ:BDSI) closed its last trading session up +0.12 at 2.00 with 450,215 shares trading hands.