Exhibit 10.2

Hopkins Capital Group II, LLC

709 The Hamptons Lane

St. Louis, MO 63017

BINDING LETTER OF INTENT AND TERMINATION AGREEMENT

August 23, 2004

BioDelivery Sciences International, Inc.

UMDNJ-New Jersey Medical School

185 South Orange Avenue, Administrative Building 4

Newark, NJ 07103

Ladies and Gentlemen:

Reference is made to that certain Facility Loan Agreement, dated August 2, 2004 (the “ Loan Agreement ”), by and between BioDelivery Sciences International, Inc. (“ BDSI ”) and Hopkins Capital Group II, LLC (“ HCG ”). Subject to formal approval of BDSI’s Board of Directors and completion of legal documentation satisfactory to all parties, we are pleased to provide you with this letter agreement (this “ Agreement ”) to set forth the agreement of BDSI and HCG with respect to: (i) the termination of the Loan Agreement and (ii) the entry into by the parties of an Equity Line of Credit Agreement (the “ Equity Line Agreement ”) to replace the Loan Agreement upon the terms set forth herein.

By executing this Agreement, the parties confirm their intentions specified herein with respect to the Equity Line Agreement. This Agreement is intended by the parties to be, and is and shall be, legally binding and enforceable upon the execution of this Agreement unless and until modified or terminated by the final Equity Line Agreement. For the avoidance of doubt, should the Equity Line Agreement not be entered into, the terms of this Agreement shall nonetheless remain enforceable and binding on the parties.

1. Termination of Loan Agreement . Pursuant to the terms of the Loan Agreement, BDSI and HCG hereby unconditionally terminate the Loan Agreement, agree that no party thereto shall hereinafter have any rights or obligations thereunder and release each other and their respective affiliates from any and all claims of action that the parties may have against one another thereunder. Any and all amounts funded as of or prior to the date hereof under the Loan Agreement shall be deemed for all purposes to have been contributed to BDSI in consideration for shares of BDSI Series B Preferred (as defined below) and otherwise on the terms set forth herein and in the Equity Line Agreement.

2. Equity Line Agreement . Pursuant to the Equity Line Agreement, HCG agrees, at the request of BDSI, to invest up to $4,000,000 in BDSI from August 23, 2004 through March 31, 2006 in consideration of shares of a newly created class of Series B Convertible Series B Preferred of BDSI (the “ Series B Preferred ”). The terms of the Series B Preferred shall be as follows:

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3. Governing Law . This Agreement and the Equity Line Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey applicable to agreements made and to be fully performed therein, without regard to conflicts of law principles.

4. Amendments . This Agreement may not be modified or amended except in a writing duly executed by the parties hereto.

5. Headings . The section headings in this Agreement have been inserted as a matter of reference and are not part of this Agreement.

6. Successors and Assigns . The benefits of this Agreement shall inure to the parties hereto, their respective successors and assigns and to the indemnified parties hereunder and their respective successors and assigns, and the obligations and liabilities assumed in this Agreement shall be binding upon the parties hereto and their respective successors and assigns. Notwithstanding anything contained herein to the contrary, neither party shall assign any of its obligations hereunder without the prior written consent of the other party.

7. No Third Party Beneficiaries . This Agreement does not create, and shall not be construed as creating, any rights enforceable by any person or entity not a party hereto.

8. Waiver . Any waiver or any breach of any of the terms or conditions of this Agreement shall not operate as a waiver of any other breach of such terms or conditions or of any other term or condition, nor shall any failure to insist upon strict performance or to enforce any provision hereof on any one occasion operate as a waiver of such provision or of any other provision hereof or a waiver of the right to insist upon strict performance or to enforce such provision or any other provision on any subsequent occasion. Any waiver must be in writing.

9. Counterparts . This Agreement may be executed in any number of counterparts and by facsimile transmission, each of which shall be deemed to be an original instrument, but all of which taken together shall constitute one and the same agreement. Facsimile signatures shall be deemed to be original signatures for all purposes.

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If the foregoing correctly sets forth our agreement, please sign the enclosed copy of this Agreement in the space provided below and return it to us.

Agreed to and accepted this 23rd day of August, 2004

BioDelivery Sciences International, Inc.

[Signature Page to Binding Letter Agreement]

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Exhibit 10.3

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (this “ Agreement ”) is made and entered into effective as of August 24, 2004, by and between BioDelivery Sciences International, Inc., a Delaware corporation (the “ Company ”) and the other persons and entities signatory hereto (collectively, the “ Series A Stockholders ”).

RECITALS

WHEREAS , pursuant to that certain Agreement and Plan of Merger and Reorganization, dated as of August 10, 2004, the Company has agreed to grant to the Series A Stockholders the registration rights set forth herein.

NOW, THEREFORE , to implement the foregoing and in consideration of the mutual terms, conditions and covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

1. Piggyback Registration .

(a) Right to Piggyback Registration . Subject to the terms hereof, whenever the Company proposes to register any Company Equity Securities under the Securities Act (other than pursuant to a registration statement on Form S-4, Form S-8 or any successor form) and the registration statement form to be used may be used for the registration of Registrable Securities, the Company shall give prompt written notice to the Series A Stockholders of its intention to effect such a registration. Subject to Section 1(b) below, the Company shall include in such registration and use commercially reasonable efforts to include in any underwriting all shares of Registrable Securities held by the Series A Stockholders with respect to which the Company has received a written request from the Series A Stockholders for inclusion therein within 30 days after the receipt of the Company’s notice (such registration, a “ Piggyback Registration ”).

(b) Priority on Primary Registrations . If a Piggyback Registration is an underwritten primary registration on behalf of the Company, and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold without materially and adversely affecting the marketability of such offering or the timing thereof, the Company shall include in such registration all Registrable Securities held by the Series A Stockholders on the condition that the Series A Stockholders will agree to refrain from selling a reasonable number of such Registrable Securities (as determined in good faith by the Company based on the impact on the timing and marketability of the offering of the sale immediate by the Series A Stockholders of all of its Registrable Securities) for a three (3) month period following the declaration of effectiveness of the applicable registration statement.

2. Registration Procedures . Whenever the Series A Stockholders request that any Registrable Securities be registered pursuant to this Agreement, the Company shall use its

commercially reasonable efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof, and pursuant thereto the Company shall as expeditiously as possible:

(a) prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its reasonable best efforts to cause such registration statement to become effective;

(b) notify the Series A Stockholders of the effectiveness of each registration statement filed hereunder and prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and the prospectus included therein usable for a period commencing on the date that such registration statement is initially declared effective by the SEC and ending on the date when all Registrable Securities covered by such registration statement have been sold pursuant to the registration statement or cease to be Registrable Securities, and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such registration statement;

(c) furnish to the Series A Stockholders such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus) and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by the Series A Stockholders;

(d) use its commercially reasonable efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as the Series A Stockholders reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable the Series A Stockholders to consummate the disposition in such jurisdictions of the Registrable Securities owned by the Series A Stockholders; provided, that the Company shall not be required to: (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph; (ii) subject itself to taxation in any such jurisdiction; or (iii) consent to general service of process in any such jurisdiction;

(e) notify the Series A Stockholders, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading, and, at the request of the Series A Stockholders, the Company shall prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading;

(f) cause all such Registrable Securities to be listed or quoted on each securities exchange or market on which similar securities issued by the Company are then listed;

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(g) provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such registration statement;

(h) enter into such customary agreements (including underwriting agreements in customary form) in order to expedite or facilitate the disposition of such Registrable Securities;

(i) make available for inspection by any underwriter participating in any disposition pursuant to such registration statement, and any attorney, accountant or other agent retained by any such underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, directors, managers, employees and independent accountants to supply all information reasonably requested by any such underwriter, attorney, accountant or agent in connection with such registration statement;

(j) otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least 12 months beginning with the first day of the Company’s first full calendar quarter after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;

(k) in the event of the issuance of any stop order suspending the effectiveness of a registration statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any Registrable Securities included in such registration statement for sale in any jurisdiction, the Company shall use its reasonable best efforts promptly to obtain the withdrawal of such order;

(l) subject to Section 2(d) above, use its reasonable best efforts to cause any Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the sellers thereof to consummate the disposition of such Registrable Securities; and

(m) if the offering is underwritten, use its reasonable best efforts to furnish on the date that Registrable Securities are delivered to the underwriters for sale pursuant to such registration, an opinion dated such date of counsel representing the Company for the purposes of such registration, addressed to the underwriters covering such issues as are reasonably required by such underwriters.

3. Registration Expenses .

(a) Payment of Registration Expenses . All expenses incident to the Company’s performance of or compliance with this Agreement, including without limitation all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, fees and disbursements of custodians, and fees and disbursements of counsel for the Company and all independent certified public accountants, underwriters (excluding underwriting discounts and commissions relating to the Registrable Securities) and other Persons retained by the Company (all such expenses being herein called “ Registration Expenses ”), shall be borne by the Company. The Company shall, in addition, pay

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its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance and the expenses and fees for listing or quoting the securities to be registered on each securities exchange on which similar securities issued by the Company are then listed or on the NASDAQ Stock Market.

(b) Payment of Registration Expenses by Holders of Registrable Securities . To the extent Registration Expenses are not required to be paid by the Company (including, without limitation, any underwriting discounts or commissions that are the responsibility of the holders of Registrable Securities), each holder of the Series A Stockholders shall pay those Registration Expenses allocable to the registration of the Series A Stockholders’ securities so included, and any Registration Expenses not so allocable shall be payable by all sellers of securities included in such registration in proportion to the aggregate selling price of the securities to be so registered.

4. Indemnification .

(a) Indemnification by The Company . The Company agrees to indemnify, to the extent permitted by law, the Series A Stockholders and their agents and representatives against all losses, claims, damages, liabilities and expenses caused by any untrue or alleged untrue statement of material fact contained in any registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are caused by or contained in any information furnished in writing to the Company by such holder expressly for use therein, results from the failure of the Series A Stockholders to provide information necessary for the registration statement to the Company, or by the Series A Stockholders’ failure to deliver a copy of the registration statement or prospectus or any amendments or supplements thereto after the Company has furnished such holder with a sufficient number of copies of the same.

(b) Indemnification by the Series A Stockholders . In connection with any registration statement in which the Series A Stockholders is participating, the Series A Stockholders shall furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such registration statement or prospectus and, to the extent permitted by law, shall indemnify the Company, its officers, directors, employees, agents and representatives and each Person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses resulting from any untrue or alleged untrue statement of material fact contained in the registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto resulting from such information provided by the Series A Stockholders or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading and not provided by the Series A Stockholders; provided that the obligation to indemnify shall be be limited to the net amount of proceeds received by the Series A Stockholders from the sale of Registrable Securities pursuant to such registration statement.

(c) Procedure For Indemnification . Any Person entitled to indemnification hereunder shall: (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any

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Person’s right to indemnification hereunder to the extent such failure has not prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. Notwithstanding anything in this Section 4(c) to the contrary, in the event the Company determines, in good faith, that a claim materially affects the interests of the Company, the Company may solely control the defense of such claim with counsel reasonably satisfactory to the Company. In the event the Company is an indemnified party pursuant to this Section 4, the indemnifying party may be subject to liability if the Company settles a claim in good faith and in a reasonable manner.

5. Participation in Underwritten Registrations . The Series A Stockholders may not participate in any registration hereunder unless the Series A Stockholders:

(a) in the case of a registration which is underwritten, agrees to sell the Series A Stockholders’s securities on the basis provided in any underwriting arrangements approved by the Company;

(b) as expeditiously as possible, notifies the Company, at any time when a prospectus relating to such the Series A Stockholders’ Registrable Securities is required to be delivered under the Securities Act, of the happening of any event as a result of which such prospectus contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading; and

(c) completes, executes and delivers all questionnaires, powers of attorney, indemnities, underwriting agreements and other usual and customary documents necessary or appropriate with respect to the offering of such the Series A Stockholders’ Registrable Securities, and in the case of a registration which is underwritten, necessary or appropriate under the terms of such underwriting arrangements (subject to the provision in Section 5(a) above).

6. Definitions .

(a) The term “ Capital Stock ” means and includes (a) any and all shares, interests, participations or other equivalents of or interests in (however designated) corporate stock, including shares of preferred or preference stock and (b) all equity or ownership interests in any Person of any other type, including any securities convertible into or exchangeable for any of the foregoing or any options, warrants or other rights to subscribe for, purchase or acquire any of the forgoing.

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(b) The term “ Common Stock ” means the shares of common stock, par value $.001 per share, of the Company.

(c) The term “ Company Equity Securities ” means any Capital Stock of the Company or options, warrants or other rights acquire Capital Stock of the Company.

(d) The term “ Person ” means any individual, Company, partnership, joint venture, association, joint-stock company, limited liability company, trust or unincorporated organization.

(e) The term “ Registrable Securities ” means all shares of Common Stock held by the Series A Stockholders or the shares of Common Stock issuable upon the conversion of shares of Series A Stock held by the Series A Stockholders; provided, however , that as to any particular Registrable Securities that have been issued, such securities shall cease to be Registrable Securities when: (i) a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of under such registration statement, (ii) all Registrable Securities owned by a holder thereof may be resold in a single 90-day period pursuant to Rule 144 under the Securities Act (or any similar rule then in force), (iii) they shall have been distributed to the public pursuant to Rule 144 under the Securities Act (or any similar rule then in force), (iv) they become available for sale under Rule 144(k) under the Securities Act (or any similar rule then in force), or (v) they shall have ceased to be outstanding.

(f) The term “ SEC ” mean the United Stated Securities and Exchange Commission.

(g) The term “ Securities Act ” means the Securities Act of 1933, as amended, or any similar federal law then in force.

(h) The term “ Securities Exchange Act ” means the Securities Exchange Act of 1934, as amended, or any similar federal law then in force.

(i) The term “ Series A Stock ” means the shares of Series A Non-Voting Convertible Preferred Stock of the Company, par value $.001 per share.

7. Miscellaneous .

(a) No Inconsistent Agreements . The Company shall not hereafter enter into any agreement with respect to its securities which is inconsistent with or violates the rights granted to the Series A Stockholders under this Agreement, and in the event that any such agreement is entered into by the Company, the terms and provisions of this Agreement will prevail over those contained in any such agreement.

(b) Remedies . Any Person having rights under any provision of this Agreement shall be entitled to enforce such rights specifically to recover damages caused by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or other security) for specific performance and for other injunctive relief in order to enforce or prevent violation of the provisions of this Agreement.

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(c) Amendments And Waivers . Except as otherwise provided herein, the provisions of this Agreement may be amended or waived only upon the prior written consent of the Company and the Series A Stockholders.

(d) Successors And Assigns . All covenants and agreements in this Agreement by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not. In addition, whether or not any express assignment has been made, the provisions of this Agreement which are for the benefit of purchasers or holders of Registrable Securities are also for the benefit of, and enforceable by, any subsequent holder of Registrable Securities. Upon any transfer of Registrable Securities, the holder of the Registrable Securities shall use its best efforts to have the new holder of Registrable Securities sign a joinder agreement pursuant to which such transferee shall agree to be bound by the terms of this Agreement applicable to the holder of such Registrable Securities, provided that, even in the absence of such joinder agreement, by taking and holding such Registrable Securities, such new holder shall be conclusively deemed to have agreed to be bound by the terms hereof applicable to such new holder.

(e) Severability . Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.

(f) Counterparts; Facsimile Transmission . This Agreement may be executed in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same Agreement. Any such counterpart delivered to the Company shall be effective if received by the Company no later than September 6, 2004. Each party to this Agreement agrees that it will be bound by its own facsimile signature and that it accepts the facsimile signature of each other party to this Agreement.

(g) Descriptive Headings . The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

(h) Governing Law . This Agreement shall be construed and governed in accordance with the laws of the State of New Jersey, without regard to its conflicts of laws principles.

(i) Notices . All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given when delivered in conformance with the applicable provisions of the Merger Agreement.

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IN WITNESS WHEREOF , the parties have executed this Agreement as of the date first written above.

[Signature Pages Continue]

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Signature Page to Registration Rights Agreement

[End of Signature Pages to Registration Rights Agreement]

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Exhibit 10.4

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (the “ Agreement ”) is entered into effective as of August 24, 2004 by and between Mark A. Sirgo (“ Employee ”) and BioDelivery Sciences International, Inc. (the “ Company ”). As used in Sections 5 through 14 hereof, the term “Company” includes BioDelivery Sciences International, Inc. and its subsidiaries, including Arius (as defined below).

WHEREAS , the Company is engaged in the business of researching and developing drug delivery technologies;

WHEREAS , as of the date hereof, the Company has acquired Arius Pharmaceuticals, Inc., a Delaware corporation (“ Arius ”) by merger, with the result being that Arius is now a wholly-owned subsidiary of the Company;

WHEREAS , Employee was heretofore an officer and director of Arius; and

WHEREAS , in light of the foregoing, the Company and Employee are willing to commence an employment relationship, on the terms, conditions and covenants set forth in this Agreement.

NOW, THEREFORE , in consideration of Employee’s commencement of employment with the Company and Arius, the mutual covenants contained herein and other good and valuable consideration, receipt of which Employee and the Company hereby acknowledge, Employee and the Company agree, as follows:

1. Position . Employee agrees to employment with the Company in the positions of Senior Vice President of Commercial and Corporate Development of the Company and President of Arius. Employee further agrees to perform the job duties and to carry out the responsibilities of that position, as reasonably determined by the Chief Executive Officer of the Company from time to time or the Board of Directors of the Company consistent with the customary duties of such position and the Bylaws of the Company and Arius (the “ Board of Directors ”). Employee shall report to the Chief Executive Officer of the Company.

2. Employee’s Effort . Employee shall perform his duties in the capacity as an employee and in such capacity shall spend the necessary working time and best efforts, skill and attention to his position and to the business and interests of the Company. Employee shall be primarily responsible for commercialization activities for the Company’s pharmaceutical and vaccine products, with an initial focus on Arius’ orally- and bucally-delivered products and product candidates.

3. Base Salary; Bonus; Benefits .

(a) Base Salary . The Company shall pay Employee compensation for services rendered in the amount of no less than One Hundred Seventy-Five Thousand Dollars ($175,000) per annum (the “ Base Salary ”), payable on a bi-weekly basis or otherwise in accordance with the Company’s standard policies. Employee’s Base Salary may be subject to annual increases as determined by the Board of Directors of the Company in its sole discretion.

(b) Signing Bonus . As of the date hereof, the Company shall pay to employee a one-time cash bonus of Thirty One Thousand One Hundred Seventy-Seven Dollars and Ninety Cents ($31,177.90). The Company shall be required to withold from such bonus any and all taxes.

(c) Optional Bonus . Employee shall also be elligible to receive a cash bonus for each Company fiscal year of up to fifty percent (50%) of the Base Salary, which bonus shall be granted in the sole and absolute discretion of the Board of Directors or a designated committee thereof.

(d) Other Compensation and Benefits . In addition, Employee shall receive such additional compensation or other benefits as are provided to Company employees generally and similarly-situated Company employees specifically (including, without limitation, three (3) weeks paid vacation and days off administered in accordance with prevailing Company policy), or as may be determined in the sole and absolute discretion of the Board of Directors or a designated committee thereof; provided, however, that it is understood and agreed that the Employee shall not be entitled to participate in the Company’s 2001 Stock Option Plan until the date on which Employee’s shares of the Company’s Series A Non-Voting Convertible Preferred Stock (“ Series A Stock ”) are eligible for conversion into shares of common stock of the Company. Furthermore, Employee shall be reimbursed for expenses properly documented as per the Company’s policy including, without limitation, any reasonable expenses incurred by Employee on behalf of Arius from August 10, 2004 through the date hereof.

4. Term; Termination . Unless earlier terminated under this Section 4, this Agreement and the status and obligations of Employee thereunder as an employee of the Company (except as provided for below) shall be effective for a period ending on August 24, 2007 (the “ Initial Term ”) and, after the expiration of the Initial Term, this Agreement shall automatically renew for successive one (1) year terms (each a “ Renewal Term ” and, collectively with all Renewal Terms and the Initial Term, the “ Term ”) unless, following the Initial Term, either party gives thirty (30) days’ advance written notice of its intention not to renew this Agreement at the conclusion of the next Renewal Term. Termination of this Agreement shall not, in any event, affect any rights that Employee may have been specifically granted to Employee by the Board of Directors or a designated committee thereof pursuant to any of the Company’s retirement plans, supplementary retirement plans, profit sharing and savings plans, healthcare, 401(k) any other employee benefit plans sponsored by the Company, it being understood that no such rights are granted hereunder. In addition, notwithstanding the expiry or termination of this Agreement pursuant to this Section 4 or otherwise, Employee’s rights and obligations under Sections 5 through 14 inclusive of this Agreement shall survive the such termination or expiration of this Agreement in accordance with the terms of such Sections.

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(e) Death . This Agreement shall automatically terminate upon the death of Employee and all of his rights hereunder, including the rights to receive compensation and benefits, except as otherwise required by law, shall terminate.

(f) Termination with Notice by Either Party . The Company or Employee may terminate this Agreement for any reason or no reason upon thirty (30) days prior written notice to the other. In case of termination by the Company only under this paragraph, the Company shall pay Employee a one-time cash severance payment equal to a full year’s Base Salary. The Company shall have no further obligations to Employee following termination.

(g) Termination for Good Cause . As used herein “ Good Cause ” shall mean any one or more of the following as determined in the reasonable discretion of the Company:

(1) a continuing material breach or material default (including, without limitation, any material deriliction of duty) by Employee of the terms of this agreement, or any related agreement which is an Exhibit hereto, except for any such breach or default which is caused by the physical disability of Employee (as determined by a neutral physician);

(2) gross negligence, willful misfeasance or breach of fiduciary duty by Employee;

(3) the commission by Employee of an act of fraud, embezzlement or any felony or crime of dishonesty in connection with Employee’s duties; or

(4) conviction of Employee of a felony or any other crime that would materially and adversely affect: (i) the business reputation of the Company or (ii) the performance of the Employee’s duties hereunder.

In the event of a termination by the Company for Good Cause, the Company will pay the Employee the Base Salary earned and expenses reimbursable under this Agreement incurred through the date of the Employee’s termination, and shall have no further responsibility for termination or other payments to Employee.

Furthermore, upon termination by the Company of the Employee’s employment with the Company without Good Cause (as defined above) or termination of employment by the Employee for Good Reason (as defined below) prior to an FDA Approval, the Employee may convert his shares of Series A Stock into a number of shares of Company common stock equal to the product obtained by multiplying the Series A Stock Conversion Rate (as defined in Arius’ Certificate of Designation, dated August 20, 2004) then in effect by the number of shares of Series A Stock being converted. As used herein, the term “ FDA Approval ” shall mean the first approval by the U.S Food and Drug Administration for the marketing and sale by the Company or any of its subsidiaries of any of the following products: Emezine, BEMA-Fentanyl, BEMA-Sumitriptan or any product which primarily incorporates technology similar to the foregoing for the buccal delivery of pharmaceuticals.

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(h) Termination for Good Reason . Employee may terminate his employment under this Agreement at any time for “Good Reason.” In case of termination hereof by the Employee for Good Reason, the Company shall pay Employee a one-time cash severance payment equal to his annual Base Salary (it being agreed that the Company may condition payment of such severance amount upon its receipt of a general release by Employee in the form reasonably acceptable to the Company and Employee) and Employee shall maintain any rights that Employee may have been specifically granted to Employee pursuant to any of the Company’s retirement plans, supplementary retirement plans, profit sharing and savings plans, healthcare, 401(k) any other employee benefit plans sponsored by the Company. Following the payment of severance, the Company shall have no further obligations to Employee following termination.

For purposes of this Agreement, the term “ Good Reason ” means, in each case without the consent of Employee:

(1) any material diminution in the office, title, duties, powers, authority or responsibilities, which diminution is not corrected within thirty (30) days after the Company receives written notice thereof from Employee;

(2) Employee’s place of work is moved more than seventy-five (75) miles from Employee’s home address in Raleigh, North Carolina;

(3) (A) the Company fails to pay Employee his Base Salary in accordance with generally applicable Company policy or (B) Employee’s Base Salary is decreased without consent of Employee, which failure or decrease is not corrected within thirty (30) days after the Company receives written notice thereof from Employee; or

(4) Employee is discriminatorily denied material benefits under the Company’s prevailing policies and plans, which denial is not corrected within thirty (30) days after the Company receives written notice thereof from Employee.

5. Confidentiality . Employee shall keep confidential, except as the Company may otherwise consent in writing, and not disclose or make any use of except for the benefit of the Company, at any time during the term of this Agreement and for a period of five (5) years thereafter, any trade secrets, knowledge, data or other confidential, secret or proprietary information of the Company relating to inventions, products, processes, knowledge, know how, technical or other data, designs, formulas, test data, customer lists, business plans, marketing plans and strategies, and product pricing strategies or other subject matter pertaining to any business of the Company or any of its clients, customers, consultants, licensees, subsidiaries or affiliates which Employee may produce, obtain or otherwise learn of during the course of Employee’s performance of services and after its termination (collectively “ Confidential Information ”), provided that the term “Confidential Information” shall not include information, technical data or know-how that is or becomes part of the public domain not as a result of any inaction or action of the Employee. Employee shall not deliver, reproduce, or in any way allow any such Confidential Information to be delivered to or used by any third parties without the

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specific direction or consent of a duly authorized representative of the Company. The terms of this paragraph shall survive termination of this Agreement. Employee agrees to execute the Confidentiality and Intellectual Property Agreement attached as Exhibit A hereto (the “ Confidentiality Agreement ”).

6. Return of Confidential Material . Upon the completion or other termination of Employee’s services for the Company, Employee shall promptly surrender and deliver to the Company all records, materials, equipment, drawings, documents, lab notes and books and data of any nature (electronic or otherwise) describing, including or pertaining to any Confidential Information, and Employee will not take with him any description containing or pertaining to any Confidential Information which Employee may produce or obtain during the course of his services. The terms of this paragraph shall survive termination of this Agreement.

7. Assignment and Disclosure of Inventions . Employee shall assign and transfer to the Company his entire right, title and interest in and to all Inventions (as defined in the Confidentiality Agreement) and disclose to the Company all Inventions in accordance with the terms set forth in the Confidentiality Agreement. The terms of this paragraph shall survive termination of this Agreement.

8. Execution of Documents . During the term of this Agreement and thereafter, Employee will execute, acknowledge and deliver to the Company or its nominee upon request and at its expense all such documents, including applications for patents and copyrights and assignments of inventions, patents and copyrights to be issued therefore, as the Company may reasonably determine necessary or desirable to apply for and obtain letters, patents, and copyrights on Inventions in any and all countries and/or to protect the interest of the Company or its nominee in Inventions, patents and copyrights and to vest title thereto in the Company or its nominee. The terms of this paragraph shall survive termination of this Agreement.

9. Maintenance of Records . Employee will keep and maintain adequate and current written records of all Inventions made or conceived by Employee (in the form of notes, sketches, drawings and as may be specified by the Company), and shall deliver such records promptly to the Company at the Company’s request, whether made solely by Employee or jointly with others, which records shall be available to and remain the sole property of the Company at all times.

10. Prior Inventions . It is understood that all Inventions, if any, patented or unpatented, which Employee made prior to the date that the Company and Employee entered into this Agreement, are excluded from the scope of this Agreement. To preclude any possible uncertainty, Employee has set forth on Exhibit A to the Confidentiality Agreement a complete list of all such prior inventions, including numbers of all patents and patent applications, and a brief description of all unpatented inventions which are not the property of another party (including, without limitation a current or previous contracting party). If no items are included on Exhibit A to the Confidentiality Agreement, Employee has no such prior inventions. Employee will notify the Company in writing before Employee makes any disclosure or performs any work on behalf of the Company which appears to threaten or conflict with proprietary rights Employee claims in any such invention or idea. In the event of Employee’s failure to give such notice, Employee will make no claim against the Company with respect to any such inventions or ideas. The terms of this paragraph shall survive termination of this Agreement.

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11. Competition . Employee will not do, or intend to do, any of the following, either directly or indirectly, during Employee’s employment with the Company and during the period of two (2) years after Employee’s cessation of employment with the Company, anywhere in the world. In the event that a court of competent jurisdiction determines that Employee improperly competes with the Company in violation of this Section 11, the period during which he engages in such competition shall not be counted in determining the duration of the two (2) year non-compete restriction:

(a) For purposes of this Agreement, “ Competitive Activity ” shall mean the development, manufacture, sale, license, packaging or marketing of the following technologies (or products incorporating such technologies): (i) (A) anionic phospholipid delivery technology or (B) buccal delivery technology, in each case for the delivery of drugs or nutrients for human or non-human applications and (ii) any technology or product which Employee was actively and directly participating in on behalf of the Company or any subsidiary of the Company or joint venture in which the Company is participating at the time of termination (it being understood, for the avoidance of doubt, that the words “actively and directly” shall not include Employee’s actions in a merely supervisory capacity).

(b) Employee agrees that, during the time frames described herein, he shall not, directly or indirectly, own, manage, operate, control, consult for, be an officer or director of, work for, or be employed in any capacity by any company, eleemosynary institution or any other business, entity, agency or organization (or a discrete business unit within any such entity) whose primary business purpose is to engage in a Competitive Activity; provided, however, that Employee may serve as a director, consultant or scientific advisor of such an entity that is either a Company licensee, or, for non-licensees, in such capacity as the Board of Directors has granted him written permission, such permission not to be unreasonably withheld.

(c) Employee shall not solicit or perform services in connection with any Competitive Activity for any prior or current customers of the Company or any entities with which the Company has undertaken joint studies or developmental activities; or

(d) Employee shall not knowingly solicit for employment (or, following such solicitation, employ) any then current employees employed by the Company without the Company’s consent.

Employee and Company agree that the phrase “Employee’s cessation of employment with the Company” as used in this Agreement, refers to any separation from his employment at the Company either voluntarily or involuntarily, either with cause or without cause, or whether the separation is at the behest of the Company or Employee. Nothing in this Agreement shall preclude him from employment at a not-for-profit or governmental institution, provided that no for-profit business involved in drug delivery directly or indirectly derives a benefit from Employee’s employment.

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12. Other Obligations .

(a) Employee acknowledges that the Company from time to time may have agreements with other persons or with the U.S. Government, or agencies thereof, which impose obligations or restrictions on the Company regarding inventions made during the course of work thereunder or regarding the confidential nature of such work. Employee will be bound by all such obligations and restrictions and will take all action necessary to discharge the obligations of the Company thereunder.

(b) Employee acknowledges that all of Employee’s obligations under this Agreement (but not including the restrictive covenants contained herein) shall be subject to any applicable agreements with, and policies issued by the Company to which Employee and all other similarly-situated employees are subject.

13. Trade Secrets of Others . Employee represents that his performance of all the terms of this Agreement as employee to the Company does not and will not breach any agreement to keep in confidence proprietary information, knowledge or data acquired by Employee in confidence or in trust, and Employee will not disclose to the Company, or allow the Company to use, any confidential or proprietary information or material belonging to any other person or entity. Employee will not enter into any agreement, either written or oral, which is in conflict with this Agreement.

14. Injunctive Relief . Employee acknowledges that any breach or attempted breach by Employee of paragraphs 5 through 13 of this Agreement shall cause the Company irreparable harm for which any adequate monetary remedy does not exist. Accordingly, in the event of any such breach or threatened breach, the Company shall be entitled to obtain injunctive relief, without the necessity of posting a bond or other surety, restraining such breach or threatened breach.

15. Reasonable Terms . Employee acknowledges and agrees that the restrictive covenants contained in this Agreement have been reviewed by Employee with the benefit of counsel and that such covenants are reasonable in all of the circumstances for the protection of the legitimate interests of the Company.

16. Modification . This Agreement may not be changed, modified, released, discharged, abandoned, or otherwise amended, in whole or in part, except by an instrument in writing, signed by Employee and by the Company. Any subsequent change or changes in Employee’s relationship with the Company or Employee’s compensation shall not affect the validity or scope of this Agreement.

17. Entire Agreement . Employee acknowledges receipt of this Agreement, and agrees that with respect to the subject matter thereof, it is Employee’s entire agreement with the Company, superseding any previous oral or written communications, representations, understandings with the Company or any office or representative thereof. Each party to the Agreement acknowledges that, in executing this Agreement, such party has had the opportunity to seek the advice of independent legal counsel, and has read and understood all of the terms and provisions of the Agreement.

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18. Severability . In the event that any paragraph or provision of this Agreement shall be held to be illegal or unenforceable, the entire Agreement shall not fail on account thereof. It is further agreed that if any one or more of such paragraphs or provisions shall be judged to be void as going beyond what is reasonable in all of the circumstances for the protection of the interests of the Company, but would be valid if part of the wording thereof were deleted or the period thereof reduced or the range of activities covered thereby reduced in scope, the said reduction shall be deemed to apply with such modifications as may be necessary to make them valid and effective and any such modification shall not thereby affect the validity of any other paragraph or provisions contained in this Agreement.

19. Successors and Assigns . This Agreement shall be binding upon Employee’s heirs, executors, administrators or other legal representatives and is for the benefit of the Company, its successors and assigns.

20. Governing Law . This Agreement shall be governed by the laws of the State of New Jersey except for any conflicts of law rules thereof that might direct the application of the substantive law of another state.

21. Counterparts . This Agreement may be signed in counterparts and delivered by facsimile transmission, and each such counterpart shall be deemed an original and all of which shall together constitute one agreement.

22. Arbitration . Except as provided for in Section 15 hereof, in the event that the Company or Employee, his spouse or any other person claiming benefits on behalf of or through Employee, has a dispute or claim based upon this Agreement including the interpretation or application of the terms and provisions of this Agreement, the sole and exclusive remedy is for that party to submit the dispute to binding arbitration in accordance with the rules of arbitration of the American Arbitration Association (“ AAA ”) in Wilmington, Delaware. Any arbitrator selected to arbitrate any such dispute shall be independent and neutral and will have the power to interpret this Agreement. Any determination or decision by the arbitrator shall be binding upon the parties and may be enforced in any court of law. The expenses of the arbitrator will be paid 50% by the Company and 50% by Employee, his spouse or other person, as the case may be, provided that the arbitrator shall be free to apportion such fees between the parties as he/she may determine in their discretion as permitted by the AAA rules of arbitration. The parties agree that this arbitration provision does not apply to the right of Employee to file a charge, testify, assist or participate in any manner in an investigation, hearing or proceeding before the Equal Employment Opportunity Commission or any other agency pertaining to any matters covered by this Agreement and within the jurisdiction of the agency.

23. No Waiver . No waiver by the Company of any breach of this Agreement by Employee shall constitute a waiver of any subsequent breach.

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24. Notice . Any notice hereby required or permitted to be given shall be sufficiently given if in writing and upon mailing by registered or certified mail, postage prepaid, to either party at the address of such party or such othis address as shall have been designated by written notice by such party to the other party.

[Signature Page Follows]

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first forth above.

[Signature Page to Employment Agreement]

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Exhibit A

Form of Confidentiality and Intellectual Property Agreement

CONFIDENTIALITY AND INTELLECTUAL PROPERTY AGREEMENT

This CONFIDENTIALITY AND INTELLECTUAL PROPERTY AGREEMENT (this “ Agreement ”) is entered into effective for all purposes as of [                   ], 2004 by                      (“ Employee ”) in favor of BioDelivery Sciences International, Inc., a Delaware corporation (the “ Company ”). As used herein, the term “Company” includes BioDelivery Sciences International, Inc. and its subsidiaries, including Arius Pharmaceuticals, Inc.

In consideration and as a condition of Employee providing services to the Company pursuant to that certain Employment Agreement, dated as of the date hereof, between Employee and the Company (the “ Employment Agreement ”), Employee hereby agrees as follows:

1. Confidentiality . At all times, Employee shall keep confidential, except as the Company may otherwise consent to in writing, and not disclose, or make any use of except for the benefit of the Company, at any time either during or subsequent to performance by Employee of services for the Company, any trade secrets, confidential information, knowledge, data or other information of the Company relating to products, processes, know-how, technical data, designs, formulas, test data, customer lists, business plans, marketing plans and strategies, and pricing strategies or other subject matter pertaining to any business of the Company or any of its clients, customers, consultants, licensees or affiliates (collectively, the “ Confidential Information ”), which Employee may produce, obtain or otherwise learn of during the course of his performance of services and after the expiration or termination of the Employment Agreement. The “Confidential Information” shall not include information, technical data or know-how that is or becomes part of the public domain not as a result of any inaction or action of the Employee. Employee shall not deliver, reproduce, or in any way allow any such Confidential Information to be delivered to or used by any third parties without the specific direction or consent of a duly authorized representative of the Company.

2. Return of Confidential Material . Upon the expiration or termination the Employment Agreement, Employee shall promptly surrender and deliver to the Company all records, materials, equipment, drawings, documents, lab notes and books and data of any nature pertaining to any Invention (as defined below) or Confidential Information of the Company or to the services provided by Employee, and Employee will not take or retain (in any form or format) any description containing or pertaining to any Confidential Information which Employee may produce or obtain during the course of the services provided under the Employment Agreement or otherwise.

3. Assignment of Inventions and Moral Rights .

(a) Employee hereby assigns and transfers to the Company, on a perpetual, worldwide and royalty-free basis, his entire right, title and interest in and to all Inventions. As used in this agreement, the term “ Inventions ” shall mean all ideas, improvements, designs, discoveries, developments, drawings, notes, documents, information and/or materials, whether or not patentable and whether or not reduced to practice, made or conceived by Employee (whether made solely by Employee or jointly with others) which: (i) occur or are conceived during the period in which Employee performs services for the Company pursuant to the Employment Agreement and (ii) which relate in any manner to drug, nutraceuticals, genes, vaccines, vitamin or other compound delivery technologies involving liposomes, proteoliposomes, cochleates, buccal, transmucosal, transdermal or oral applications and/or derivatives

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thereof (“ Delivery Technologies ”), applications of the Delivery Technologies to specific drugs, nutraceuticals, genes, vaccines, vitamins or other compounds, or result from any task assigned to or undertaken by Employee or any work performed by Employee for or on behalf of the Company or any of its affiliates.

(b) Employee hereby irrevocably transfers and assigns to the Company any and all Moral Rights that Employee may have in any Inventions. Employee also hereby forever waives and agrees never to assert against the Company, its successors or licensees any and all Moral Rights which Employee may have in any Inventions, even after expiration or termination of the Employment Agreement. For purposes of this Agreement, the term “ Moral Rights” means any right to claim authorship of a work, any right to object to any distortion or other modification of a work, and any similar right, existing under the law of any country in the world, or under any treaty.

4. Disclosure of Inventions . In connection with all Inventions contemplated by Section 3 hereof:

(a) Employee will disclose all Inventions promptly in writing to the Chief Scientific Officer of the Company, with a copy to the President of the Company, in order to permit the Company to enforce and perfect the rights to which the Company is entitled under this Agreement;

(b) Employee will, at the Company’s request, promptly execute a written assignment of title to the Company for any Invention, and Employee will preserve all Inventions as Confidential Information in accordance with the terms hereof; and

(c) Upon request, Employee will assist the Company or its nominee (at the Company’s expense) during and at any time during or subsequent to the performance of services by Employee for the Company in every reasonable way in obtaining for the Company’s own benefit patents and copyrights for all Inventions in any and all countries, which Inventions shall be and remain the sole and exclusive property of the Company or its nominee, whether or not patented or copyrighted. Employee will execute such papers and perform such lawful acts as the Company deems to be necessary to allow the Company to exercise all rights, title and interest in such patents and copyrights.

5. Execution of Documents . In connection with this Agreement, Employee will execute, acknowledge and deliver to the Company or its nominee upon request and at the Company’s expense all such documents, including applications for patents and copyrights and assignments of all Inventions, patents and copyrights to be issued therefore, as the Company may determine necessary or desirable to apply for and obtain letters patent and copyrights on all Inventions in any and all countries and/or to protect the interest of the Company or its nominee in Inventions, patents and copyrights and to vest title thereto in the Company or its nominee.

6. Maintenance of Records . Employee will keep and maintain adequate and current written records of all Inventions made by Employee (in the form of notes, sketches, drawings and as may be specified by the Company), which records shall be available to and remain the sole property of the Company at all times.

7. Prior Inventions . It is understood that all ideas, improvements, designs and discoveries, whether or not patentable and whether or not reduced to practice, which Employee made prior to the time the Company and Employee began to consider any possible performance of services contemplated by the Employment Agreement (herein referred to as “ Excluded Inventions ”) are excluded from the definition

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of Inventions as used herein. Set forth on Exhibit A attached hereto is a complete list of all Excluded Inventions, including numbers of all patents and patent applications, and a brief description of all unpatented inventions which are not the property of another party (including, without limitation, a current or previous contracting party). The list is complete and if no items are included on Exhibit A , Employee shall be deemed to have no such prior inventions within the definition of Inventions. Employee will notify the Company in writing before Employee makes any disclosure or performs any work on behalf of the Company which appears to threaten or conflict with proprietary rights Employee claims in any such Invention or idea. In the event of Employee’s failure to give such notice, Employee will make no claim against the Company with respect to any such inventions or ideas.

8. Other Obligations. Employee acknowledges that the Company, from time to time, may have agreements with other persons or entities or with the U.S. Government, or agencies thereof, which impose obligations or restrictions on the Company regarding inventions made during the course of work thereunder or regarding the confidential nature of such work. Employee will be bound by all such obligations and restrictions and will take all action necessary to discharge the obligations of the Company thereunder.

9. Trade Secrets of Others . Employee represents that his performance of all the terms of this Agreement and the Employment Agreement and as a consultant to the Company does not and will not breach any agreement to keep in confidence proprietary information, knowledge or data acquired by Employee in confidence or in trust, and Employee will not disclose to the Company, or induce the Company to use, any confidential or proprietary information or material belonging to any other person or entity. Employee will not enter into any agreement, either written or oral, in conflict herewith.

10. Non-Solicitation . Employee agrees that he will not, without the prior written consent of the Company, at any time during the term of the Employment Agreement or for a period of two (2) years from the date of the expiration or termination of the Employment Agreement for whatever reason, either individually or through any entity controlled by Employee, and either on Employee’s behalf or on behalf of any other person or entity competing or endeavoring to compete with the Company, directly or indirectly, knowingly solicit for employment or retention (or, following such solicitation, employ or retain) as an employee, independent contractor or agent, any person who is an employee of the Company as of the date of the expiration or termination of the Employment Agreement or was an employee of the Company at any time during the two (2) year prior to the the expiration or termination of the Employment Agreement. Employee further agrees that, should Employee be approached by a person who Employee has actual knowledge was an employee of the Company or any subsidiary or joint venture thereof during the period while Employee was employed by the Company, Employee will not offer to nor employ or retain (or refer to a third party) as an employee, independent contractor or agent any such person for a period of two (2) years following the expiration or termination of the Employment Agreement.

11. Injunctive Relief . Employee acknowledges that any breach or attempted breach by Employee of this Agreement or any provision hereof shall cause the Company irreparable harm for which any adequate monetary remedy does not exist. Accordingly, in the event of any such breach or threatened breach, the Company shall be entitled to obtain injunctive relief, without the necessity of posting a bond or other surety, restraining such breach or threatened breach.

12. Modification. This Agreement may not be changed, modified, released, discharged, abandoned, or otherwise amended, in whole or in part, except by an instrument in writing, signed by Employee and by the Company. Any subsequent change or changes in the relationship between the Company and Employee or in Employee’s compensation by the Company shall not affect the validity or scope of this Agreement.

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13. Reasonable Terms . Employee acknowledges and agrees that the restrictive covenants contained in this Agreement have been reviewed by Employee with the benefit of counsel and that such covenants are reasonable in all of the circumstances for the protection of the legitimate interests of the Company.

14. Entire Agreement . Employee acknowledges receipt of this Agreement, and agrees that with respect to the subject matter thereof it is Employee’s entire agreement with the Company, superseding any previous oral or written communications, representations, understandings, or agreements with the Company or any officer or representative thereof.

15. Severabilitv. In the event that any paragraph or provision of this Agreement shall be held to be illegal or unenforceable, the entire Agreement shall not fail on account thereof. It is further agreed that if any one or more of such paragraphs or provisions shall be judged to be void as going beyond what is reasonable in all of the circumstances for the protection of the interests of the Company, but would be valid if part of the wording thereof were deleted or the period thereof reduced or the range of activities covered thereby reduced in scope, the said reduction shall be deemed to apply with such modifications as may be necessary to make them valid and effective and any such modification shall not thereby affect the validity of any other paragraph or provisions contained in this Agreement.

16. Successors and Assigns . This Agreement shall be binding upon the heirs, executors, administrators or other legal representatives of Employee and is for the benefit of the Company, its successors and assigns. Employee may not assign Employee’s rights or delegate Employee’s duties under this Agreement or the Employment Agreement either in whole or in part without the prior written consent of the Company. Any attempted assignment or delegation without such consent will be null and void.

[Signature Page Follows]

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17. Governing Law . This Agreement shall be governed by the laws of the State of New Jersey except for any conflicts of law rules thereof which might direct the application of the substantive laws of another state.

EXECUTED as of the date set forth below.

[Signature Page to Confidentiality and Intellectual Property Agreement]

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EXHIBIT A TO

CONFIDENTIALITY AND INTELLECTUAL PROPERTY AGREEMENT

PRIOR INVENTIONS WITHIN THE SCOPE OF ASSIGNMENT

The following is a complete list of all inventions or improvements patented or, unpatented, that have been made or conceived or first reduced to practice by the undersigned alone or jointly with others prior to the time the Company and the undersigned first began to consider the undersigned’s performance of services for the Company. The undersigned desires to remove the inventions and improvements listed, if any, from the operation of the foregoing Agreement.

Check one:

No inventions or improvements.

As follows:

Additional sheets attached.

Exhibit 10.5

CONFIDENTIALITY AND INTELLECTUAL PROPERTY AGREEMENT

This CONFIDENTIALITY AND INTELLECTUAL PROPERTY AGREEMENT (this “ Agreement ”) is entered into effective for all purposes as of August 24, 2004 by Mark A. Sirgo (“ Employee ”) in favor of BioDelivery Sciences International, Inc., a Delaware corporation (the “ Company ”). As used herein, the term “Company” includes BioDelivery Sciences International, Inc. and its subsidiaries, including Arius Pharmaceuticals, Inc.

In consideration and as a condition of Employee providing services to the Company pursuant to that certain Employment Agreement, dated as of the date hereof, between Employee and the Company (the “ Employment Agreement ”), Employee hereby agrees as follows:

1. Confidentiality . At all times, Employee shall keep confidential, except as the Company may otherwise consent to in writing, and not disclose, or make any use of except for the benefit of the Company, at any time either during or subsequent to performance by Employee of services for the Company, any trade secrets, confidential information, knowledge, data or other information of the Company relating to products, processes, know-how, technical data, designs, formulas, test data, customer lists, business plans, marketing plans and strategies, and pricing strategies or other subject matter pertaining to any business of the Company or any of its clients, customers, consultants, licensees or affiliates (collectively, the “ Confidential Information ”), which Employee may produce, obtain or otherwise learn of during the course of his performance of services and after the expiration or termination of the Employment Agreement. The “Confidential Information” shall not include information, technical data or know-how that is or becomes part of the public domain not as a result of any inaction or action of the Employee. Employee shall not deliver, reproduce, or in any way allow any such Confidential Information to be delivered to or used by any third parties without the specific direction or consent of a duly authorized representative of the Company.

2. Return of Confidential Material . Upon the expiration or termination the Employment Agreement, Employee shall promptly surrender and deliver to the Company all records, materials, equipment, drawings, documents, lab notes and books and data of any nature pertaining to any Invention (as defined below) or Confidential Information of the Company or to the services provided by Employee, and Employee will not take or retain (in any form or format) any description containing or pertaining to any Confidential Information which Employee may produce or obtain during the course of the services provided under the Employment Agreement or otherwise.

3. Assignment of Inventions and Moral Rights .

(a) Employee hereby assigns and transfers to the Company, on a perpetual, worldwide and royalty-free basis, his entire right, title and interest in and to all Inventions. As used in this agreement, the term “ Inventions ” shall mean all ideas, improvements, designs, discoveries, developments, drawings, notes, documents, information and/or materials, whether or not patentable and whether or not reduced to practice, made or conceived by Employee (whether made solely by Employee or jointly with others) which: (i) occur or are conceived during the period in which Employee performs services for the Company pursuant to the Employment Agreement and (ii) which relate in any manner to drug, nutraceuticals, genes, vaccines, vitamin or other compound delivery technologies involving liposomes, proteoliposomes, cochleates, buccal, transmucosal, transdermal or oral applications and/or derivatives thereof (“ Delivery Technologies ”), applications of the Delivery Technologies to specific drugs, nutraceuticals, genes, vaccines, vitamins or other compounds, or result from any task assigned to or undertaken by Employee or any work performed by Employee for or on behalf of the Company or any of its affiliates.

(b) Employee hereby irrevocably transfers and assigns to the Company any and all Moral Rights that Employee may have in any Inventions. Employee also hereby forever waives and agrees never to assert against the Company, its successors or licensees any and all Moral Rights which Employee may have in any Inventions, even after expiration or termination of the Employment Agreement. For purposes of this Agreement, the term “ Moral Rights” means any right to claim authorship of a work, any right to object to any distortion or other modification of a work, and any similar right, existing under the law of any country in the world, or under any treaty.

4. Disclosure of Inventions . In connection with all Inventions contemplated by Section 3 hereof:

(a) Employee will disclose all Inventions promptly in writing to the Chief Scientific Officer of the Company, with a copy to the President of the Company, in order to permit the Company to enforce and perfect the rights to which the Company is entitled under this Agreement;

(b) Employee will, at the Company’s request, promptly execute a written assignment of title to the Company for any Invention, and Employee will preserve all Inventions as Confidential Information in accordance with the terms hereof; and

(c) Upon request, Employee will assist the Company or its nominee (at the Company’s expense) during and at any time during or subsequent to the performance of services by Employee for the Company in every reasonable way in obtaining for the Company’s own benefit patents and copyrights for all Inventions in any and all countries, which Inventions shall be and remain the sole and exclusive property of the Company or its nominee, whether or not patented or copyrighted. Employee will execute such papers and perform such lawful acts as the Company deems to be necessary to allow the Company to exercise all rights, title and interest in such patents and copyrights.

5. Execution of Documents . In connection with this Agreement, Employee will execute, acknowledge and deliver to the Company or its nominee upon request and at the Company’s expense all such documents, including applications for patents and copyrights and assignments of all Inventions, patents and copyrights to be issued therefore, as the Company may determine necessary or desirable to apply for and obtain letters patent and copyrights on all Inventions in any and all countries and/or to protect the interest of the Company or its nominee in Inventions, patents and copyrights and to vest title thereto in the Company or its nominee.

6. Maintenance of Records . Employee will keep and maintain adequate and current written records of all Inventions made by Employee (in the form of notes, sketches, drawings and as may be specified by the Company), which records shall be available to and remain the sole property of the Company at all times.

7. Prior Inventions . It is understood that all ideas, improvements, designs and discoveries, whether or not patentable and whether or not reduced to practice, which Employee made prior to the time the Company and Employee began to consider any possible performance of services contemplated by the Employment Agreement (herein referred to as “ Excluded Inventions ”) are excluded from the definition of Inventions as used herein. Set forth on Exhibit A attached hereto is a complete list of all Excluded Inventions, including numbers of all patents and patent applications, and a brief description of all unpatented inventions which are not the property of another party (including, without limitation, a current or previous contracting party). The list is complete and if no items are included on Exhibit A , Employee shall be deemed to have no such prior inventions within the definition of Inventions. Employee will notify the Company in writing before Employee makes any disclosure or performs any work on behalf of the Company which appears to threaten or conflict with proprietary rights Employee claims in any such Invention or idea. In the event of Employee’s failure to give such notice, Employee will make no claim against the Company with respect to any such inventions or ideas.

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8. Other Obligations. Employee acknowledges that the Company, from time to time, may have agreements with other persons or entities or with the U.S. Government, or agencies thereof, which impose obligations or restrictions on the Company regarding inventions made during the course of work thereunder or regarding the confidential nature of such work. Employee will be bound by all such obligations and restrictions and will take all action necessary to discharge the obligations of the Company thereunder.

9. Trade Secrets of Others . Employee represents that his performance of all the terms of this Agreement and the Employment Agreement and as a consultant to the Company does not and will not breach any agreement to keep in confidence proprietary information, knowledge or data acquired by Employee in confidence or in trust, and Employee will not disclose to the Company, or induce the Company to use, any confidential or proprietary information or material belonging to any other person or entity. Employee will not enter into any agreement, either written or oral, in conflict herewith.

10. Non-Solicitation . Employee agrees that he will not, without the prior written consent of the Company, at any time during the term of the Employment Agreement or for a period of two (2) years from the date of the expiration or termination of the Employment Agreement for whatever reason, either individually or through any entity controlled by Employee, and either on Employee’s behalf or on behalf of any other person or entity competing or endeavoring to compete with the Company, directly or indirectly, knowingly solicit for employment or retention (or, following such solicitation, employ or retain) as an employee, independent contractor or agent, any person who is an employee of the Company as of the date of the expiration or termination of the Employment Agreement or was an employee of the Company at any time during the two (2) year prior to the the expiration or termination of the Employment Agreement. Employee further agrees that, should Employee be approached by a person who Employee has actual knowledge was an employee of the Company or any subsidiary or joint venture thereof during the period while Employee was employed by the Company, Employee will not offer to nor employ or retain (or refer to a third party) as an employee, independent contractor or agent any such person for a period of two (2) years following the expiration or termination of the Employment Agreement.

11. Injunctive Relief . Employee acknowledges that any breach or attempted breach by Employee of this Agreement or any provision hereof shall cause the Company irreparable harm for which any adequate monetary remedy does not exist. Accordingly, in the event of any such breach or threatened breach, the Company shall be entitled to obtain injunctive relief, without the necessity of posting a bond or other surety, restraining such breach or threatened breach.

12. Modification. This Agreement may not be changed, modified, released, discharged, abandoned, or otherwise amended, in whole or in part, except by an instrument in writing, signed by Employee and by the Company. Any subsequent change or changes in the relationship between the Company and Employee or in Employee’s compensation by the Company shall not affect the validity or scope of this Agreement.

13. Reasonable Terms . Employee acknowledges and agrees that the restrictive covenants contained in this Agreement have been reviewed by Employee with the benefit of counsel and that such covenants are reasonable in all of the circumstances for the protection of the legitimate interests of the Company.

14. Entire Agreement . Employee acknowledges receipt of this Agreement, and agrees that with respect to the subject matter thereof it is Employee’s entire agreement with the Company, superseding any previous oral or written communications, representations, understandings, or agreements with the Company or any officer or representative thereof.

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15. Severability. In the event that any paragraph or provision of this Agreement shall be held to be illegal or unenforceable, the entire Agreement shall not fail on account thereof. It is further agreed that if any one or more of such paragraphs or provisions shall be judged to be void as going beyond what is reasonable in all of the circumstances for the protection of the interests of the Company, but would be valid if part of the wording thereof were deleted or the period thereof reduced or the range of activities covered thereby reduced in scope, the said reduction shall be deemed to apply with such modifications as may be necessary to make them valid and effective and any such modification shall not thereby affect the validity of any other paragraph or provisions contained in this Agreement.

16. Successors and Assigns . This Agreement shall be binding upon the heirs, executors, administrators or other legal representatives of Employee and is for the benefit of the Company, its successors and assigns. Employee may not assign Employee’s rights or delegate Employee’s duties under this Agreement or the Employment Agreement either in whole or in part without the prior written consent of the Company. Any attempted assignment or delegation without such consent will be null and void.

17. Governing Law . This Agreement shall be governed by the laws of the State of New Jersey except for any conflicts of law rules thereof which might direct the application of the substantive laws of another state.

EXECUTED as of the date set forth below.

[Signature Page to Confidentiality and Intellectual Property Agreement]

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EXHIBIT A TO

CONFIDENTIALITY AND INTELLECTUAL PROPERTY AGREEMENT

PRIOR INVENTIONS WITHIN THE SCOPE OF ASSIGNMENT

The following is a complete list of all inventions or improvements patented or, unpatented, that have been made or conceived or first reduced to practice by the undersigned alone or jointly with others prior to the time the Company and the undersigned first began to consider the undersigned’s performance of services for the Company. The undersigned desires to remove the inventions and improvements listed, if any, from the operation of the foregoing Agreement.

Check one:

Safety closure with easy-open feature for handicapped and elderly individuals Patent #5,158,194. Issued October 27, 1992; Design Patent #337,943 issued 8/3/93

Exhibit 10.6

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (the “ Agreement ”) is entered into effective as of August 24, 2004 by and between Andrew L. Finn (“ Employee ”) and BioDelivery Sciences International, Inc. (the “ Company ”). As used in Sections 5 through 14 hereof, the term “Company” includes BioDelivery Sciences International, Inc. and its subsidiaries, including Arius (as defined below).

WHEREAS , the Company is engaged in the business of researching and developing drug delivery technologies;

WHEREAS , as of the date hereof, the Company has acquired Arius Pharmaceuticals, Inc., a Delaware corporation (“ Arius ”) by merger, with the result being that Arius is now a wholly-owned subsidiary of the Company;

WHEREAS , Employee was heretofore an officer and director of Arius; and

WHEREAS , in light of the foregoing, the Company and Employee are willing to commence an employment relationship, on the terms, conditions and covenants set forth in this Agreement.

NOW, THEREFORE , in consideration of Employee’s commencement of employment with the Company and Arius, the mutual covenants contained herein and other good and valuable consideration, receipt of which Employee and the Company hereby acknowledge, Employee and the Company agree, as follows:

1. Position . Employee agrees to employment with the Company in the positions of Senior Vice President of Product Development of the Company and Senior Vice President and Chief Operating Officer of Arius. Employee further agrees to perform the job duties and to carry out the responsibilities of that position, as reasonably determined by the Chief Executive Officer of the Company from time to time or the Board of Directors of the Company consistent with the customary duties of such position and the Bylaws of the Company and Arius (the “ Board of Directors ”). Employee shall report to the Chief Executive Officer of the Company.

2. Employee’s Effort . Employee shall perform his duties in the capacity as an employee and in such capacity shall spend the necessary working time and best efforts, skill and attention to his position and to the business and interests of the Company. Employee shall be primarily responsible for product development activities for the Company’s pharmaceutical and vaccine products, with an initial focus on Arius’ orally- and bucally-delivered products and product candidates.

3. Base Salary; Bonus; Benefits .

(a) Base Salary . The Company shall pay Employee compensation for services rendered in the amount of no less than One Hundred Seventy-Five Thousand Dollars ($175,000) per annum (the “ Base Salary ”), payable on a bi-weekly basis or otherwise in accordance with the Company’s standard policies. Employee’s Base Salary may be subject to annual increases as determined by the Board of Directors of the Company in its sole discretion.

(b) Signing Bonus . As of the date hereof, the Company shall pay to employee a one-time cash bonus of Twenty Eight Thousand and Ninety Two Dollars and Four Cents ($28,092.04). The Company shall be required to withold from such bonus any and all taxes.

(c) Optional Bonus . Employee shall also be elligible to receive a cash bonus for each Company fiscal year of up to fifty percent (50%) of the Base Salary, which bonus shall be granted in the sole and absolute discretion of the Board of Directors or a designated committee thereof.

(d) Other Compensation and Benefits . In addition, Employee shall receive such additional compensation or other benefits as are provided to Company employees generally and similarly-situated Company employees specifically (including, without limitation, three (3) weeks paid vacation and days off administered in accordance with prevailing Company policy), or as may be determined in the sole and absolute discretion of the Board of Directors or a designated committee thereof; provided, however, that it is understood and agreed that the Employee shall not be entitled to participate in the Company’s 2001 Stock Option Plan until the date on which Employee’s shares of the Company’s Series A Non-Voting Convertible Preferred Stock (“ Series A Stock ”) are eligible for conversion into shares of common stock of the Company. Furthermore, Employee shall be reimbursed for expenses properly documented as per the Company’s policy including, without limitation, any reasonable expenses incurred by Employee on behalf of Arius from August 10, 2004 through the date hereof.

4. Term; Termination . Unless earlier terminated under this Section 4, this Agreement and the status and obligations of Employee thereunder as an employee of the Company (except as provided for below) shall be effective for a period ending on August 24, 2007 (the “ Initial Term ”) and, after the expiration of the Initial Term, this Agreement shall automatically renew for successive one (1) year terms (each a “ Renewal Term ” and, collectively with all Renewal Terms and the Initial Term, the “ Term ”) unless, following the Initial Term, either party gives thirty (30) days’ advance written notice of its intention not to renew this Agreement at the conclusion of the next Renewal Term. Termination of this Agreement shall not, in any event, affect any rights that Employee may have been specifically granted to Employee by the Board of Directors or a designated committee thereof pursuant to any of the Company’s retirement plans, supplementary retirement plans, profit sharing and savings plans, healthcare, 401(k) any other employee benefit plans sponsored by the Company, it being understood that no such rights are granted hereunder. In addition, notwithstanding the expiry or termination of this Agreement pursuant to this Section 4 or otherwise, Employee’s rights and obligations under Sections 5 through 14 inclusive of this Agreement shall survive the such termination or expiration of this Agreement in accordance with the terms of such Sections.

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(e) Death . This Agreement shall automatically terminate upon the death of Employee and all of his rights hereunder, including the rights to receive compensation and benefits, except as otherwise required by law, shall terminate.

(f) Termination with Notice by Either Party . The Company or Employee may terminate this Agreement for any reason or no reason upon thirty (30) days prior written notice to the other. In case of termination by the Company only under this paragraph, the Company shall pay Employee a one-time cash severance payment equal to a full year’s Base Salary. The Company shall have no further obligations to Employee following termination.

(g) Termination for Good Cause . As used herein “ Good Cause ” shall mean any one or more of the following as determined in the reasonable discretion of the Company:

(1) a continuing material breach or material default (including, without limitation, any material deriliction of duty) by Employee of the terms of this agreement, or any related agreement which is an Exhibit hereto, except for any such breach or default which is caused by the physical disability of Employee (as determined by a neutral physician);

(2) gross negligence, willful misfeasance or breach of fiduciary duty by Employee;

(3) the commission by Employee of an act of fraud, embezzlement or any felony or crime of dishonesty in connection with Employee’s duties; or

(4) conviction of Employee of a felony or any other crime that would materially and adversely affect: (i) the business reputation of the Company or (ii) the performance of the Employee’s duties hereunder.

In the event of a termination by the Company for Good Cause, the Company will pay the Employee the Base Salary earned and expenses reimbursable under this Agreement incurred through the date of the Employee’s termination, and shall have no further responsibility for termination or other payments to Employee.

Furthermore, upon termination by the Company of the Employee’s employment with the Company without Good Cause (as defined above) or termination of employment by the Employee for Good Reason (as defined below) prior to an FDA Approval, the Employee may convert his shares of Series A Stock into a number of shares of Company common stock equal to the product obtained by multiplying the Series A Stock Conversion Rate (as defined in Arius’ Certificate of Designation, dated August 20, 2004) then in effect by the number of shares of Series A Stock being converted. As used herein, the term “ FDA Approval ” shall mean the first approval by the U.S Food and Drug Administration for the marketing and sale by the Company or any of its subsidiaries of any of the following products: Emezine, BEMA-Fentanyl, BEMA-Sumitriptan or any product which primarily incorporates technology similar to the foregoing for the buccal delivery of pharmaceuticals.

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(h) Termination for Good Reason . Employee may terminate his employment under this Agreement at any time for “Good Reason.” In case of termination hereof by the Employee for Good Reason, the Company shall pay Employee a one-time cash severance payment equal to his annual Base Salary (it being agreed that the Company may condition payment of such severence amount upon its receipt of a general release by Employee in the form reasonably acceptable to the Company and Employee) and Employee shall maintain any rights that Employee may have been specifically granted to Employee pursuant to any of the Company’s retirement plans, supplementary retirement plans, profit sharing and savings plans, healthcare, 401(k) any other employee benefit plans sponsored by the Company. Following the payment of severance, the Company shall have no further obligations to Employee following termination.

For purposes of this Agreement, the term “ Good Reason ” means, in each case without the consent of Employee:

(1) any material diminution in the office, title, duties, powers, authority or responsibilities, which diminution is not corrected within thirty (30) days after the Company receives written notice thereof from Employee;

(2) Employee’s place of work is moved more than seventy-five (75) miles from Employee’s home address in Raleigh, North Carolina;

(3) (A) the Company fails to pay Employee his Base Salary in accordance with generally applicable Company policy or (B) Employee’s Base Salary is decreased without consent of Employee, which failure or decrease is not corrected within thirty (30) days after the Company receives written notice thereof from Employee; or

(4) Employee is discriminatorily denied material benefits under the Company’s prevailing policies and plans, which denial is not corrected within thirty (30) days after the Company receives written notice thereof from Employee.

5. Confidentiality . Employee shall keep confidential, except as the Company may otherwise consent in writing, and not disclose or make any use of except for the benefit of the Company, at any time during the term of this Agreement and for a period of five (5) years thereafter, any trade secrets, knowledge, data or other confidential, secret or proprietary information of the Company relating to inventions, products, processes, knowledge, know how, technical or other data, designs, formulas, test data, customer lists, business plans, marketing plans and strategies, and product pricing strategies or other subject matter pertaining to any business of the Company or any of its clients, customers, consultants, licensees, subsidiairies or affiliates which Employee may produce, obtain or otherwise learn of during the course of Employee’s performance of services and after its termination (collectively “ Confidential Information ”), provided that the term “Confidential Information” shall not include information, technical data or know-how that is or becomes part of the public domain not as a result of any inaction or action of the Employee. Employee shall not deliver, reproduce, or in any way allow any such Confidential Information to be delivered to or used by any third parties without the

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specific direction or consent of a duly authorized representative of the Company. The terms of this paragraph shall survive termination of this Agreement. Employee agrees to execute the Confidentiality and Intellectual Property Agreement attached as Exhibit A hereto (the “ Confidentiality Agreement ”).

6. Return of Confidential Material . Upon the completion or other termination of Employee’s services for the Company, Employee shall promptly surrender and deliver to the Company all records, materials, equipment, drawings, documents, lab notes and books and data of any nature (electronic or otherwise) describing, including or pertaining to any Confidential Information, and Employee will not take with him any description containing or pertaining to any Confidential Information which Employee may produce or obtain during the course of his services. The terms of this paragraph shall survive termination of this Agreement.

7. Assignment and Disclosure of Inventions . Employee shall assign and transfer to the Company his entire right, title and interest in and to all Inventions (as defined in the Confidentiality Agreement) and disclose to the Company all Inventions in accordance with the terms set forth in the Confidentiality Agreement. The terms of this paragraph shall survive termination of this Agreement.

8. Execution of Documents . During the term of this Agreement and thereafter, Employee will execute, acknowledge and deliver to the Company or its nominee upon request and at its expense all such documents, including applications for patents and copyrights and assignments of inventions, patents and copyrights to be issued therefore, as the Company may reasonably determine necessary or desirable to apply for and obtain letters, patents, and copyrights on Inventions in any and all countries and/or to protect the interest of the Company or its nominee in Inventions, patents and copyrights and to vest title thereto in the Company or its nominee. The terms of this paragraph shall survive termination of this Agreement.

9. Maintenance of Records . Employee will keep and maintain adequate and current written records of all Inventions made or conceived by Employee (in the form of notes, sketches, drawings and as may be specified by the Company), and shall deliver such records promptly to the Company at the Company’s request, whether made solely by Employee or jointly with others, which records shall be available to and remain the sole property of the Company at all times.

10. Prior Inventions . It is understood that all Inventions, if any, patented or unpatented, which Employee made prior to the date that the Company and Employee entered into this Agreement, are excluded from the scope of this Agreement. To preclude any possible uncertainty, Employee has set forth on Exhibit A to the Confidentiality Agreement a complete list of all such prior inventions, including numbers of all patents and patent applications, and a brief description of all unpatented inventions which are not the property of another party (including, without limitation a current or previous contracting party). If no items are included on Exhibit A to the Confidentiality Agreement, Employee has no such prior inventions. Employee will notify the Company in writing before Employee makes any disclosure or performs any work on behalf of the Company which appears to threaten or conflict with proprietary rights Employee claims in any such invention or idea. In the event of Employee’s failure to give such notice, Employee will make no claim against the Company with respect to any such inventions or ideas. The terms of this paragraph shall survive termination of this Agreement.

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11. Competition . Employee will not do, or intend to do, any of the following, either directly or indirectly, during Employee’s employment with the Company and during the period of two (2) years after Employee’s cessation of employment with the Company, anywhere in the world. In the event that a court of competent jurisdiction determines that Employee improperly competes with the Company in violation of this Section 11, the period during which he engages in such competition shall not be counted in determining the duration of the two (2) year non-compete restriction:

(a) For purposes of this Agreement, “ Competitive Activity ” shall mean the development, manufacture, sale, license, packaging or marketing of the following technologies (or products incorporating such technologies): (i) (A) anionic phospholipid delivery technology or (B) buccal delivery technology, in each case for the delivery of drugs or nutrients for human or non-human applications and (ii) any technology or product which Employee was actively and directly participating in on behalf of the Company or any subsidiary of the Company or joint venture in which the Company is participating at the time of termination (it being understood, for the avoidance of doubt, that the words “actively and directly” shall not include Employee’s actions in a merely supervisory capacity).

(b) Employee agrees that, during the time frames described herein, he shall not, directly or indirectly, own, manage, operate, control, consult for, be an officer or director of, work for, or be employed in any capacity by any company, eleemosynary institution or any other business, entity, agency or organization (or a discrete business unit within any such entity) whose primary business purpose is to engage in a Competitive Activity; provided, however, that Employee may serve as a director, consultant or scientific advisor of such an entity that is either a Company licensee, or, for non-licensees, in such capacity as the Board of Directors has granted him written permission, such permission not to be unreasonably withheld.

(c) Employee shall not solicit or perform services in connection with any Competitive Activity for any prior or current customers of the Company or any entities with which the Company has undertaken joint studies or developmental activities; or

(d) Employee shall not knowingly solicit for employment (or, following such solicitation, employ) any then current employees employed by the Company without the Company’s consent.

Employee and Company agree that the phrase “Employee’s cessation of employment with the Company” as used in this Agreement, refers to any separation from his employment at the Company either voluntarily or involuntarily, either with cause or without cause, or whether the separation is at the behest of the Company or Employee. Nothing in this Agreement shall preclude him from employment at a not-for-profit or governmental institution, provided that no for-profit business involved in drug delivery directly or indirectly derives a benefit from Employee’s employment.

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12. Other Obligations .

(a) Employee acknowledges that the Company from time to time may have agreements with other persons or with the U.S. Government, or agencies thereof, which impose obligations or restrictions on the Company regarding inventions made during the course of work thereunder or regarding the confidential nature of such work. Employee will be bound by all such obligations and restrictions and will take all action necessary to discharge the obligations of the Company thereunder.

(b) Employee acknowledges that all of Employee’s obligations under this Agreement (but not including the restrictive covenants contained herein) shall be subject to any applicable agreements with, and policies issued by the Company to which Employee and all other similarly-situated employees are subject.

13. Trade Secrets of Others . Employee represents that his performance of all the terms of this Agreement as employee to the Company does not and will not breach any agreement to keep in confidence proprietary information, knowledge or data acquired by Employee in confidence or in trust, and Employee will not disclose to the Company, or allow the Company to use, any confidential or proprietary information or material belonging to any other person or entity. Employee will not enter into any agreement, either written or oral, which is in conflict with this Agreement.

14. Injunctive Relief . Employee acknowledges that any breach or attempted breach by Employee of paragraphs 5 through 13 of this Agreement shall cause the Company irreparable harm for which any adequate monetary remedy does not exist. Accordingly, in the event of any such breach or threatened breach, the Company shall be entitled to obtain injunctive relief, without the necessity of posting a bond or other surety, restraining such breach or threatened breach.

15. Reasonable Terms . Employee acknowledges and agrees that the restrictive covenants contained in this Agreement have been reviewed by Employee with the benefit of counsel and that such covenants are reasonable in all of the circumstances for the protection of the legitimate interests of the Company.

16. Modification . This Agreement may not be changed, modified, released, discharged, abandoned, or otherwise amended, in whole or in part, except by an instrument in writing, signed by Employee and by the Company. Any subsequent change or changes in Employee’s relationship with the Company or Employee’s compensation shall not affect the validity or scope of this Agreement.

17. Entire Agreement . Employee acknowledges receipt of this Agreement, and agrees that with respect to the subject matter thereof, it is Employee’s entire agreement with the Company, superseding any previous oral or written communications, representations, understandings with the Company or any office or representative thereof. Each party to the Agreement acknowledges that, in executing this Agreement, such party has had the opportunity to seek the advice of independent legal counsel, and has read and understood all of the terms and provisions of the Agreement.

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18. Severability . In the event that any paragraph or provision of this Agreement shall be held to be illegal or unenforceable, the entire Agreement shall not fail on account thereof. It is further agreed that if any one or more of such paragraphs or provisions shall be judged to be void as going beyond what is reasonable in all of the circumstances for the protection of the interests of the Company, but would be valid if part of the wording thereof were deleted or the period thereof reduced or the range of activities covered thereby reduced in scope, the said reduction shall be deemed to apply with such modifications as may be necessary to make them valid and effective and any such modification shall not thereby affect the validity of any other paragraph or provisions contained in this Agreement.

19. Successors and Assigns . This Agreement shall be binding upon Employee’s heirs, executors, administrators or other legal representatives and is for the benefit of the Company, its successors and assigns.

20. Governing Law . This Agreement shall be governed by the laws of the State of New Jersey except for any conflicts of law rules thereof that might direct the application of the substantive law of another state.

21. Counterparts . This Agreement may be signed in counterparts and delivered by facsimile transmission, and each such counterpart shall be deemed an original and all of which shall together constitute one agreement.

22. Arbitration . Except as provided for in Section 15 hereof, in the event that the Company or Employee, his spouse or any other person claiming benefits on behalf of or through Employee, has a dispute or claim based upon this Agreement including the interpretation or application of the terms and provisions of this Agreement, the sole and exclusive remedy is for that party to submit the dispute to binding arbitration in accordance with the rules of arbitration of the American Arbitration Association (“ AAA ”) in Wilmington, Delaware. Any arbitrator selected to arbitrate any such dispute shall be independent and neutral and will have the power to interpret this Agreement. Any determination or decision by the arbitrator shall be binding upon the parties and may be enforced in any court of law. The expenses of the arbitrator will be paid 50% by the Company and 50% by Employee, his spouse or other person, as the case may be, provided that the arbitrator shall be free to apportion such fees between the parties as he/she may determine in their discretion as permitted by the AAA rules of arbitration. The parties agree that this arbitration provision does not apply to the right of Employee to file a charge, testify, assist or participate in any manner in an investigation, hearing or proceeding before the Equal Employment Opportunity Commission or any other agency pertaining to any matters covered by this Agreement and within the jurisdiction of the agency.

23. No Waiver . No waiver by the Company of any breach of this Agreement by Employee shall constitute a waiver of any subsequent breach.

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24. Notice . Any notice hereby required or permitted to be given shall be sufficiently given if in writing and upon mailing by registered or certified mail, postage prepaid, to either party at the address of such party or such othis address as shall have been designated by written notice by such party to the other party.

[Signature Page Follows]

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first forth above.

[Signature Page to Employment Agreement]

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Exhibit A

Form of Confidentiality and Intellectual Property Agreement

CONFIDENTIALITY AND INTELLECTUAL PROPERTY AGREEMENT

This CONFIDENTIALITY AND INTELLECTUAL PROPERTY AGREEMENT (this “ Agreement ”) is entered into effective for all purposes as of [              ], 2004 by                  (“ Employee ”) in favor of BioDelivery Sciences International, Inc., a Delaware corporation (the “ Company ”). As used herein, the term “Company” includes BioDelivery Sciences International, Inc. and its subsidiaries, including Arius Pharmaceuticals, Inc.

In consideration and as a condition of Employee providing services to the Company pursuant to that certain Employment Agreement, dated as of the date hereof, between Employee and the Company (the “ Employment Agreement ”), Employee hereby agrees as follows:

1. Confidentiality . At all times, Employee shall keep confidential, except as the Company may otherwise consent to in writing, and not disclose, or make any use of except for the benefit of the Company, at any time either during or subsequent to performance by Employee of services for the Company, any trade secrets, confidential information, knowledge, data or other information of the Company relating to products, processes, know-how, technical data, designs, formulas, test data, customer lists, business plans, marketing plans and strategies, and pricing strategies or other subject matter pertaining to any business of the Company or any of its clients, customers, consultants, licensees or affiliates (collectively, the “ Confidential Information ”), which Employee may produce, obtain or otherwise learn of during the course of his performance of services and after the expiration or termination of the Employment Agreement. The “Confidential Information” shall not include information, technical data or know-how that is or becomes part of the public domain not as a result of any inaction or action of the Employee. Employee shall not deliver, reproduce, or in any way allow any such Confidential Information to be delivered to or used by any third parties without the specific direction or consent of a duly authorized representative of the Company.

2. Return of Confidential Material . Upon the expiration or termination the Employment Agreement, Employee shall promptly surrender and deliver to the Company all records, materials, equipment, drawings, documents, lab notes and books and data of any nature pertaining to any Invention (as defined below) or Confidential Information of the Company or to the services provided by Employee, and Employee will not take or retain (in any form or format) any description containing or pertaining to any Confidential Information which Employee may produce or obtain during the course of the services provided under the Employment Agreement or otherwise.

3. Assignment of Inventions and Moral Rights .

(a) Employee hereby assigns and transfers to the Company, on a perpetual, worldwide and royalty-free basis, his entire right, title and interest in and to all Inventions. As used in this agreement, the term “ Inventions ” shall mean all ideas, improvements, designs, discoveries, developments, drawings, notes, documents, information and/or materials, whether or not patentable and whether or not reduced to practice, made or conceived by Employee (whether made solely by Employee or jointly with others) which: (i) occur or are conceived during the period in which Employee performs services for the Company pursuant to the Employment Agreement and (ii) which relate in any manner to drug, nutraceuticals, genes, vaccines, vitamin or other compound delivery technologies involving liposomes, proteoliposomes, cochleates, buccal, transmucosal, transdermal or oral applications and/or derivatives

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thereof (“ Delivery Technologies ”), applications of the Delivery Technologies to specific drugs, nutraceuticals, genes, vaccines, vitamins or other compounds, or result from any task assigned to or undertaken by Employee or any work performed by Employee for or on behalf of the Company or any of its affiliates.

(b) Employee hereby irrevocably transfers and assigns to the Company any and all Moral Rights that Employee may have in any Inventions. Employee also hereby forever waives and agrees never to assert against the Company, its successors or licensees any and all Moral Rights which Employee may have in any Inventions, even after expiration or termination of the Employment Agreement. For purposes of this Agreement, the term “ Moral Rights” means any right to claim authorship of a work, any right to object to any distortion or other modification of a work, and any similar right, existing under the law of any country in the world, or under any treaty.

4. Disclosure of Inventions . In connection with all Inventions contemplated by Section 3 hereof:

(a) Employee will disclose all Inventions promptly in writing to the Chief Scientific Officer of the Company, with a copy to the President of the Company, in order to permit the Company to enforce and perfect the rights to which the Company is entitled under this Agreement;

(b) Employee will, at the Company’s request, promptly execute a written assignment of title to the Company for any Invention, and Employee will preserve all Inventions as Confidential Information in accordance with the terms hereof; and

(c) Upon request, Employee will assist the Company or its nominee (at the Company’s expense) during and at any time during or subsequent to the performance of services by Employee for the Company in every reasonable way in obtaining for the Company’s own benefit patents and copyrights for all Inventions in any and all countries, which Inventions shall be and remain the sole and exclusive property of the Company or its nominee, whether or not patented or copyrighted. Employee will execute such papers and perform such lawful acts as the Company deems to be necessary to allow the Company to exercise all rights, title and interest in such patents and copyrights.

5. Execution of Documents . In connection with this Agreement, Employee will execute, acknowledge and deliver to the Company or its nominee upon request and at the Company’s expense all such documents, including applications for patents and copyrights and assignments of all Inventions, patents and copyrights to be issued therefore, as the Company may determine necessary or desirable to apply for and obtain letters patent and copyrights on all Inventions in any and all countries and/or to protect the interest of the Company or its nominee in Inventions, patents and copyrights and to vest title thereto in the Company or its nominee.

6. Maintenance of Records . Employee will keep and maintain adequate and current written records of all Inventions made by Employee (in the form of notes, sketches, drawings and as may be specified by the Company), which records shall be available to and remain the sole property of the Company at all times.

7. Prior Inventions . It is understood that all ideas, improvements, designs and discoveries, whether or not patentable and whether or not reduced to practice, which Employee made prior to the time the Company and Employee began to consider any possible performance of services contemplated by the Employment Agreement (herein referred to as “ Excluded Inventions ”) are excluded from the definition

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of Inventions as used herein. Set forth on Exhibit A attached hereto is a complete list of all Excluded Inventions, including numbers of all patents and patent applications, and a brief description of all unpatented inventions which are not the property of another party (including, without limitation, a current or previous contracting party). The list is complete and if no items are included on Exhibit A , Employee shall be deemed to have no such prior inventions within the definition of Inventions. Employee will notify the Company in writing before Employee makes any disclosure or performs any work on behalf of the Company which appears to threaten or conflict with proprietary rights Employee claims in any such Invention or idea. In the event of Employee’s failure to give such notice, Employee will make no claim against the Company with respect to any such inventions or ideas.

8. Other Obligations. Employee acknowledges that the Company, from time to time, may have agreements with other persons or entities or with the U.S. Government, or agencies thereof, which impose obligations or restrictions on the Company regarding inventions made during the course of work thereunder or regarding the confidential nature of such work. Employee will be bound by all such obligations and restrictions and will take all action necessary to discharge the obligations of the Company thereunder.

9. Trade Secrets of Others . Employee represents that his performance of all the terms of this Agreement and the Employment Agreement and as a consultant to the Company does not and will not breach any agreement to keep in confidence proprietary information, knowledge or data acquired by Employee in confidence or in trust, and Employee will not disclose to the Company, or induce the Company to use, any confidential or proprietary information or material belonging to any other person or entity. Employee will not enter into any agreement, either written or oral, in conflict herewith.

10. Non-Solicitation . Employee agrees that he will not, without the prior written consent of the Company, at any time during the term of the Employment Agreement or for a period of two (2) years from the date of the expiration or termination of the Employment Agreement for whatever reason, either individually or through any entity controlled by Employee, and either on Employee’s behalf or on behalf of any other person or entity competing or endeavoring to compete with the Company, directly or indirectly, knowingly solicit for employment or retention (or, following such solicitation, employ or retain) as an employee, independent contractor or agent, any person who is an employee of the Company as of the date of the expiration or termination of the Employment Agreement or was an employee of the Company at any time during the two (2) year prior to the the expiration or termination of the Employment Agreement. Employee further agrees that, should Employee be approached by a person who Employee has actual knowledge was an employee of the Company or any subsidiary or joint venture thereof during the period while Employee was employed by the Company, Employee will not offer to nor employ or retain (or refer to a third party) as an employee, independent contractor or agent any such person for a period of two (2) years following the expiration or termination of the Employment Agreement.

11. Injunctive Relief . Employee acknowledges that any breach or attempted breach by Employee of this Agreement or any provision hereof shall cause the Company irreparable harm for which any adequate monetary remedy does not exist. Accordingly, in the event of any such breach or threatened breach, the Company shall be entitled to obtain injunctive relief, without the necessity of posting a bond or other surety, restraining such breach or threatened breach.

12. Modification. This Agreement may not be changed, modified, released, discharged, abandoned, or otherwise amended, in whole or in part, except by an instrument in writing, signed by Employee and by the Company. Any subsequent change or changes in the relationship between the Company and Employee or in Employee’s compensation by the Company shall not affect the validity or scope of this Agreement.

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13. Reasonable Terms . Employee acknowledges and agrees that the restrictive covenants contained in this Agreement have been reviewed by Employee with the benefit of counsel and that such covenants are reasonable in all of the circumstances for the protection of the legitimate interests of the Company.

14. Entire Agreement . Employee acknowledges receipt of this Agreement, and agrees that with respect to the subject matter thereof it is Employee’s entire agreement with the Company, superseding any previous oral or written communications, representations, understandings, or agreements with the Company or any officer or representative thereof.

15. Severability. In the event that any paragraph or provision of this Agreement shall be held to be illegal or unenforceable, the entire Agreement shall not fail on account thereof. It is further agreed that if any one or more of such paragraphs or provisions shall be judged to be void as going beyond what is reasonable in all of the circumstances for the protection of the interests of the Company, but would be valid if part of the wording thereof were deleted or the period thereof reduced or the range of activities covered thereby reduced in scope, the said reduction shall be deemed to apply with such modifications as may be necessary to make them valid and effective and any such modification shall not thereby affect the validity of any other paragraph or provisions contained in this Agreement.

16. Successors and Assigns . This Agreement shall be binding upon the heirs, executors, administrators or other legal representatives of Employee and is for the benefit of the Company, its successors and assigns. Employee may not assign Employee’s rights or delegate Employee’s duties under this Agreement or the Employment Agreement either in whole or in part without the prior written consent of the Company. Any attempted assignment or delegation without such consent will be null and void.

[Signature Page Follows]

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17. Governing Law . This Agreement shall be governed by the laws of the State of New Jersey except for any conflicts of law rules thereof which might direct the application of the substantive laws of another state.

EXECUTED as of the date set forth below.

Dated: August [      ], 2004

Accepted and Agreed:

BIODELIVERY SCIENCES INTERNATIONAL, INC.

[Signature Page to Confidentiality and Intellectual Property Agreement]

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EXHIBIT A TO

CONFIDENTIALITY AND INTELLECTUAL PROPERTY AGREEMENT

PRIOR INVENTIONS WITHIN THE SCOPE OF ASSIGNMENT

The following is a complete list of all inventions or improvements patented or, unpatented, that have been made or conceived or first reduced to practice by the undersigned alone or jointly with others prior to the time the Company and the undersigned first began to consider the undersigned’s performance of services for the Company. The undersigned desires to remove the inventions and improvements listed, if any, from the operation of the foregoing Agreement.

Check one:

No inventions or improvements.

As follows:

Additional sheets attached.

Exhibit 10.7

CONFIDENTIALITY AND INTELLECTUAL PROPERTY AGREEMENT

This CONFIDENTIALITY AND INTELLECTUAL PROPERTY AGREEMENT (this “ Agreement ”) is entered into effective for all purposes as of August 24, 2004 by Andrew L. Finn (“ Employee ”) in favor of BioDelivery Sciences International, Inc., a Delaware corporation (the “ Company ”). As used herein, the term “Company” includes BioDelivery Sciences International, Inc. and its subsidiaries, including Arius Pharmaceuticals, Inc.

In consideration and as a condition of Employee providing services to the Company pursuant to that certain Employment Agreement, dated as of the date hereof, between Employee and the Company (the “ Employment Agreement ”), Employee hereby agrees as follows:

1. Confidentiality . At all times, Employee shall keep confidential, except as the Company may otherwise consent to in writing, and not disclose, or make any use of except for the benefit of the Company, at any time either during or subsequent to performance by Employee of services for the Company, any trade secrets, confidential information, knowledge, data or other information of the Company relating to products, processes, know-how, technical data, designs, formulas, test data, customer lists, business plans, marketing plans and strategies, and pricing strategies or other subject matter pertaining to any business of the Company or any of its clients, customers, consultants, licensees or affiliates (collectively, the “ Confidential Information ”), which Employee may produce, obtain or otherwise learn of during the course of his performance of services and after the expiration or termination of the Employment Agreement. The “Confidential Information” shall not include information, technical data or know-how that is or becomes part of the public domain not as a result of any inaction or action of the Employee. Employee shall not deliver, reproduce, or in any way allow any such Confidential Information to be delivered to or used by any third parties without the specific direction or consent of a duly authorized representative of the Company.

2. Return of Confidential Material . Upon the expiration or termination the Employment Agreement, Employee shall promptly surrender and deliver to the Company all records, materials, equipment, drawings, documents, lab notes and books and data of any nature pertaining to any Invention (as defined below) or Confidential Information of the Company or to the services provided by Employee, and Employee will not take or retain (in any form or format) any description containing or pertaining to any Confidential Information which Employee may produce or obtain during the course of the services provided under the Employment Agreement or otherwise.

3. Assignment of Inventions and Moral Rights .

(a) Employee hereby assigns and transfers to the Company, on a perpetual, worldwide and royalty-free basis, his entire right, title and interest in and to all Inventions. As used in this agreement, the term “ Inventions ” shall mean all ideas, improvements, designs, discoveries, developments, drawings, notes, documents, information and/or materials, whether or not patentable and whether or not reduced to practice, made or conceived by Employee (whether made solely by Employee or jointly with others) which: (i) occur or are conceived during the period in which Employee performs services for the Company pursuant to the Employment Agreement and (ii) which relate in any manner to drug, nutraceuticals, genes, vaccines, vitamin or other compound delivery technologies involving liposomes, proteoliposomes, cochleates, buccal, transmucosal, transdermal or oral applications and/or derivatives thereof (“ Delivery Technologies ”), applications of the Delivery Technologies to specific drugs, nutraceuticals, genes, vaccines, vitamins or other compounds, or result from any task assigned to or undertaken by Employee or any work performed by Employee for or on behalf of the Company or any of its affiliates.

(b) Employee hereby irrevocably transfers and assigns to the Company any and all Moral Rights that Employee may have in any Inventions. Employee also hereby forever waives and agrees never to assert against the Company, its successors or licensees any and all Moral Rights which Employee may have in any Inventions, even after expiration or termination of the Employment Agreement. For purposes of this Agreement, the term “ Moral Rights” means any right to claim authorship of a work, any right to object to any distortion or other modification of a work, and any similar right, existing under the law of any country in the world, or under any treaty.

4. Disclosure of Inventions . In connection with all Inventions contemplated by Section 3 hereof:

(a) Employee will disclose all Inventions promptly in writing to the Chief Scientific Officer of the Company, with a copy to the President of the Company, in order to permit the Company to enforce and perfect the rights to which the Company is entitled under this Agreement;

(b) Employee will, at the Company’s request, promptly execute a written assignment of title to the Company for any Invention, and Employee will preserve all Inventions as Confidential Information in accordance with the terms hereof; and

(c) Upon request, Employee will assist the Company or its nominee (at the Company’s expense) during and at any time during or subsequent to the performance of services by Employee for the Company in every reasonable way in obtaining for the Company’s own benefit patents and copyrights for all Inventions in any and all countries, which Inventions shall be and remain the sole and exclusive property of the Company or its nominee, whether or not patented or copyrighted. Employee will execute such papers and perform such lawful acts as the Company deems to be necessary to allow the Company to exercise all rights, title and interest in such patents and copyrights.

5. Execution of Documents . In connection with this Agreement, Employee will execute, acknowledge and deliver to the Company or its nominee upon request and at the Company’s expense all such documents, including applications for patents and copyrights and assignments of all Inventions, patents and copyrights to be issued therefore, as the Company may determine necessary or desirable to apply for and obtain letters patent and copyrights on all Inventions in any and all countries and/or to protect the interest of the Company or its nominee in Inventions, patents and copyrights and to vest title thereto in the Company or its nominee.

6. Maintenance of Records . Employee will keep and maintain adequate and current written records of all Inventions made by Employee (in the form of notes, sketches, drawings and as may be specified by the Company), which records shall be available to and remain the sole property of the Company at all times.

7. Prior Inventions . It is understood that all ideas, improvements, designs and discoveries, whether or not patentable and whether or not reduced to practice, which Employee made prior to the time the Company and Employee began to consider any possible performance of services contemplated by the Employment Agreement (herein referred to as “ Excluded Inventions ”) are excluded from the definition of Inventions as used herein. Set forth on Exhibit A attached hereto is a complete list of all Excluded Inventions, including numbers of all patents and patent applications, and a brief description of all unpatented inventions which are not the property of another party (including, without limitation, a current or previous contracting party). The list is complete and if no items are included on Exhibit A , Employee

shall be deemed to have no such prior inventions within the definition of Inventions. Employee will notify the Company in writing before Employee makes any disclosure or performs any work on behalf of the Company which appears to threaten or conflict with proprietary rights Employee claims in any such Invention or idea. In the event of Employee’s failure to give such notice, Employee will make no claim against the Company with respect to any such inventions or ideas.

8. Other Obligations. Employee acknowledges that the Company, from time to time, may have agreements with other persons or entities or with the U.S. Government, or agencies thereof, which impose obligations or restrictions on the Company regarding inventions made during the course of work thereunder or regarding the confidential nature of such work. Employee will be bound by all such obligations and restrictions and will take all action necessary to discharge the obligations of the Company thereunder.

9. Trade Secrets of Others . Employee represents that his performance of all the terms of this Agreement and the Employment Agreement and as a consultant to the Company does not and will not breach any agreement to keep in confidence proprietary information, knowledge or data acquired by Employee in confidence or in trust, and Employee will not disclose to the Company, or induce the Company to use, any confidential or proprietary information or material belonging to any other person or entity. Employee will not enter into any agreement, either written or oral, in conflict herewith.

10. Non-Solicitation . Employee agrees that he will not, without the prior written consent of the Company, at any time during the term of the Employment Agreement or for a period of two (2) years from the date of the expiration or termination of the Employment Agreement for whatever reason, either individually or through any entity controlled by Employee, and either on Employee’s behalf or on behalf of any other person or entity competing or endeavoring to compete with the Company, directly or indirectly, knowingly solicit for employment or retention (or, following such solicitation, employ or retain) as an employee, independent contractor or agent, any person who is an employee of the Company as of the date of the expiration or termination of the Employment Agreement or was an employee of the Company at any time during the two (2) year prior to the the expiration or termination of the Employment Agreement. Employee further agrees that, should Employee be approached by a person who Employee has actual knowledge was an employee of the Company or any subsidiary or joint venture thereof during the period while Employee was employed by the Company, Employee will not offer to nor employ or retain (or refer to a third party) as an employee, independent contractor or agent any such person for a period of two (2) years following the expiration or termination of the Employment Agreement.

11. Injunctive Relief . Employee acknowledges that any breach or attempted breach by Employee of this Agreement or any provision hereof shall cause the Company irreparable harm for which any adequate monetary remedy does not exist. Accordingly, in the event of any such breach or threatened breach, the Company shall be entitled to obtain injunctive relief, without the necessity of posting a bond or other surety, restraining such breach or threatened breach.

12. Modification. This Agreement may not be changed, modified, released, discharged, abandoned, or otherwise amended, in whole or in part, except by an instrument in writing, signed by Employee and by the Company. Any subsequent change or changes in the relationship between the Company and Employee or in Employee’s compensation by the Company shall not affect the validity or scope of this Agreement.

13. Reasonable Terms . Employee acknowledges and agrees that the restrictive covenants contained in this Agreement have been reviewed by Employee with the benefit of counsel and that such covenants are reasonable in all of the circumstances for the protection of the legitimate interests of the Company.

14. Entire Agreement . Employee acknowledges receipt of this Agreement, and agrees that with respect to the subject matter thereof it is Employee’s entire agreement with the Company, superseding any previous oral or written communications, representations, understandings, or agreements with the Company or any officer or representative thereof.

15. Severability. In the event that any paragraph or provision of this Agreement shall be held to be illegal or unenforceable, the entire Agreement shall not fail on account thereof. It is further agreed that if any one or more of such paragraphs or provisions shall be judged to be void as going beyond what is reasonable in all of the circumstances for the protection of the interests of the Company, but would be valid if part of the wording thereof were deleted or the period thereof reduced or the range of activities covered thereby reduced in scope, the said reduction shall be deemed to apply with such modifications as may be necessary to make them valid and effective and any such modification shall not thereby affect the validity of any other paragraph or provisions contained in this Agreement.

16. Successors and Assigns . This Agreement shall be binding upon the heirs, executors, administrators or other legal representatives of Employee and is for the benefit of the Company, its successors and assigns. Employee may not assign Employee’s rights or delegate Employee’s duties under this Agreement or the Employment Agreement either in whole or in part without the prior written consent of the Company. Any attempted assignment or delegation without such consent will be null and void.

17. Governing Law . This Agreement shall be governed by the laws of the State of New Jersey except for any conflicts of law rules thereof which might direct the application of the substantive laws of another state.

EXECUTED as of the date set forth below.

Accepted and Agreed:

BIODELIVERY SCIENCES INTERNATIONAL, INC.

[Signature Page to Confidentiality and Intellectual Property Agreement]

EXHIBIT A TO

CONFIDENTIALITY AND INTELLECTUAL PROPERTY AGREEMENT

PRIOR INVENTIONS WITHIN THE SCOPE OF ASSIGNMENT

The following is a complete list of all inventions or improvements patented or, unpatented, that have been made or conceived or first reduced to practice by the undersigned alone or jointly with others prior to the time the Company and the undersigned first began to consider the undersigned’s performance of services for the Company. The undersigned desires to remove the inventions and improvements listed, if any, from the operation of the foregoing Agreement.

Check one:

Exhibit 10.8

VOTING AGREEMENT

This VOTING AGREEMENT (this “ Agreement ”) is made as of the 24 ^th day of August, 2004, by Mark A. Sirgo and Andrew L. Finn (the “ Stockholders ”) in favor of BioDelivery Sciences International, Inc. (the “ Parent ”).

WHEREAS , the Parent has entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”), dated August 10, 2004, by and among Parent, Arius Acquisition Corp., Arius Pharmaceuticals, Inc. (the “ Company ”) and the Stockholders.

WHEREAS , each of the undersigned will receive substantial direct and indirect benefit by reason of the consummation of the transactions (the “ Merger ”) provided for in the Merger Agreement;

WHEREAS , each of the Stockholders is the record and beneficial owner of such number of shares of Series A Preferred Stock of Parent (the “ Preferred Stock ”) as of the closing of the Merger as set forth in Exhibit A hereto;

WHEREAS , pursuant to its terms, the Preferred Stock is eligible for conversion into shares of shares of Parent common stock (the “ Common Stock ”) upon the occurrence of certain events;

WHEREAS , it is a condition precedent to the entering of the Merger Agreement by the Company and the consummation of the Merger that each of the Stockholders shall have executed and delivered to the Company this Agreement.

NOW, THEREFORE , in consideration of the premises and the agreements herein, and in order to induce the Company to enter into the Merger Agreement and to consummate the Merger, the undersigned, intending to be legally bound, hereby agree with the Company as follows:

1. Recitals . The recitals to this Agreement are incorporated herein and made an operative part of this Agreement.

2. Definitions . Reference is hereby made to the Merger Agreement, for a statement of the terms thereof, and each of the undersigned represents and warrants that it has read and reviewed the Merger Agreement. Unless otherwise defined herein, all terms used in this Agreement and not otherwise defined herein shall have the meanings ascribed thereto in the Merger Agreement.

3. Voting Restrictions . From and after the time that the Stockholders hold any shares of Common Stock, the Stockholders agree, for themselves and their Affiliates (as defined in the rules and regulations of the Securities and Exchange Commission (an “ SEC Affiliate ” and, collectively with the Stockholders, the “ Covered Persons ”), that each Covered Person shall vote all shares of Common Stock issued upon conversion of the Preferred Stock for each and every nominee of the board of directors of the Company in connection with any election of directors of the Company.

4. Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of laws principals thereof.

5. Counterparts . This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto were upon the same instrument. Facsimile signatures shall for all purposes hereof be deemed to be original signatures of the parties hereto.

6. Successors and Assigns . This Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and permitted assigns.

7. Amendment . This Agreement may be amended at any time by execution of an instrument in writing signed on behalf of each of the parties hereto.

8. Jurisdiction . Each of the Covered Persons hereby irrevocably submits to the jurisdiction of the state court or the federal court in the State of Delaware, in any action, suit or proceeding brought under, in respect of or in connection with this Agreement, and hereby irrevocably waives, to the fullest extent each Covered Person may effectively do so, any defense based on improper jurisdiction or venue including, without limitation, defenses based on forum non convenience.

9. Legal Fees . The prevailing party in any action, suit or proceeding brought under, in respect of or in connection with this Agreement shall be entitled to reasonable attorney’s fees and costs from the other parties thereto.

[Signature Page Follows]

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IN WITNESS WHEREOF , each of the undersigned has executed and delivered this Agreement in favor of Parent as of the date first above written.

[Signature Page to Voting Agreement]

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Exhibit 10.9

VOTING AGREEMENT

This VOTING AGREEMENT (this “ Agreement ”) is made as of the 24 ^th day of August, 2004, by Hopkins Capital Group II, LLC, Dr. Raphael J. Mannino, Donald L. Ferguson and James A. McNulty (the “ Stockholders ”) in favor of BioDelivery Sciences International, Inc. (the “ Parent ”) and Mark A. Sirgo and Andrew L. Finn (the “ Arius Stockholders ”).

WHEREAS , the Parent has entered into an Agreement and Plan of Merger and Reorganization (the “ Merger Agreement ”), dated August 10, 2004, by and among Parent, Arius Acquisition Corp., Arius Pharmaceuticals, Inc. (the “ Company ”), and the Arius Stockholders)

WHEREAS , each of the undersigned will receive substantial direct and indirect benefit by reason of the consummation of the transactions (the “ Merger ”) provided for in the Merger Agreement;

WHEREAS , each of the Stockholders is the record and beneficial owner of such number of shares of Common Stock of Parent (the “ Common Stock ”) as of the closing of the Merger as set forth in Exhibit A hereto;

WHEREAS , it is a condition precedent to the entering of the Merger Agreement by the Company and the consummation of the Merger that each of the Stockholders shall have executed and delivered to the Company this Agreement.

NOW, THEREFORE , in consideration of the covenants and representations set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by all parties, the parties hereto agree as follows:

1. Recitals . The recitals to this Agreement are incorporated herein and made an operative part of this Agreement.

2. Definitions . Reference is hereby made to the Merger Agreement, for a statement of the terms thereof, and each of the undersigned represents and warrants that it has read and reviewed the Merger Agreement. Unless otherwise defined herein, all terms used in this Agreement and not otherwise defined herein shall have the meanings ascribed thereto in the Merger Agreement.

3. Representation and Warranty . The Stockholders hereby represent and warrant, jointly and severally, to each of the Arius Stockholders that, as of the date hereof, the Stockholders hold, in the aggregate, greater than fifty percent (50%) of the Parent’s outstanding shares of Common Stock.

4. Voting Restrictions . From and after the time that the Stockholders hold any shares of Common Stock, the Stockholders agree, for themselves and their Affiliates (as defined in the rules and regulations of the Securities and Exchange Commission (an “ SEC Affiliate ” and, collectively with the Stockholders, the “ Covered Persons ”), that each Covered Person shall

vote all shares of Common Stock held by such Covered Person at the next annual meeting of Parent’s stockholders following the Closing (and at each special or annual meeting of Parent thereafter until approval is gained) in favor of: (i) the issuance by Parent of all shares of Parent Common Stock issuable upon conversion of all shares of Parent Preferred Stock to be issued pursuant to the Merger Agreement and (ii) any and all other matters required to be approved by the Parent’s stockholders to permit such issuance.

5. Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of laws principals thereof.

6. Counterparts . This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto were upon the same instrument. Facsimile signatures shall for all purposes hereof be deemed to be original signatures of the parties hereto.

7. Successors and Assigns . This Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and permitted assigns.

8. Amendment . This Agreement may be amended at any time by execution of an instrument in writing signed on behalf of each of the parties hereto.

9. Jurisdiction . Each of the Covered Persons hereby irrevocably submits to the jurisdiction of the state court or the federal court in the State of Delaware, in any action, suit or proceeding brought under, in respect of or in connection with this Agreement, and hereby irrevocably waives, to the fullest extent each Covered Person may effectively do so, any defense based on improper jurisdiction or venue including, without limitation, defenses based on forum non convenience.

10. Legal Fees . The prevailing party in any action, suit or proceeding brought under, in respect of or in connection with this Agreement shall be entitled to reasonable attorney’s fees and costs from the other parties thereto.

[Signature Page Follows]

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IN WITNESS WHEREOF , each of the undersigned has executed and delivered this Agreement as of the date first above written.

[Signature Page to Voting Agreement]

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Exhibit 10.14

LOAN AGREEMENT

THIS LOAN AGREEMENT (this “ Agreement ”) is made and entered into effective as of the 22nd day of April, 2003 (the “ Effective Date ”), by and between BIODELIVERY SCIENCES INTERNATIONAL, INC., a Delaware corporation (the “ Borrower ”), and GOLD BANK, a Florida banking corporation, its successors and assigns (“ Bank ”). Capitalized terms used in this Agreement have the meanings assigned to them in Section 1 hereof.

BACKGROUND

(1) The Borrower has requested that the Bank make available to the Borrower a line of credit (the “ Facility ”) in the principal amount of up to One Million Dollars ($1,000,000.00) for the purchase of additional equipment.

(2) The Facility is to be secured by a first priority lien on all Equipment (as hereinafter defined) of the Borrower, including, without limitation, a purchase money security interest in all Equipment purchased using funds of the Facility from and after the date hereof, all on the terms and subject to the conditions set forth herein.

(3) The Bank has agreed to provide the Facility on the terms and subject to the conditions set forth herein and in the other Loan Documents (as hereinafter defined).

NOW, THEREFORE, in consideration of the premises, the mutual covenants and agreements contained herein, and other good and valuable consideration in hand paid by the parties hereto, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

OPERATIVE PROVISIONS

SECTION 1. DEFINITIONS

1.1. Background . The Borrower and Bank acknowledge and agree that the recitals set forth above (the “ Background ”) are true and correct, and the Background and the defined terms referred to therein are incorporated and made a part of this Agreement.

1.2. Defined Terms . Except as otherwise expressly provided in this Agreement, the following terms shall have the respective meanings ascribed to them below for all purposes of this Agreement, unless the context shall otherwise require:

1.2.1. “ Account ” means the same definition as the definition contained in Article 9 of the Uniform Commercial Code of the State of Delaware as from time to time in effect, and shall also mean any account receivable of Borrower as that term is used under GAAP.

1.2.2. “ Account Debtor ” means any Person who owes payment to Borrower for goods or services rendered by Borrower to that Person.

1.2.3. “ Acquisitions ” means the purchase by Borrower for cash, securities, property or other consideration, that is not in the ordinary course of the operation of Borrower’s business, to acquire existing businesses, patents, licenses or other tangible and/or intangible assets, all of which are required to be compatible with and in furtherance of the operation and nature of Borrower’s business.

1.2.4. “ Advance(s) ” means an advance of funds by Bank to Borrower under the Facility pursuant to the provisions of this Agreement.

1.2.5. “ Agreement ” means this Agreement, as the same may be amended, supplemented or otherwise modified from time to time by an agreement in writing signed by Borrower and Bank.

1.2.6. “ Business Day ” means a day that is not a Saturday, a Sunday, or a day on which Bank is closed pursuant to authorization or requirement of law.

1.2.7. “ Capital Stock ” means any capital stock of the Borrower, whether common or preferred.

1.2.8. “ Capitalized Leases ” means leases that are treated for tax purposes pursuant to GAAP as installment purchases of capital assets rather than operating leases.

1.2.9. “ Cash Balances ” means all liquid assets of Borrower (as defined by GAAP) with maturities of ninety (90) days or less. For purposes of clarification, Cash Balances shall not include any liquid assets of any Subsidiary or other entity that is consolidated with Borrower for accounting purposes.

1.2.10. “ Collateral ” means all Equipment (as defined herein) now or hereafter owned by the Borrower.

1.2.11. “ Commitment Period ” means the period from and including the date of this Agreement to but not including the Commitment Termination Date.

1.2.12. “ Commitment Termination Date ” means the date upon which the Bank has no further obligation to make Advances of portions of the Facility, which date shall be the earlier of (i) following the occurrence of an Event of Default under this Agreement, the date upon which the Bank notifies the Borrower in writing that it has elected, pursuant to the provisions of this Agreement, not to make further Advances or (ii) October 30, 2003.

1.2.13. “ Debt ” means all indebtedness of Borrower in respect of money borrowed, including , without limitation, (i) all Capitalized Leases or asset and leaseback obligations created in connection with a sale and leaseback financing or similar financing arrangement, (ii) obligations evidenced by a promissory note, bond or similar written obligation for the payment of money, or (iii) other contingent liabilities, whether direct or indirect (such as by way of a letter of credit issued for the account of Borrower) in connection with the

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obligations, stock, or dividends of any Person that would be required by GAAP to be included in determining total liabilities as shown on a balance sheet for Borrower (provided the obligation so guaranteed is not otherwise included in the calculation of Debt for purposes hereof).

1.2.14. “ Default Rate ” means the highest rate permissible under applicable law from and as of the date of any Event of Default until the entire obligation or any judgment thereon is paid in full.

1.2.15. “ Designated Officer ” means the officers from time to time designated from Borrower to Bank pursuant to written notice from the President of Borrower.

1.2.16. “ Disclosure Schedule ” means the schedule delivered to the Bank by Borrower simultaneously with the execution of this Agreement, setting forth the limitations to or qualifications of the representations and warranties as specifically stated in Section 4 of this Agreement.

1.2.17. “ Effective Date ” means the date stated above in the preamble to this Agreement.

1.2.18. “ Environmental Laws ” means any federal, state, or local statutory or common law, ordinance, rule or regulation, whether now in existence or established or enacted in the future, relating to pollution or protection of the environment, including without limitation, any common law of nuisance or trespass, and any law, rule or regulation relating to emissions, discharges, releases or threatened releases of pollutants, contaminants or chemicals, or industrial, toxic or hazardous substances or waste into the environment (including without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of nuclear or radioactive material, pollutants, contaminants or chemicals or industrial, toxic or hazardous substances or wastes, which Environmental Laws include but are not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), 42 U.S.C. ‘ 9601, et seq. , the Superfund Amendments and Reauthorization Act of 1986 (“SARA”), Public Law 99-499, 100 Stat. 1613, the Resource Conservation and Recovery Act (“RCRA”), 42 U.S.C. ‘ 6901, et seq. , the Florida Resource Recovery and Management Act, Section 403.702, et seq. , Florida Statutes, the Pollutant Discharge Prevention and Control Act, Section 376.011-376.17 and 376.19-376.21 Florida Statutes, and all federal, state or local environmental statutes, ordinances, rules and regulations.

1.2.19. “ ERISA ” means the Employee Retirement Income Security Act of 1974 as amended from time to time.

1.2.20. “ Equipment ” means all Equipment (as defined in Article 9 of the Uniform Commercial Code of the State of Delaware as in effect from time to time, and including, without limitation, all Equipment purchased using funds of the Facility from and after the date hereof), employed in connection with the Borrower’s business located at 185 South Orange Avenue, Bldg. #4 Newark, New Jersey, together with all present and future additions, attachments and accessions thereto and all substitutions therefor and replacements thereof, and copies or originals of all testing, quality control and other records relating to any of the Equipment. For the

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avoidance of doubt, the term “Equipment” shall not mean any other personal or real property of the Borrower, including, without limitation, all Inventory, General Intangibles or other Goods (each as defined in Article 9 of the Uniform Commercial Code of the State of Delaware as in effect from time to time) of the Borrower.

1.2.21. “ Event of Default ” means any of the events specified in Section 7.1 hereof.

1.2.22. “ Facility ” is defined in the Background.

1.2.23. “ Fiscal Year ” means the fiscal year of the Borrower for accounting and tax purposes, which ends on December 31 ^st of each year.

1.2.24. “ GAAP” or “Generally Accepted Accounting Principles ” means those principles of accounting set forth in Opinions of the Financial Accounting Standards Board of the American Institute of Public Accountants or which have other substantial authoritative support and are applicable in the circumstances as of the date of any report required herein or as of the date of an application of such principles as required herein, as such principles are from time to time supplemented and amended.

1.2.25. “ Interest Expense ” for any period means interest, whether expensed or capitalized, in respect of Debt of the Borrower outstanding during such period.

1.2.26. “ Line Facility Note” means the equipment term promissory note executed by the Borrower in favor of the Bank pursuant to Advances made under the Line Facility, in the form attached hereto as Exhibit A.

1.2.27. “ Line Facility Note Maturity Date ” means fifty four months from the date of Closing hereunder, or November 30, 2007.

1.2.28. “ Loan Documents ” means this Agreement, the Line Facility Note, the Security Agreement and any other security instruments from time to time executed by Borrower in conjunction with the Facility, and all other instruments, certificates, statements, documents or other writings delivered pursuant hereto or thereto.

1.2.29. “ Maximum Line Facility Committed Amount ” means, with respect to the Line Facility, the maximum principal amount of One Million and No/100 Dollars ($1,000,000.00), which Bank has agreed to lend to Borrower pursuant hereto, as evidenced by the Line Facility Note.

1.2.30. “ Minimum Cash Balances to Total Liabilities Ratio ” means 2 to 1, which shall constitute the lowest ratio of Cash Balances to Total Liabilities permitted with respect to the Borrower’s operations at all times, to be certified to the Bank as of the last day of each fiscal year.

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1.2.31. “ Officer’s Certificate ” means a certificate containing, among other things, certifications as to loan covenant compliance, in form and substance satisfactory to Bank, signed by a Designated Officer, in the form attached as Exhibit “C”.

1.2.32. “ Permitted Liens ” means (i) liens for taxes not yet due or which are being contested in good faith by appropriate proceeding and against which reserves reasonably deemed adequate by the Bank, (ii) liens in favor of Bank, and (iii) liens described in Section 4.5 of the Disclosure Schedule (which shall not include any liens on the Collateral hereunder).

1.2.33. “ Person ” means an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture or any other entity or a government or any agency or political subdivision thereof.

1.2.34. “ Reportable Event ” means any of the events set forth in Section 4043(b) of ERISA.

1.2.35. “ Security Agreement ” means the Security Agreement attached hereto as Exhibit “D” and executed by Borrower granting a first priority security interest in the Equipment to the Bank.

1.2.36. “ Solvent ” means as to any Person, that such Person (i) owns property whose fair saleable value is greater than the amount required to pay all of such Person’s indebtedness (including contingent debts), (ii) is able to pay all of its indebtedness as such indebtedness matures and (iii) has capital sufficient to carry on its business and transactions and all business and transactions in which it is about to engage.

1.2.37. “ Subsidiary ” means any corporation or other entity of which more than 50% of voting stock at any time is directly or indirectly owned or controlled by the Borrower, or that is directly or indirectly under common ownership or control with the Borrower.

1.2.38. “ Total Liabilities ” means all liabilities of the Borrower as defined by GAAP, including all contingent liabilities of the Borrower for any obligation of any Subsidiary or any third party.

1.3. Other Definitional Provisions . All terms defined in or incorporated into this Agreement shall have the same defined meanings when used in the other Loan Documents or any certificate or other instrument made or delivered pursuant hereto unless the context otherwise requires. Any accounting term used but not defined herein shall have the meaning given to it under GAAP.

SECTION 2. THE FACILITY

2.1. The Facility . Subject to the terms and conditions of this Agreement, including, without limitation, the Maximum Line Facility Committed Amount and Advance limitations as herein described, Bank agrees to make available to Borrower the Line Facility in the maximum principal amount of One Million and No/100 Dollars ($1,000,000.00). Prior to the Line Facility Maturity Date, and provided all conditions set forth in Section 2.1.2, below, have been satisfied,

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Bank shall, pursuant to this Agreement and upon the request of Borrower, make Advances under the Facility. All or any portion of the Maximum Line Facility Committed Amount may be prepaid without prepayment premium or penalty; provided, however that no amounts so prepaid shall be available during the term of this Agreement for reborrowing.

2.1.1. The Line Facility Note . Each Advance under the Facility shall be evidenced by the Line Facility Note.

2.1.2. Conditions to Advances . At the time of each Advance of a portion of the Facility, each of the following must be satisfied in all material respects:

2.1.2.1. Representations and Warranties . All of the representations and warranties of the Borrower set forth in this Agreement or in any of the other Loan Documents shall be correct in all material respects on and as of the date of such Advance as though made on and as of such date.

2.1.2.2. No Default . The Borrower shall have observed and performed in all material respects all of the terms, conditions and agreements set forth herein or in any other Loan Documents on its part to be observed or performed and no Event of Default shall have occurred and be continuing thereunder.

2.1.2.4. Draw Eligibility . Aggregate Advances then-outstanding under the Line Facility, inclusive of the amount to be advanced under the current request, do not exceed seventy-five percent (75%) of the lower of cost or fair market value (as determined by the Bank) of all Equipment of the Borrower, inclusive of the equipment to be purchased under the current request. The Bank shall have the right at all times to inspect and have agents acceptable to the Bank appraise the Equipment for purposes of verification of this condition.

2.1.2.5. Not Exceed the Maximum Line Facility Committed Amount . Aggregate Advances then-outstanding under the Line Facility, inclusive of the amount to be advanced under the current request, do not exceed the Maximum Line Facility Committed Amount.

2.1.2.6. Commitment Termination Date . The Commitment Termination Date has not occurred in accordance with the terms of this Agreement.

2.1.2.7. Borrower’s Certificate . Bank is in possession of a current acceptable Officer’s Certificate (as to compliance with the representations, warranties and covenants set forth herein) as of the date of the Advance.

2.1.2.8. Execution of Documentation . As a condition to each Advance under the Facility, Borrower shall provide copies of documentation detailing the equipment to be purchased (including a description of the equipment), together with evidence satisfactory to the Bank that the equipment has been delivered to the location of Borrower in Newark, New Jersey within ten (10) days of such delivery. Borrower further authorizes the filing of a UCC-1 financing

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statement(s) and any other documents in connection with the perfection by Bank of a purchase money security interest in the equipment purchased with the Advance.

2.1.3. Advances . Advances shall be made by Bank under the Facility on the same domestic Business Day of Bank’s receipt of Borrower’s request from a Designated Officer for an Advance if received by 2:00 p.m., Tampa, Florida time, and if Borrower’s request for an Advance is received thereafter, as soon as practicable, but in any event by 9:00 a.m., Tampa, Florida time, the following Business Day (provided, however, Bank shall only be required to fund such Advance on a Business Day). The Borrower’s request for an Advance under the Facility may be provided either telephonically, via e-mail, by U.S. Mail, prepaid overnight delivery, or by facsimile transmission, in any case provided by a Designated Officer of Borrower, and specifying the proposed date of the Advance and the principal amount of such Advance. Each Advance shall bear interest at the rate stated in the Line Facility Note, and shall be made by crediting the amount of the Advance to the general deposit account of Borrower maintained with Bank (the “ Deposit Account ”), except as otherwise from time to time specified by Borrower. Unless Borrower provides Bank with written information to the contrary, the president, the chief financial officer or any vice president of Borrower shall each constitute a “ Designated Officer ” for purposes of requests, certifications and notifications under this Agreement. Borrower agrees that throughout the term of the Facility, the President of Borrower will provide written notification to Bank of any change in officers and personnel of Borrower necessitating a change in the Designated Officer(s) of Borrower, and Bank is hereby expressly authorized to rely upon any such written notification received by Bank. As requested by the Bank, the Bank’s electronic sweep procedures as in effect from time to time shall apply to the Advances.

2.1.4. Initial Advance . The initial Advance to be made by Bank hereunder shall be based upon the Officer’s Certificate provided by Borrower to Bank at or prior to the Effective Date, shall be subject to the satisfaction of the conditions precedent to Closing set forth in Section 2.4 of this Agreement, and shall further be subject to the confirmation by the Bank of the Equipment manufacturer numbers and serial numbers provided by the Bank.

2.1.5. Payments . Each payment and prepayment by Borrower of principal and interest under the Line Facility Note shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debt. If any installment of principal or interest becomes due and payable on a day other than a Business Day, the due date thereof shall be extended to the next succeeding Business Day; and, in the case of principal, interest shall be payable during the extension at the rate specified in the Line Facility Note.

2.1.6. Mandatory Principal Repayments . In the event that the Minimum Cash Balances to Total Liability Ratio at any time during the term of this Agreement falls below 2 to 1, the Borrower shall make a immediate prepayment in an amount sufficient to reduce the amount outstanding under the Line Facility Note by one-half. The Borrower’s failure to make any repayment or prepayment required by this Section within ten (10) Business Days after having received the notice from the Bank described above, shall constitute an Event of Default under Section 7.1 below.

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2.1.7. Advances to Cure Default . Upon the occurrence of an event of default by Borrower under any Debt (including, without limitation, the obligations of Borrower under the Line Facility Note), the Bank shall have the right, but not the obligation, to advance any sums necessary to cure such event of default. Any sums so advanced shall constitute an Advance under the Loan Documents, shall bear interest at the Default Rate and shall be immediately due and payable.

2.2 Commitment Fees . Contemporaneously with the execution of this Agreement, as consideration for making the Facility available to Borrower, Borrower shall pay to Bank a commitment fee of $5,000.00.

2.3 Closing of the Facility . The closing of the transactions contemplated hereby (the “Closing”) shall be held in Newark, New Jersey, effective for all purposes as of the Effective Date, or at such other time and/or place as the parties may agree.

2.4 Conditions Precedent to Closing . The Bank shall have no obligation to close the transactions contemplated hereby to the Borrower under the Facility until the Bank has received the items listed below and/or the events described below have occurred, as the case may be:

2.4.1 Loan Documents . The Loan Documents shall have been duly executed by the Borrower and delivered to the Bank.

2.4.2 Security Agreement . The Security Agreement shall have been duly executed by the Borrower and delivered to the Bank.

2.4.3 Borrowing Resolutions and General Certificate . Copies of (i) the resolutions of the Borrower certified by the corporate secretary authorizing execution of this Agreement and the other Loan Documents on behalf of the Borrower and authorizing specified officers of the Borrower to execute and deliver this Agreement and the other Loan Documents on behalf of the Borrower, and (ii) an officer’s certificate accompanying a current version of articles of incorporation and bylaws and incumbency.

2.4.4 Certificates of Incumbency . A certificate of incumbency showing the present president, secretary, and any other persons executing any of the Loan Documents on behalf of the Borrower and specimen signatures of said persons.

2.4.5 No Adverse Change . Since December 31, 2002, no conditions have occurred or arisen regarding either the Borrower’s financial condition which the Bank deems, in its sole discretion, to have a materially adverse impact on the Borrower’s financial condition.

2.4.6 Landlord’s Waiver and Acknowledgment . The landlord of any premises leased by the Borrower where Equipment is located shall have executed and delivered to Bank a Landlord’s Waiver and Acknowledgment with respect to the first priority security interest in Equipment granted in the Security Agreement.

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2.4.7 Lien Priority and Terminations . The Bank shall have received a lien search verifying the priority of the security interest granted in the Collateral, and any liens on the Collateral other than Permitted Liens shall have been terminated.

2.4.8. Opinion of Counsel . An opinion of counsel to the Borrower, acceptable to the Bank.

SECTION 3. SECURITY

All amounts due from Borrower to Bank under this Agreement and the Note shall be secured as follows:

3.1. Security Documents . Simultaneously with the execution of this Agreement, Borrower shall execute and deliver to Bank (i) one or more security agreements (collectively, the “ Security Agreement ”) relating to all Equipment of Borrower evidencing a first priority security interest in all Equipment and a purchase money security interest in all Equipment purchased by the Borrower using the proceeds of the Facility. Borrower further authorizes Bank to file UCC-1 financing statements and other documents as deemed necessary by Bank to evidence a first priority security interest in the Collateral. Additionally, Borrower shall execute and deliver such security agreements, assignments and other documents as may, in the reasonable opinion of Bank’s counsel, be necessary or desirable in connection with perfecting a first security interest in such Collateral.

SECTION 4. REPRESENTATIONS AND WARRANTIES

To induce Bank to enter into this Agreement and to make the Advances hereunder, Borrower represents and warrants to Bank (which representations and warranties shall survive the delivery of the documents mentioned herein and the making of the Facility contemplated hereby) as follows:

4.1 Legal Existence . Borrower is a corporation duly formed and organized, validly existing and in good standing under the laws of the State of Delaware and qualified to transact business in the States of New Jersey and Florida and in all jurisdictions where qualification is required for the conduct of its business, other than jurisdictions where the failure to qualify would not have a material adverse effect on the Borrower. Borrower has the power to own its properties and to carry on its business as now being conducted, and Borrower is in compliance with all other material requirements of law applicable to it and to its business.

4.2 Legal Power of Borrower; Authorization . Borrower has the legal right, power and authority to make, deliver and perform the Loan Documents and Borrower has the legal right, power and authority to borrow thereunder, and such actions will not violate any provision of law or its articles of incorporation and amended and restated bylaws. Borrower has taken all necessary corporate and shareholder action on its part to be taken to authorize the execution, delivery and performance of the Loan Documents and to authorize the borrowings by Borrower contemplated hereby.

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4.3 Enforceable Obligations . The Loan Documents have been duly executed and delivered on behalf of Borrower; and the Loan Documents constitute the legal, valid and binding obligations of each, enforceable in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforceability of creditors’ rights generally and general principles of equity which may limit the availability of equitable remedies.

4.4 Financial Condition . The balance sheet of Borrower dated December 31, 2002, the related statements of operations, stockholders’ equity and cash flow for the year then ended, audited by Grant Thornton LLP, fairly present the financial condition of the Borrower as at the date of said balance sheet and the results of their operations for said year (all such financial statements are referred to herein as the “Financial Statements”). The Borrower does not have any material direct liabilities or contingent obligations as of the date of this Agreement which are not provided for or reflected in the Financial Statements. All Financial Statements have been prepared in accordance with GAAP applied on a consistent basis maintained throughout the period involved (except that full footnotes and year-end adjustments are not included in the unaudited interim financial statements). There has been no material adverse change in the business, properties or condition, financial or otherwise, of Borrower since the date of the Financial Statements.

4.5 Title to Collateral; Priority of Liens . Borrower has good, indefeasible and marketable title to all of the Collateral, free and clear of all judgments, liens, security interests or other encumbrances other than the Permitted Liens and except for liens identified on the Disclosure Schedule as liens to be terminated prior to the Effective Date. Borrower has paid or discharged all lawful claims that are due which, if unpaid, might become a lien against or encumbrance upon any of the Collateral. The liens and security interests granted to Bank under the Security Agreement are first priority liens and security interests in the Collateral, subject to the Permitted Liens.

4.6 Taxes . The Borrower has filed accurate and complete tax returns required to be filed by them with respect to all taxes owed or filed an appropriate extension, all taxes shown thereon have been paid or adequate provision for the payment of such taxes has been made, and no controversy in respect of additional taxes, state or federal, of the Borrower is pending, or to the knowledge of the Borrower, threatened.

4.6 Solvent Financial Condition . Borrower is now and, after giving effect to the Facility to be made by Bank, at all times will be Solvent.

4.7 Governmental Consents . Borrower has, and is in good standing in all material respects with respect to, all governmental consents, approvals, licenses, authorizations, permits, certificates, inspections and franchises necessary to continue to conduct its business as heretofore or proposed to be conducted by it and to own or lease and operate its business as it is now conducted.

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4.8 Contract or Restriction Affecting Borrower . The Borrower neither is a party to nor bound by any contract or agreement or subject to any articles of incorporation, bylaws or other corporate restrictions which adversely affects the business, properties, or condition, financial or otherwise, of the Borrower.

4.9 Patents and Trademarks . The Borrower owns, possesses, or has the right to use all necessary patents, licenses, trademarks, trademark rights, trade names, trade name rights, copyrights, trade secrets and other confidential commercial and proprietary information, free from burdensome restrictions, which are material to the conduct its business as conducted as of the Effective Date, and, to the knowledge of the Borrower, without infringement of any patent, license, trademark, trade name, copyright or other proprietary right of any other person.

4.10 Litigation . There are no investigations, actions, suits or proceedings by any federal, state or local government body, agency or authority, or any political subdivisions thereof, or by any person, pending, or to the knowledge of the Borrower, threatened against the Borrower or other proceedings to which the Borrower is a party (including administrative or arbitration proceedings), (a) that are likely to result in any material adverse change in, or to have any other material adverse effect on, the business or condition, financial or otherwise, of the Borrower, or (b) that, whether or not the Borrower is a party thereto, seek to restrain, enjoin, prohibit or obtain damages or other relief with respect to the transactions contemplated by this Agreement. The Disclosure Schedules list investigations, actions, suits or proceedings of which Borrower is aware, none of which are likely to result in any material adverse change in, or have any other material adverse effect on, the Business or condition, financial or otherwise, of the Borrower.

4.11 Environmental Matters .

4.11.1 Borrower is in compliance with all provisions of the Environmental Laws, except where the failure to so be in compliance will not materially and adversely affect the business, properties or condition, financial or otherwise, of Borrower, as the case may be.

4.11.2. Borrower has not received any assessment, notice of liability or notice of financial responsibility, and no notice of any action, claim or proceeding to determine such liability or responsibility, or the amount thereof, or to impose civil penalties with respect to a site listed on any federal or state listing of sites containing or believed to contain hazardous materials under any Environmental Law, and Borrower has received no notification that any hazardous substances (as defined under CERCLA) that it has disposed of have been found in any site at which any governmental agency is conducting an investigation or other proceeding under any Environmental Law.

4.11.3. Except for radioactive materials used in compliance with all applicable laws and regulations in the ordinary course of Borrower’s business, no part of any of the property used by Borrower in its businesses or in any building, structure or facility located thereon or improvement thereto contains asbestos or polychlorinated biphenyls (PCBs); have electrical transformers, fluorescent light fixture ballasts or other equipment containing PCBs installed thereon or therein; is used for the handling, processing, storage or disposal of Hazardous Materials; or contain above-ground or underground storage tanks or other storage

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facilities for Hazardous Materials or, if any of the foregoing circumstances exist, the same does not and will not have a materially adverse impact on the financial condition or business operations of the Borrower.

4.12 Compliance with Law . Borrower is and has at all times been in compliance with all provisions of all laws, ordinances and regulations applicable to Borrower and the business conducted by it, except where the failure to so be in compliance will not materially and adversely affect the business, properties or condition, financial or otherwise, of Borrower, as the case may be..

4.13 ERISA . The Borrower has not incurred any material accumulated funding deficiency within the meaning of ERISA, or incurred any material liability in connection with any employee benefit plan established or maintained by the Borrower (or in any multi-employer Plan (as defined in Section 4001(a)(3) of ERISA) in which Borrower participates) and no Reportable Event has occurred or is occurring.

4.14. Default . As of the date hereof, there does not exist any Event of Default.

4.15 Liabilities . The Borrower has not incurred any debts, liabilities, or obligations other than those disclosed to the Bank in connection with the Borrower’s request for the extension of credit contemplated hereby or those shown on the financial statements and/or the notes thereto submitted to the Bank by the Borrower or those incurred in the ordinary course of business subsequent to the date of the financial statements.

4.16 Regulation U . No part of the proceeds of the Facility will be used to purchase or carry or to reduce or retire any loan incurred to purchase or carry, any margin stocks (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System) or to extend credit to others for the purpose of purchasing or carrying any such margin stocks. Neither Borrower nor any Subsidiary is engaged and will not engage as one of its important activities in extending credit for the purpose of purchasing or carrying such margin stocks. If requested by the Bank, the Borrower and Subsidiaries will furnish to the Bank, in connection with the Facility, a statement in conformity with the requirements of Federal Reserve Form U-1 referred to in Regulation U. In addition, no part of the proceeds of the Facility will be used for the purchase of commodity future contracts (or margins therefor for short sales), or for any commodity.

4.17 Securities Law . Borrower is not (i) an “investment company” or a company “controlled” by an “investment company” (within the meaning of the Act of 1940, as amended), (ii) a “holding company,” or a subsidiary or affiliate of a “holding company,” or a “public utility” within the meaning of the Public Utility Holding Company Act of 1935, as amended, or (iii) a “public utility” within the meaning of the Federal Power Act, as amended.

4.18 No Untrue Statements . To the knowledge of the Borrower, neither this Agreement, nor any of the other Loan Documents, nor any other agreement, report, schedule, certification or instrument simultaneously with the execution of this Agreement delivered to the Bank by the Borrower or by any officer thereof, contains any misrepresentation or untrue statement of any material fact or omits to state any material fact necessary to make any of such agreements, reports, schedules, certificates or instruments not misleading in any material respect.

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4.19 Subsidiaries . Except as set forth on the Disclosure Schedule (as updated from time to time by notice to Bank, which notice may be provided in the form of copies of filings by the Borrower with the SEC) the Borrower has no Subsidiaries.

4.20 Capital Structure of Borrower . The authorized capital structure of the Borrower (including all option, warrants or other rights to purchase capital stock of the Borrower) is as described in the Borrower’s Annual Report on Form 10-KSB filed with the Securities and Exchange Commission on March 28, 2003 (the “Borrower’s 10-K”).

SECTION 5. AFFIRMATIVE COVENANTS

Borrower covenants and agrees that from the date of this Agreement until payment in full of all the amounts outstanding under the Note, unless Bank shall otherwise consent in writing, Borrower shall fully comply with the following provisions:

5.1. Financial Reports and Other Data .

(a) Borrower will deliver or cause to be delivered to Bank certified copies of its Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K as filed with the Securities and Exchange Commission within seven (7) days of such filing (or if such filing is extended or delayed, internally prepared income statements and balance sheets for Borrower, certified as true and correct by Borrower to Bank’s satisfaction shall be provided within forty five (45) days of the end of each fiscal quarter and within one hundred and twenty (120) days of the end of each fiscal year throughout the term of the Facility). In addition, Borrower shall, from time to time provide to the Bank such additional information regarding the financial position or business of the Borrower as Bank may reasonably request.

(b) Within forty five (45) days of the end of each calendar quarter throughout the term of the Facility, internally prepared income statements and balance sheets for Borrower, all certified as true and correct by Borrower to Bank’s satisfaction and an Officer’s Certificate signed by a Designated Officer of Borrower in the form attached hereto as Exhibit “C” (including compliance with the Minimum Cash Balances to Total Liabilities Ratio); if any Event of Default exists on the date of such certificate, such certificate shall set forth the details thereof and the action which Borrower is taking or proposes to take with respect thereto.

(c) In the event that (i) Borrower fails to furnish any required financial statements or Officer’s Certificates when due, or (ii) fails to prepare any required monthly financial statements in accordance with GAAP, consistently applied, Bank may, without waiving its right to claim a default due to such failure, have the books and records of Borrower audited by an independent certified public accountant of Bank’s choice at the expense of Borrower.

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5.2. Conduct of Business; Maintenance of Existence . Borrower (i) will do or cause to be done all things necessary to preserve and to keep in full force and effect its legal existence and all patents, licenses, rights, trade names, and permits which are reasonably necessary for the continuance of its business, and (ii) will continue to engage principally in the business in which it is engaged on the Effective Date.

5.3. Maintenance of Collateral . Borrower will maintain the Collateral and its various properties in good order and repair and, from time to time, make all needful and proper repairs, renewals, replacements, additions and improvements thereto so that the business carried on may be properly and advantageously conducted at all times in accordance with prudent business management.

5.4. Notices . Borrower will promptly give notice to Bank of:

(a) The occurrence of any Event of Default hereunder or under any of the other Loan Documents;

(b) The occurrence of any material casualty to any facility of Borrower;

(c) Any material adverse change or imminent material adverse change to the financial condition of Borrower or any Subsidiary of which Borrower is aware;

(d) The occurrence of any litigation or proceedings that may involve a claim for damages, injunctive relief, enforcement or other relief pending, being instituted, levy, execution or other process being instituted by or against any assets of Borrower in which damages of $50,000.00 or greater are sought or which might otherwise materially adversely affect the continued conduct of Borrower’s business prospects or operations.

5.5. Payment of Taxes; Liens . To the extent applicable, Borrower and each Subsidiary will promptly pay, or cause to be paid, prior to any delinquency, all taxes, assessments and other governmental charges which may lawfully be levied or assessed (i) upon the income or profits of Borrower or a Subsidiary; (ii) upon the Collateral or any other property, real, personal or mixed, belonging to Borrower, or upon any part thereof; or (iii) any lawful claims for labor, material and supplies which, if unpaid, might become a lien or charge against any such property; provided, however, Borrower or Subsidiary, as the case may be, shall not be required to pay any such tax, assessment, charge, levy or claim so long as the validity thereof shall be actively contested in good faith by proper proceedings; but provided further that any such tax, assessment, charge, levy or claim shall be paid forthwith upon the commencement of proceedings to foreclose any lien securing the same.

5.6. Indemnification of Bank . Borrower agrees to and shall indemnify Bank from any liability, claim or losses resulting from the disbursement of proceeds of the Note for payment of any payroll or employee benefits obligations of Borrower and each Subsidiary, or for any

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Federal Social Security Taxes, Medicare Taxes, Federal Withholding Tax obligations of Borrower in conjunction therewith, or in any way resulting from the operation of Borrower’s business (the payment of all of which shall remain Borrower’s sole obligation) and whether arising during or after the term of any indebtedness of Borrower to Bank. This subsection shall survive the repayment of any and all indebtedness of Borrower to Bank and shall continue in full force and effect so long as the possibility of any liability, claim or loss exists.

5.7. Insurance of Properties . Borrower will use commercially reasonable efforts to keep its business and properties and all inventory and equipment used in the operation of its business adequately insured at all times by responsible insurance companies against the risks and in at least the amounts of coverage currently covered by the property policy described on the certificate of insurance attached to the Disclosure Schedule and deliver to Bank annually upon renewal and/or replacement of each such policy and, as from time to time otherwise requested by Bank, a certificate of such company or successor underwriter, if any, setting forth the nature of the risks covered by such insurance, the amount carried with respect to each risk, the name of the insurer and naming Bank as additional/loss payee/additional insured.

5.8. Pay Bank’s Expenses; Approval of Bank’s Attorneys . Borrower covenants and agrees to pay the following costs incurred by Bank in connection with Advances contemplated hereunder and expenses of Bank with respect thereto: recording and/or filing costs, documentary stamps, surtax and other revenue fees, escrow fees and similar items. All Closing papers, loan documents and other legal matters shall be subject to the reasonable approval of Bank’s counsel.

5.9. ERISA Compliance . Borrower hereby agrees to comply with the requirements of ERISA with respect to each employee benefit plan maintained by Borrower, and shall promptly notify Bank of (i) the occurrence of any event which could cause the termination, in whole or in part, of any defined benefit plan; (ii) any violation of ERISA with respect to any employee benefit plan; and (iii) the occurrence of any Reportable Event.

5.10. Regulatory Compliance . The Borrower will maintain in good standing in all material respects with respect to, all governmental consents, approvals, licenses, authorizations, permits, certificates, inspections and franchises necessary to continue to conduct its business as heretofore or proposed to be conducted by it and to own or lease and operate its business and the properties as now owned or leased by it.

5.11. Changes in Ownership . Borrower agrees to immediately report to Bank the following: if Francis E. O’Donnell, Jr. either (i) is no longer an officer and director of Borrower or (ii) if the beneficial ownership of the voting securities of Borrower held by Francis E. O’Donnell, Jr. fall below 25%. For purposes of this Section 5.11, all percentages shall be computed on a fully diluted basis, treating all shares of common stock reserved by the Borrower for issuance pursuant to warrants, subscriptions, and any stock option plan described in the Borrower’s 10-K as issued.

5.12. Account Relationship . Borrower shall maintain its primary operating deposit account with Bank.

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SECTION 6. NEGATIVE COVENANTS

Borrower covenants and agrees, effective the date of this Agreement until payment in full of the loan or loans contemplated hereunder, unless Bank shall otherwise consent in writing, as follows:

6.1. Prohibition of Fundamental Changes; Sale of Assets, Merger; Dissolution, Etc. Borrower will not, directly or indirectly, enter into any transaction of merger or consolidation, or transfer, sell, assign, lease or otherwise dispose of all or substantially part of its properties necessary for the proper conduct of its business (excluding the sale of inventory in the ordinary course of business), or wind up, liquidate or dissolve, or agree to do any of the foregoing.

6.2. Minimum Cash Balances to Total Liabilities . The Minimum Cash Balances to Total Liabilities Ratio shall not fall below 2 to 1 at any time during the term of the Facility.

6.3. Nature of Business . Borrower shall not change the nature of its primary business, or enter into any new business or acquire any business, either of which is substantially different from the business as conducted as of the Effective Date.

6.4. Purpose of Borrowing . Use or permit the proceeds of the Facility to be used for the purpose of reducing or carrying any margin security or for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry a margin security or for any other purpose which might constitute this transaction a “purpose credit” within the meaning of Regulation U, as now in effect or as it may hereafter be amended, and all such proceeds shall be used for normal business purposes.

6.5. No Additional Debt to be Incurred by Borrower . Except with respect to (i) borrowing under the Facility, (ii) existing debt heretofore disclosed to Bank by Borrower and identified in the Borrower’s 10-K, and (iii) debt incurred by Borrower in the ordinary course of Borrower’s business, including without limitation Capitalized Leases) Borrower will not, without the prior written consent of Bank (which consent shall not be unreasonably withheld, conditioned or delayed), borrow from anyone except Bank either on an unsecured basis, or on the security of any of the assets of Borrower, or permit any lien or encumbrance to attach to any of the assets of Borrower or any of the equity ownership interests in Borrower, or any levy to be made thereon or any financing statement (except Bank’s financing statement) to be on file with respect thereto, or to sell or offer to sell or otherwise transfer, encumber or impair the value of any of Borrower’s assets or Borrower’s equity ownership interests or any interest therein, or guarantee or otherwise become contingently liable for the obligation of any other party.

6.6 No Payment on any Stockholder Obligation . Make any payment of principal or accrued interest on any note or other obligation owed by the Borrower to any shareholder of the Borrower or to any Subsidiary.

6.7 No Distributions . Except in connection with the contemplated distribution to Borrower’s stockholders of rights to purchase from the Borrower interests in Bioral Nutrient Delivery, LLC, a Delaware limited liability company and a subsidiary of the Borrower (“BND”), as such distributions are described in that certain Registration Statement on Form SB-1 of BND,

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filed with the Securities and Exchange Commission of February 25, 2003, as amended, (the “SB-1”), Borrower shall make no payments, dividends or distributions, either directly or indirectly or through any subsidiary, of any cash or property to any of its shareholders or to any Subsidiary, provided that nothing in this Section 6.8 shall prevent Borrower from paying compensation to any person for the provision of services to Borrower in the ordinary course of the Borrower’s business, or making advances or reimbursements for expenses incurred by any person with respect to the Borrower’s business in the ordinary course of the Borrower’s business.

6.8 No Transaction with Subsidiary . Except for each of the transactions between the Borrower and BND or regarding BND which are described in the SB-1, without the prior consent of Bank (i) no Subsidiary shall do business at any location of Borrower, or use (whether pursuant to a lease or otherwise) any assets of Borrower (including without limitation the Collateral) or enter into any transactions with Borrower or (ii) Borrower shall not (directly or indirectly) distribute or contribute any assets to any Subsidiary.

SECTION 7. EVENTS OF DEFAULT AND REMEDIES THEREFOR

7.1 Event of Default . If at any time when any amount remains outstanding on any Facility, any one or more of the following (“ Events of Default ”) shall occur, Bank may, at its option at any time thereafter, declare the indebtedness owed to Bank by Borrower under the Line Facility Note, and this Agreement, and all other obligations and indebtedness owed by Borrower to Bank, to be forthwith due and payable, whereupon all such obligations and indebtedness, with accrued interest thereon, whether contingent or direct, shall forthwith become due and payable, without presentment, demand, protest or other notice of any kind from Bank, all of which are hereby expressly waived; and, in addition, Bank may immediately proceed to do all things provided for by law to enforce its rights hereunder and to collect all amounts owing to Bank by Borrower, and automatically all commitments to extend credit or to make Advances subsequent to the occurrence of an Event of Default shall immediately terminate:

7.1.1. Payment of Indebtedness . Borrower fails to make payment of any principal, interest, fee or other amount due on any obligation under the Loan Documents or any other obligation of Borrower to Bank.

7.1.2. Payment of Other Obligations . Borrower defaults in the payment of principal or interest in excess of $100,000 on any Debt (other than a Debt to Bank) beyond any period of grace provided with respect thereto, or in the performance of any other agreement, term or condition under which any such Debt is created, if the effect of such default is to cause, or to permit the holder or holders thereof to cause such Debt to become due prior to its stated maturity, unless, in each case, the Borrower is contesting such payment in good faith and notifies the Bank of such occurrence.

7.1.3. Default under other Loan Document . A default by Borrower in the performance or observance of a material provision of any Loan Document (other than a monetary default) if such default continues and is not cured for ten (10) Business Days after the earlier of the Borrower becoming aware of such default or the effective date of notice of such default by Bank to the Borrower.

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7.1.4. Legal Existence . Any act or omission leading to, or resulting in, the termination, invalidation (total or partial), revocation, suspension, interruption, or unenforceability of Borrower’s (i) legal existence, or (ii) material rights, patents, licenses, franchises and permits, or the transfer or disposition (whether by sale, lease, or otherwise) to any person or entity of all or a substantial part of its property without Bank’s prior written consent.

7.1.5. Liquidation; Dissolution; Voluntary Bankruptcy . The liquidation or dissolution of the Borrower, or the filing by the Borrower of a voluntary petition or an answer seeking reorganization, arrangement, readjustment of its or their debts or for any other relief under the United States Bankruptcy Code, as amended, or under any other insolvency act or law, state or federal, now or hereafter existing, or any other action of the Borrower indicating its consent to, approval of or acquiescence in, any such petition or proceeding; the application by the Borrower for, or the appointment by consent or acquiescence of the Borrower of a receiver, a trustee or a custodian of the Borrower for all or a substantial part of its property; the making by the Borrower of any assignment for the benefit of creditors; the inability of the Borrower or the admission by the Borrower in writing of its inability to pay its debts as they mature; or the Borrower taking any corporate action to authorize any of the foregoing.

7.1.6. Involuntary Bankruptcy . The filing of an involuntary petition against the Borrower in bankruptcy or seeking reorganization, arrangement, readjustment of its debts or for any other relief under the United States Bankruptcy Code, as amended, or under any other insolvency act or law, state or federal, now or hereafter existing; or the involuntary appointment of a receiver, a trustee or a custodian of the Borrower for all or a substantial part of its property; or the issuance of a warrant of attachment, execution or similar process against any substantial part of the property of the Borrower, and the continuance of any of such events for sixty (60) days undismissed or undischarged.

7.1.7. Adjudication of Bankruptcy . The adjudication of the Borrower as bankrupt or insolvent.

7.1.8. Order of Dissolution . The entering of any order in any proceedings against the Borrower decreeing the dissolution, divestiture or split-up of the Borrower, and such order remains in effect for more than sixty (60) days.

7.1.9. Reports and Certificates . Any report, certificate, financial statement or other instrument delivered to the Bank by any designated officer on behalf of the Borrower pursuant to the terms of this Agreement or any of the other Loan Documents is false or misleading in any material respect when made or delivered.

7.2 Remedies . Upon the occurrence of any Event of Default, without limiting any other remedy available to the Bank, the Bank may take any or all of the following steps:

7.2.1 Termination of Advances . Upon the occurrence of any Event of Default, the Bank may refuse to make an Advance under the Facility and the Bank shall have no further obligation to make any Advances as long as said Event of Default shall continue uncured or unwaived. In the event that the Bank elects to terminate the making of Advances as provided

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herein, the Bank shall give written notice of such election to Borrower, but the failure of the Bank to give such notice or of the Borrower to receive such notice shall in no way obligate the Bank to continue making Advances after the occurrence of an Event of Default.

7.2.2 Acceleration and Set-off . Upon the occurrence of any Event of Default, and at any time thereafter as long as the Event of Default is continuing, the Bank may, upon five (5) days written notice, declare the entire principal and all interest on the Advances and all obligations under the Loan Documents, and all other indebtedness of the Borrower to the Bank, whether the Borrower’s liability for payment thereof is primary or secondary, direct or indirect, sole, joint, several or joint and several, or whether the indebtedness is matured or unmatured, due or to become due, fixed, absolute or contingent, to be immediately due and payable (without presentment, demand, protest or other notice of any kind, all of which are expressly waived) and the Facility and all such other indebtedness thereupon shall be and become immediately due and payable, and the Bank may proceed to collect the same by foreclosure, at law, or as otherwise provided in the Loan Documents and/or other instruments or agreements signed by the Borrower. In addition, without limiting any other rights of the Bank, whenever the Bank has the right to declare any indebtedness to be immediately due and payable (whether or not it has so declared), the Bank may set off against the indebtedness without notice any amounts then owed to the Borrower by the Bank, as the case may be, in any capacity, whether due or not due, including without limitation deposits, stocks, bonds and other securities and other assets held in any custodial accounts, and the Bank shall be deemed to have exercised its right to set off immediately at the time its right to such election accrues.

7.2.3 Cumulative Remedies . All rights, remedies or recourse of the Bank under this Agreement, the Note, or any other Loan Documents, at law, in equity or otherwise, are cumulative, and exercisable concurrently, and may be pursued singularly, successively or together and may be exercised as often as occasion therefore shall arise. No act of commission or omission by the Bank, including, but not limited to, any failure to exercise, or any delay, forbearance or indulgence in the exercise of, any right, remedy or recourse hereunder or under any other Loan Document shall be deemed a waiver, release or modification of that or any other right, remedy or recourse, and no single or partial exercise of any right, remedy or recourse shall preclude the Bank from any other or future exercise of the right, remedy or recourse or the exercise of any other right, remedy or recourse. No waiver or release of any such rights, remedies and recourse shall be effective against the Bank unless in writing and manually signed by an authorized officer on the Bank’s behalf, and then only to the extent recited therein. A waiver, release or modification with reference to any one event shall not be construed as continuing or constituting a course of dealing, nor shall it be construed as a bar to, or as a waiver, release or modification of, any subsequent right, remedy or recourse as to a subsequent event.

7.2.4 No Liability . Whether or not the Bank elects to employ any or all remedies available to it in the event of an occurrence of an Event of Default, the Bank shall not be liable for the payment of any expenses incurred in connection with the exercise of any remedy available to the Bank or for the performance or non-performance of any obligation of the Borrower.

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SECTION 8. MISCELLANOUS

8.1. Course of Dealing; Supplemental Agreements . No course of dealing between Bank and Borrower shall be effective to amend, modify or change any provision of this Agreement. This Agreement may not be amended, modified, or changed in any respect except by an instrument in writing signed by Bank and Borrower. Bank and Borrower may, subject to the provisions of this Subsection 8.1, from time to time enter into written agreements supplemental hereto for the purpose of adding any provisions to this Agreement or changing in any manner the rights and obligations of Bank and Borrower hereunder. Any such supplemental agreement in writing signed by Bank and Borrower shall be binding upon Bank and Borrower. Nothing contained herein shall be construed to modify the terms and provisions relating to the indebtedness evidenced thereby, or any of the Loan Documents relating thereto.

8.2. Waiver of Default . Bank may, upon written notice to Borrower, at any time and from time to time, waive any Event of Default and its consequences, or any default in the performance or observance of any conditions, covenant or other term hereof and its consequences which shall have occurred hereunder. Any such waiver shall be for such period and subject to such conditions as shall be specified in any such notice. In the case of any such waiver, Borrower and Bank shall be restored to their former positions prior to such default or Event of Default and shall have the same rights as they had thereto, and any Event of Default or default so waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Event of Default or default or impair any right consequent thereto.

8.3. Notices . All Notices, requests, demands to or upon the parties to this Agreement shall be deemed to have been given or made when delivered by hand or by facsimile (with printed confirmation of receipt), or the day following the day mailed through Federal Express or another prepaid overnight courier service, or within three (3) days of the date deposited in the United States mail, postage prepaid by registered or certified mail, return receipt requested, or, in the case of facsimile notice, when properly transmitted as described in this Section 8.3, addressed as follows or to such other address as may be hereafter designated in writing by one party to the other:

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except in cases where it is expressly provided herein that such notice, request or demand is not effective until received by the party to whom it is addressed.

8.4 No Waiver; Cumulative Remedies . No omission or failure of Bank to exercise, and no delay in exercising by Bank of any right, power, or privilege hereunder shall impair such right, power or privilege, shall operate as a waiver thereof or be construed to be a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies provided in the Loan Documents are cumulative and not exclusive of any rights or remedies provided by law, and the warranties, representations, covenants and agreements made by Borrower therein shall be cumulative, except in the case of irreconcilable inconsistency, in which case the provisions of this Agreement shall control.

8.5 Reliance Upon, Survival of and Materiality of Representations and Warranties, Agreements and Covenants . All representations and warranties, agreements and covenants made by Borrower in the Loan Documents are material and shall be deemed to have been relied upon by Bank, and shall survive the execution and delivery of the Loan Documents and the making of the loan or loans herein contemplated, and shall be deemed to have been made anew each time Borrower requests an Advance under this Agreement.

8.6 Liens; Set Off by Bank; Adjustments . Borrower hereby grants to Bank a continuing lien for all indebtedness of Borrower to Bank, whether created hereunder, pursuant hereto, under this Agreement, the Note or otherwise, upon any and all monies, securities and other property of Borrower and the proceeds thereof, now or hereafter held or received by or in transit to Bank from or for Borrower, and also upon any and all deposits (general or special) and credits of Borrower, if any, at Bank, at any time existing. Upon the occurrence of any Event of Default, Bank is hereby authorized at any time and from time to time, without notice to Borrower, to set off, appropriate and apply any or all items hereinabove referred to against all indebtedness of Borrower owed to Bank, whether under this Agreement or otherwise, whether now existing or hereafter arising, pursuant to such continuing lien.

8.7 Severability and Enforceability of Agreement . Should any one or more of the provisions of the Loan Documents be determined to be invalid, illegal or unenforceable in any respect as to one or more of the parties, the validity, legality and enforceability of all remaining provisions nevertheless shall remain effective and binding on the parties hereto and shall not be affected or impaired thereby.

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8.8 Payment of Expenses, Including Attorneys’ Fees, and Taxes . Borrower agrees:

(a) to reimburse Bank for all its reasonable and customary out-of-pocket costs and expenses incurred in connection with the preparation, negotiation and execution of, and any amendment, supplement or modification to, this Agreement or any other documents prepared and delivered in connection herewith or therewith, and the consummation of the transactions contemplated hereby and thereby, including, without limitation, the reasonable and customary fees and disbursement of counsel to Bank;

(b) to pay or reimburse Bank for all its costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement, including after an Event of Default, or any other documents prepared and delivered in connection herewith, including, without limitation, the reasonable and customary fees and disbursements of counsel to Bank;

(c) to pay, indemnify and hold Bank harmless from any and all recording and filing fees and any and all liabilities, including penalties, with respect to, or resulting from any delay in payment stamp, excise and other similar taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, or any other documents prepared and delivered in connection herewith; and

(d) to pay, indemnify and hold Bank harmless from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, or reasonable out-of-pocket costs, expenses and disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of the Loan Documents. The agreements in this subsection shall survive repayment of all other amounts payable hereunder or pursuant hereto, now or in the future.

8.9 Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of Bank and Borrower and their respective successors, assignees or transferees; and in the event of such transfer or assignment, the rights and privileges herein conferred upon Bank shall automatically extend to and be vested in the successor, assignee or transferee of Bank, except that Borrower may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of Bank.

8.10 Governing Law . The validity, interpretation and enforcement of this Agreement, of the rights and obligations of the parties hereto, and of the other documents delivered in connection herewith, shall be governed by and construed and interpreted in accordance with the laws of the State of Florida (other than matters pertaining to the security interest granted herein which shall be governed by the law of the State of Delaware).

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8.11 Title and Headings . The titles and headings preceding the text of the preamble, preliminary statement, sections and subsections of this Agreement have been inserted solely for convenience or reference and shall neither constitute a part of this Agreement nor affect its meaning, interpretation or effect.

8.12 Complete Agreement . The Loan Documents contain the final, complete and exclusive expression of the understanding of Borrower and Bank with respect to the transactions contemplated by the Loan Documents and supersede any prior or contemporaneous agreement or representation oral or written, by or between the parties related to the subject matter hereof. The Facility constitutes the only credit facility outstanding to Borrower from Bank.

8.13 Legal or Governmental Limitations . Anything contained in this Agreement to the contrary notwithstanding, Bank shall not be obligated to extend credit or make loans to Borrower in an amount in violation of any limitations or prohibition provided by any applicable statute or regulation.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the Effective Date.

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EXHIBIT A

EQUIPMENT TERM PROMISSORY NOTE

FOR VALUE RECEIVED, BIODELIVERY SCIENCES INTERNATIONAL, INC. , a Delaware corporation (“ Borrower ”), hereby promises to pay to the order of GOLD BANK, a Florida banking corporation (“ Lender ”), with an address at 601 North Ashley Drive, Suite 101, Tampa, Florida 33602, the principal sum of ONE MILLION AND NO/100 DOLLARS ($1,000,000.00) , together with interest thereon at the rate of 7.5% per annum from the Effective Date through the maturity of this obligation, whether by acceleration or otherwise, as hereinafter provided. Principal and interest hereunder shall be payable in lawful money of the United States of America at the address of Lender which is specified above, or at such other place as Lender may designate in writing. Interest shall be payable hereunder on the 1st day of each calendar month commencing on May 1, 2003 through and including October 1, 2003. Commencing on November 1, 2003 and on the 1st of each calendar month thereafter until the Maturity Date, payments of principal shall be payable in monthly installments in an amount necessary to fully pay the total principal amount outstanding hereunder in forty eight (48) level payments as of November 1, 2003, plus accrued interest thereon, as calculated by Lender in its sole but reasonable discretion. . The entire unpaid principal indebtedness evidenced by this Note, together with accrued and unpaid interest through the date of payment, shall be due and payable on October 1, 2007 (the ”Maturity Date”).

Borrower may prepay all or any portion of the outstanding principal balance of this Note, without premium or penalty; provided however that any amounts so prepaid may not be reborrowed. Each partial prepayment of the Note shall be applied to principal payments in the inverse order of their maturity.

This Note is secured by a Security Agreement entered into by Borrower and Lender on or about even date herewith (the “Security Agreement”).

If any payment is not received by Lender on the date on which it is due, Borrower shall pay a late charge equal to five percent (5%) of the amount of such payment, in order to compensate Lender for its loss of use of funds and for the expense of handling the delinquency, which late charge must be received by Lender with the payment then due.

Each payment in respect of the indebtedness evidenced by this Note shall be applied first to charges owed by Borrower that are neither principal nor interest, then to accrued interest and the balance, if any, on account of principal. Notwithstanding any provision of this Note or the Security Agreement to the contrary, the parties intend that no provision of this Note or the Security Agreement be interpreted, construed, applied or enforced so as to permit or require the payment or collection of interest in excess of the highest rate of interest permitted to be paid or collected by the laws of the State of Florida with respect to this transaction (the “Maximum Permitted Rate”). If, however, any such provision is so interpreted, construed, applied or enforced, then the parties intend: (i) that such provision automatically shall be deemed reformed nunc pro tunc so as to require payment only of interest at the Maximum Permitted Rate; and (ii) if interest payments in excess of such Maximum Permitted Rate have been received, that the amount of such excess shall be deemed credited nunc pro tunc in reduction of the then outstanding principal amount of this obligation, together with interest at such Maximum

Permitted Rate. In connection with all calculations to determine the Maximum Permitted Rate, the parties intend: first, that all charges be excluded to the extent they are properly excludable under the usury laws of the State of Florida, as they from time to time are determined to apply to this obligation; and, second, that all charges that may be “spread” in the manner provided by Section 687.03(3), Florida Statutes, or any similar successor law, be spread in the manner provided by such statute.

If any payment required under this Note is not received by Lender after the same is due, without notice or demand, or if any other default under this Note or the Security Agreement or any other loan document which evidences or secures this loan (and shall continue beyond any applicable cure period for which provision is made therein), then, at the option of Lender, the entire principal sum and accrued interest shall become immediately due and payable without notice. Any failure to exercise this option shall not constitute a waiver of the right to exercise the same at any other time. Upon any such default, the outstanding principal balance of this Note, together with accrued and unpaid interest, if any, shall bear interest at the highest legal rate permissible under applicable law from the date of such default until the entire obligation or any judgment thereon is paid in full. All parties liable for the payment of this Note agree to pay Lender its reasonable attorneys’ and legal assistants’ fees for the services and expenses of counsel employed after maturity or default to collect this Note (including any appeals relating to such enforcement proceedings), or to protect or enforce the security hereof, whether or not suit be brought.

The remedies of Lender as provided herein and in the Security Agreement shall be cumulative and concurrent, and may be pursued singly, successively or together, at the sole discretion of Lender, and may be exercised as often as occasion therefor shall arise. No act of omission or commission of Lender, including specifically any failure to exercise any right, remedy or recourse, shall be effective as a waiver thereof unless it is set forth in a written document executed by Lender, and shall then be effective only to the extent specifically recited therein. A waiver or release with reference to one event shall not be construed as a bar to, or as a waiver or release of, any right, remedy or recourse as to any other or subsequent event.

Any default by Borrower under any document which evidences or secures this loan, including without limitation the Loan Agreement in favor of Lender dated on or about even date herewith and the Security Agreement or other document executed in connection therewith, shall also be a default under this Note.

Borrower hereby (a) waives demand, presentment for payment, notice of nonpayment, protest, notice of protest and all other notices, filing of suit and diligence in collecting this Note, in enforcing any security rights or in proceeding against the Collateral (as defined in the Security Agreement); and (b) agrees that Lender shall not be required first to institute any suit or to exhaust any other remedies against Borrower, against any other person or party which is or may become liable hereunder, or against the Collateral, in order to enforce payment of this Note

Any future sureties, endorsers and guarantors of this Note (if any) hereby (a) waive demand, presentment for payment, notice of nonpayment, protest, notice of protest and all other notices, filing of suit and diligence in collecting this Note, in enforcing any security rights or in proceeding against the Collateral (as defined in the Security Agreement); (b) agree and consent to any substitution, exchange, addition or release of any of the Collateral, and to the addition or release of any party or person liable hereon, without notice, consent or consideration; (c) agree

that Lender shall not be required first to institute any suit or to exhaust any other remedies against Borrower, against any other person or party which is or may become liable hereunder, or against the Collateral, in order to enforce payment of this Note; (d) agree and consent to any extension, rearrangement, renewal or postponement of time of payment of this Note and to any other indulgence with respect hereto without notice, consent or consideration; and (e) agree that, notwithstanding the occurrence of any of the foregoing (except the express written release by Lender of any such person or party), they shall be and remain jointly and severally, directly and primarily, liable for all sums due under this Note and the Security Agreement.

This Note shall be construed and enforced in accordance with the laws of the State of Florida. As used herein, the words “Borrower” and “Lender” shall be deemed to include Borrower and Lender as defined herein and their respective heirs, personal representatives, successors and assigns.

THE FOREGOING INSTRUMENT was acknowledged before me this              day of April, 2003, by                      , as                      of Biodelivery Sciences International, Inc. who is personally known to me or who has produced                      as identification, on behalf of Biodelivery Sciences International, Inc.

Exhibit 10.15

SECURITY AGREEMENT

THIS SECURITY AGREEMENT (this “ Security Agreement ”) is entered into as of April 22, 2003 by BIODELIVERY SCIENCES INTERNATIONAL, INC. , a Delaware corporation (the “Debtor”) and GOLD BANK, a Florida banking corporation, its successors and assigns (the “Secured Party”).

RECITALS

WHEREAS , pursuant to that certain Loan Agreement dated as of the date hereof (as amended, modified, extended, renewed or replaced from time to time, the “ Loan Agreement ”), among the Debtor and the Secured Party, the Secured Party has agreed to make certain advances of credit (the “Loan”) upon the terms and subject to the conditions set forth therein; and

WHEREAS , it is a condition precedent to the effectiveness of the Loan Agreement and the obligations of the Secured Party to advance funds that the Debtor shall have executed and delivered this Security Agreement to the Secured Party.

NOW, THEREFORE , in consideration of these premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Security Interest .

(a) This Agreement is made to secured the payment and performance of the obligations of Debtor under the Loan Agreement and the promissory note(s) executed in connection therewith, and all future advances and loans by the Secured Party to Debtor, including without limitation the obligation to make prompt and timely payments of all amounts due thereunder, all renewals, extensions, or restatements thereof, and all costs and expenses incurred in the collection or enforcement of the Debtor’s obligations thereunder and the enforcement of the Secured Party’s rights under this Agreement, in each case including without limitation attorneys fees (the “Secured Obligations”).

(b) In consideration of the willingness of Secured Party to make and continue the Loan, Debtor hereby grants to Secured Party a security interest in and agrees and acknowledges that Secured Party, without further action on its part, has and shall continue to have a continuing first priority security interest in, all of the “Collateral” (as defined in Section 2 below), and a first priority purchase money security interest in all Equipment to be purchased with the proceeds of the Loan. All capitalized terms used but not defined herein shall have the meaning set forth in Article 9 of the Uniform Commercial Code of the State of Delaware, as in effect from time to time (the “UCC”).

2. Collateral . For the purposes of this Agreement, the term “Collateral” shall mean all Equipment (as defined in the UCC, and including, without limitation, all Equipment purchased using funds of the Facility from and after the date hereof), employed in connection with the

Borrower’s business located at 185 South Orange Avenue, Bldg. #4 Newark, New Jersey, together with all present and future additions, attachments and accessions thereto and all substitutions therefor and replacements thereof, and copies or originals of all testing, quality control and other records relating to any of the Equipment. For the avoidance of doubt, the term “Equipment” shall not mean any other personal or real property of the Borrower, including, without limitation, all Inventory, General Intangibles or other Goods (each as defined in the UCC) of the Borrower.

3. No Prior Security Interest .

Debtor represents and warrants that Secured Party shall hold a first priority security interest in the Collateral, and Debtor covenants and agrees to take no action with respect to any such collateral that is inconsistent with Secured Party’s security interest, except as provided for in the Loan Agreement.

4. Obligations . This Agreement shall continue in full force and effect and Secured Party shall have the security interest herein described to secure payment and performance by the Debtor of the Secured Obligations until the Debtor is fully released from its obligations under the Secured Obligations and under any documents executed pursuant thereto, and to secure payment of, and so long as there exists, any outstanding indebtedness or liability whatsoever by the Debtor to Secured Party pursuant to the Secured Obligations, whether direct or indirect, absolute or contingent, due or to become due, and whether now existing or hereafter arising, and howsoever evidenced or acquired, including but not limited to any indebtedness or obligation under the Note and whether joint, several, or joint and several. Secured Party shall have a right to set-off against Debtor any amounts that may be or may become due from Secured Party to Debtor at any and all times and in any and all proceedings or actions, including, but not restricted to, bankruptcy, reorganization, receivership or insolvency.

5. Representations, Warranties and Covenants . Debtor hereby represents, warrants, covenants and agrees to and with Secured Party that:

(a) Status; State of Incorporation; Name of Debtor; Location .

(i) Debtor has been duly organized and is existing as a corporation in good standing under the laws of the State of Delaware. Debtor is duly qualified and in good standing as a foreign corporation in those jurisdictions where the conduct of its business or ownership of its properties requires qualification, including the states of New Jersey and Florida.

(ii) Debtor’s exact legal name is “BioDelivery Sciences International, Inc.” During the past five years, the Debtor has not done business under any name other than its exact legal name, and the following predecessor and trade names and has not operated its principal place of business at any location other than its present location, where its chief executive office is located. Except for MAS Acquisition XXIII Corp., an Indiana corporation, and BioDelivery Sciences, Inc., a Delaware

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corporation, Debtor is not the successor to any other person or entity. The predecessor and trade names of the Debtor are MAS Acquisition XXIII Corp., an Indiana corporation, and BioDelivery Sciences, Inc., a Delaware corporation.

(iii) Until the Secured Obligations are paid in full, Debtor will preserve its corporate existence and not, whether in one transaction or a series of transactions, (A) merge into or consolidate with any other entity; (B) change the state where it is incorporated; or (C) change its corporate name without providing Secured Party with 30 days’ prior written notice.

(b) Authority . The execution, delivery and performance by Debtor of this Agreement have been duly authorized by all necessary corporate action, do not contravene (1) Debtor’s Articles of Incorporation or Bylaws, or (2) any law, rule, regulation, agreement, indenture, deed of trust, mortgage, loan agreement, writ, judgment, injunction, decree or other instrument or order binding on or affecting Debtor or its assets and will not result in the creation of a lien, security interest or any charge or encumbrance on the assets of Debtor (other than that granted by this Agreement). No further action is necessary on the part of Debtor to make this Agreement valid and binding upon it and enforceable against it in accordance with the terms hereof and to carry out the transactions contemplated hereby. No authorization or approval or other action by, and no notice to or filing with, any governmental agency or authority is required for the due execution, delivery and performance by Debtor of this Agreement.

(c) Performance . Debtor will perform all of the covenants of debtor under any notes or agreements delivered by it to Secured Party, including without limitation the Loans, and Debtor will perform all of Debtor’s covenants under all documents executed by Debtor pursuant thereto.

(d) Other Security Interests . Debtor is the owner of the Collateral free from any lien, security interest or encumbrance, and Debtor will defend the Collateral claiming the same or any interest therein. Debtor has rights in or the power to transfer the Collateral.

(e) Perfection of Security Interests

(i) Financing Statements; Power of Attorney . No active financing statement covering any of the Collateral or any of the proceeds thereof is now on file in any public office. Secured Party is hereby authorized to file with respect to the Collateral one or more financing statements, continuation statements or other documents describing the Collateral.

(ii) Possession . Debtor shall have possession of the Collateral, except where expressly otherwise provided in this Security Agreement. Where Collateral is in the possession of a third party, Debtor will join with Secured Party in notifying the third party of Secured Party’s security interest and obtaining an acknowledgement from the third party that it is holding the Collateral for the benefit of Secured Party. With respect to any Equipment purchased after the date of this Agreement with the proceeds of the Loan, Debtor shall provide copies of all purchase orders and invoices related thereto to Secured Party at least 20 days prior to taking possession of the Equipment.

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(iii) Certificates of Title . To the extent ownership of any Collateral is evidenced by a certificate of title, registration or similar documentation, Debtor has delivered (and from and after the date of this Agreement shall deliver) the original of such document to Secured Party.

(iv) Further Assurances . Debtor shall, upon commercially reasonable notice from Secured Party, furnish to Secured Party such further information and will execute and deliver to Secured Party such mortgages and other agreements and will do all such acts and things as Secured Party may at any time or from time to time reasonably request or that Secured Party considers necessary, desirable or appropriate to create, preserve, continue, perfect or validate any security interest granted hereunder or which is necessary to enable the Secured Party to exercise or enforce its rights hereunder with respect to such security interest. The Debtor hereby appoints the Secured Party as the Debtor’s attorney-in-fact to do any and every act which the Debtor is obligated by this Agreement to do, including, without limitation, to execute any and all papers and instruments and to do all other things necessary to preserve and protect the Collateral and to protect the Secured Party’s interest in the Collateral. Such power of attorney is coupled with an interest and is irrevocable and shall survive the insolvency or bankruptcy of the Debtor. Secured Party shall have and retain a security interest in the Collateral wherever located.

(f) Limitation on Further Pledge . Debtor will not, without the prior written consent of Secured Party, borrow from anyone except Secured Party on the security of, or pledge or grant any security interest in, the Collateral to anyone except Secured Party or permit any lien or encumbrance to attach to the Collateral or any levy to be made thereon or any financing statement to be on file with respect thereto, or to sell or offer to sell or otherwise transfer, encumber or impair the value of the Collateral or any interest therein.

(g) No Further Liabilities . While this Agreement is in force, Debtor will not, without the prior written consent of Secured Party, incur any new obligation or liability in excess of $100,000 except current liabilities incurred in the ordinary course of business.

(h) No Sale or Transfer . Debtor will not sell or offer to sell or otherwise transfer, encumber, or impair the value of any of the Collateral or any interest therein other than in the normal course of business without the prior written consent of Secured Party, except for the sale of inventory or finished goods in the ordinary course of business.

(i) Insurance . Debtor will keep the Collateral at all times insured for full value, with such coverage and in such companies as Secured Party may approve in its reasonable discretion, at Debtor’s expense, with losses in all cases to be payable to Secured Party and Debtor as their interests may appear, and the policies to be duly endorsed in favor of Secured Party and delivered to it. Secured Party assumes no risk or responsibility in connection with the payment or nonpayment

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of losses, its only responsibility being to credit Debtor with any insurance payments received on account of losses. Upon the failure of Debtor to do so within thirty (30) days of written demand by the Secured Party, Secured Party may act as attorney for Debtor in making, adjusting and settling claims under and canceling such insurance and endorsing Debtor’s name on any drafts drawn by insurers of the Collateral. Such insurance shall not be cancelable or not renewed by the Debtor without the prior written consent of the Secured Party, or be cancelable or not renewed by the Debtor’s insurer without at least thirty (30) days advance written notice to the Secured Party. All risk of loss of, damage to or destruction of the Collateral shall at all times be on the Debtor.

(j) Condition of Collateral . Debtor will keep the Collateral free from any adverse lien, security interest or encumbrance, other than as herein permitted, and in good order and repair, and will not waste or destroy the Collateral or any part hereof, and will make any needful and proper repairs, renewals, replacements or improvements so that its business may at all times be properly and advantageously conducted, and will not use the Collateral in violation of any applicable statute, ordinance or policy of insurance thereon. Secured Party may enter on Debtor’s property and may examine and inspect the Collateral or Debtor’s books, records, papers and journals at any reasonable time or times, wherever located.

(k) Written Statements . Debtor will furnish to Secured Party from time to time upon request written statements and schedules identifying and describing the Collateral and any additions thereto and substitutions thereof, in such detail as Secured Party may require, and will maintain books and records pertaining to the Collateral in such detail, form and scope as Secured Party shall reasonably require, and will advise Secured Party promptly and in sufficient detail of any substantial change in the Collateral and of the occurrence of any event which would have any material effect on the value of any of the Collateral or on the lien and security interest granted to Secured Party therein.

(l) Notice of Default . Debtor shall promptly give notice to Secured Party of the occurrence of any Event of Default (as defined in below) or of any event which could, with the giving of notice or the passage of time, or both, constitute an Event of Default.

(m) Change in Business . The Debtor will not make any material change in the nature of its business as conducted on the date of this Agreement, enter into any transactions to liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution), convey, sell, lease, transfer or otherwise dispose of, in one transaction or a series of transactions, all or substantially all of its business or assets, whether now owned or hereafter acquired, or convey, sell, lease, transfer or otherwise dispose of any part of its business or assets outside of the ordinary course of business; provided, however, that nothing herein shall prohibit the Debtor from selling the Collateral in the ordinary course of business as permitted herein.

6. Payments by Secured Party . At its option but without obligation to Debtor, Secured Party may discharge taxes, liens or security interest or other encumbrances at any time levied or placed on the Collateral, may place and pay for insurance thereon, may order and pay for the repair,

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maintenance and preservation thereof, and may pay any necessary filing or recording fees. Debtor agrees to reimburse Secured Party on demand for any payment made or any expense incurred by Secured Party pursuant to the foregoing authorization, and such expenses if not reimbursed shall be added to the obligation secured hereby.

7. Events of Default . Each of the following shall constitute an Event of Default under this Agreement:

(a) There shall occur an Event of Default under any Loan or any Secured Obligation, including without limitation any Event of Default as defined in the Loan Agreement.

(c) Debtor shall default in the observance or performance of any term, provision, condition, covenant or agreement contained in this Agreement or any other agreement executed in connection with a Secured Obligation.

(d) Any sale, transfer, lease, disposition or encumbrance to or of any material portion of the Collateral, except as otherwise contemplated by or permitted herein, or the making of any levy, seizure or attachment thereof or thereon, or any theft, loss, damage or destruction of any material portion of the Collateral as to which the Secured Party does not receive insurance proceeds pursuant to the provisions of this Agreement.

(f) The entry of a judgment against Debtor involving a liability of $100,000 or more and such judgment shall not have been vacated, discharged, stayed or bonded within twenty (20) days from the entry thereof.

(g) The issuing of any attachment or garnishment, or the filing of any lien against any property of Debtor involving a liability of $100,000 or more and such shall not have been vacated, discharged, removed, stayed or bonded within twenty (20) days from the issuance or filing thereof.

(h) The taking of a substantial part of the property of Debtor at the instance of any governmental authority.

(i) The dissolution, termination of existence, insolvency, business failure, appointment of receiver for Debtor or any of the Collateral or any part thereof, or any material assignment for the benefit of the creditors by, or the commencement of any proceedings under any bankruptcy or insolvency laws by or against, Debtor.

(j) The sale, disposition, pledge, assignment, transfer or granting of a security interest by the Debtor of or in all or any part of the Collateral without the written consent of the Secured Party.

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8. Remedies . Upon the occurrence or existence of any Event of Default or at any time thereafter, the Secured Party shall have all of the rights and remedies described in Sections (a) through (c) below, inclusive, and it may exercise any one or more or all of such remedies, in its sole discretion, without thereby waiving any of the others.

(a) The Secured Party, at its option, may declare all of the Secured Obligations to be immediately due and payable, whereupon the same shall become immediately due and payable without presentment, demand, protest, notice of nonpayment or any other notice required by law relative thereto, all of which are hereby expressly waived by the Debtor, anything contained herein to the contrary notwithstanding.

(b) The Secured Party shall have the right and remedies of a secured party under the UCC in effect on the date thereof (regardless of whether the same has been enacted in the jurisdiction where the rights and remedies are asserted), including without limitation, the rights to take possession of any of the Collateral or the proceeds thereof and to sell or otherwise dispose of the Collateral, at public or private sale, and to apply the proceeds therefrom first to any costs of collection and then to all other Secured Obligations and shall have the right to avail itself of any and all other rights and remedies granted a secured party under any other applicable law. The Secured Party shall give the Debtor written notice of the time and place of any public sale of the Collateral or the time after which any other intended disposition thereof is to be made. At any such sale, the Secured Party shall have the right to purchase the Collateral, or any part thereof. The requirement of sending reasonable notice shall be met if such notice is given to the Debtor pursuant to this Agreement at least fifteen (15) days before such disposition. Expenses of retaking, holding, insuring, preserving, protecting, preparing for sale or selling or the like with respect to the Collateral as well as reasonable attorneys’ fees in connection therewith and other legally recoverable collection expenses, shall all constitute and be added to the Secured Obligations. The Secured Party may proceed against such security as the Secured Party has with respect to the Secured Obligations in such fashion and in such order as the Secured Party may desire and the Secured Party shall not be deemed to have waived any of its security rights or other rights by virtue of the order or fashion in which it elects to realize on the various security interests which it had to secure any of the Secured Obligations or by virtue of bringing any action to realize on any of the various security interests. Upon disposition by the Secured Party of any property in which the Secured Party has a security interest hereunder, the Debtor shall be and shall remain liable for any deficiency; and the Secured Party shall account to the Debtor for any surplus.

(c) The Secured Party may take the Collateral or any portion thereof into its possession, by such means (without breach of the peace and otherwise in accordance with the UCC) and through such agents or otherwise as it may elect and, in connection therewith, demand that the Debtor assemble the Collateral at a place or places and in such manner as the Secured Party shall prescribe. The Secured Party may sell, lease or otherwise dispose of the Collateral or any portion thereof in its existing condition at the time the Secured Party takes it into its possession, or following any commercially reasonable preparation or processing, which disposition may be by public or private proceeding, by one or more contracts, as a unit or as parcels, at any time or place and on any terms so long as the same are commercially reasonable.

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(d) In the event Debtor defaults with respect to any of its covenants hereunder, Secured Party may proceed against the Collateral with respect to the Secured Obligations, in such fashion and in such order as Secured Party may desire and Secured Party shall not be deemed to have waived any of its security rights or other rights by virtue of the order or fashion in which it elects to realize on the security interests which it has to secure the Secured Obligations or by virtue of bringing any action to realize on any of the security interests.

9. Independent Security; Remedies Cumulative . Secured Party’s interest in the Collateral and all other rights under this Agreement are continuing, independent of and in addition to any other security, collateral, endorsement or guaranty held by Secured Party in connection with the Secured Obligations, and other agreements executed in connection therewith. The rights and remedies of Secured Party under this Agreement and with respect to the Collateral shall not be impaired, altered or otherwise affected by the taking of any other additional security for or guaranty of this Agreement or by any neglect, failure or omission by Secured Party to hold, perfect, protect or rely or realize upon any such other or additional security or guaranty or by any other act or thing whatsoever.

10. Miscellaneous .

(a) Amendments . No amendment, modification, supplement, termination or waiver of any provision of this Agreement, nor any consent to any departure by Debtor from any provision of this Agreement, shall be effective unless it shall be in writing and signed by Secured Party and Debtor.

(b) Notices . Any notice, request, demand or other communication which is required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given (1) if transmitted by telecopy, electronic telephone line facsimile transmission or other similar electronic or digital transmission method, when transmitted; (2) if sent by a nationally recognized next day delivery service that obtains a receipt on delivery, the day after it is sent; (3) if mailed, first class registered or certified United States mail, postage prepaid, five days after it is sent; and (4) in any other case, when actually received. In each case, notice shall be sent to the address or facsimille number set forth below or to such other address or electronic number as a party may have specified in writing to the other parties using the procedures specified above in this Section 10(b).

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(c) Termination . This Agreement, and the assignments, pledges and security interest created hereby, shall terminate when all Secured Obligations have been fully paid and satisfied.

(d) Assignability . This Agreement may be assigned in whole or in part by the Secured Party at any time, but shall not be assignable by the Debtor without the prior written consent of the Secured Party. If so assigned, this Agreement shall be binding upon and inure to the benefit of the successors in interest and assigns of the parties.

(e) Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be considered an original, but all of which together shall constitute one and the same instrument, and shall become effective when each of the parties has executed at least one of the counterparts even if all the parties have not executed the same counterpart.

(f) Construction and Interpretation . (i) This Agreement shall be governed by, and construed in accordance with, the laws of the State of Florida; provided that the manner of creation of a security interest in specific collateral or the manner or effect of perfection or nonperfection or the rules governing priority of security interests are to be governed by the laws of the jurisdictions that govern the collateral to which this Security Agreement relates (which with respect to the Collateral shall be the state of Delaware).

(ii) The headings of the various sections in this Agreement are inserted for the convenience of the parties and shall not affect the meaning, construction or interpretation of this Agreement.

(iii) Any provision of this Agreement which is determined by a court of competent jurisdiction to be prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or nonauthorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction. In any such case, such determination shall not affect any other provision of this Agreement, and the remaining provisions of this Agreement shall remain in full force and effect. If any provision or term of this Agreement

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is susceptible to two or more constructions or interpretations, one or more of which would render the provision or term void or unenforceable, the parties agree that a construction or interpretation which renders the term or provision valid shall be favored.

(g) Entire Agreement . This Agreement constitutes the entire Agreement, and supersedes all prior agreements and understandings, oral and written, among the parties to this Agreement with respect to the subject matter hereof.

(h) Successors and Assigns . All rights of the Secured Party hereunder shall inure to the benefit of its successors and assigns, and all obligations of the Debtor shall bind the successors and assigns of the Debtor; provided, however, that the Debtor shall not be entitled to assign this Agreement without the prior written consent of the Secured Party.

(i) Release . The Debtor releases the Secured Party from all claims for loss or damage caused by any failure to sell the Collateral or by any act or omission on the part of the Secured Party, its officers, agents and employees.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year first above written.

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Exhibit 10.16

LIMITED WAIVER AND FORBEARANCE AGREEMENT

This Limited Waiver and Forbearance Agreement is entered into this 14th day of May, 2004 to be effective for all purposes as of May 14, 2004 by and between BIODELIVERY SCIENCES INTERNATIONAL, INC., a Delaware corporation (the “ Borrower ”) and GOLD BANK, a Florida banking corporation, its successors and assigns (“ Bank ”) in connection with that certain Loan Agreement dated as of April 22, 2003 between Borrower and Bank (the “Loan Agreement”) and the documents related thereto (collectively, the “Loan Documents”).

WHEREAS, Borrower has requested that Bank waive the requirement that the Borrower comply with the covenant set forth in Section 6.2 of the Loan Agreement to maintain a certain stated “Minimum Cash Balances to Total Liabilities Ratio” (as defined in the Loan Agreement); and

WHEREAS, the Bank is willing to waive such requirement only on the terms and conditions and for the limited period set forth herein.

NOW, THEREFORE, in consideration of the premises (which shall be a material part hereof and not mere recitations), the mutual covenants and agreements contained herein, and other good and valuable consideration in hand paid by the parties hereto, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. For the period from the effective date hereof through June 30, 2004, Bank agrees that so long as the Borrower is in compliance with all other provisions of the Loan Documents (including without limitation the obligation to make payments of principal and interest thereunder), Bank shall waive compliance by the Borrower with the Minimum Cash Balances to Total Liabilities Ratio set forth in Section 6.2 of the Loan Agreement and shall forbear from taking any action pursuant to the Loan Documents related solely to any noncompliance by Borrower with such Minimum Cash Balances to Total Liabilities Ratio. In consideration of such waiver and forbearance, Borrower has paid to the Bank a non-refundable Waiver Fee in the amount of $10,000 at the time of execution and delivery of this Agreement. The parties acknowledge and agree that (i) the Waiver Fee is not a charge for the use of money but rather a purchase of the right to secure the continued extension of credit represented by the Loan Documents on the part of Borrower despite any noncompliance with the Minimum Cash Balances to Total Liabilities Ratio, and (ii) payment of the Waiver Fee was and is a material inducement to Lender to enter into this Agreement.

2. To the extent Borrower desires to extend the period of waiver and forbearance set forth in this Agreement for up to three (3) additional calendar months (that is, through July 31, 2004; August 30, 2004 and September 30, 2004), so long as (i) the Borrower is in compliance with all other provisions of the Loan Documents (including without limitation the obligation to make payments of principal and interest thereunder), Bank shall waive compliance by the Borrower with the Minimum Cash Balances to Total Liabilities Ratio set forth in Section 6.2 of the Loan Agreement and shall forbear from taking any action pursuant to the Loan Documents

related solely to any noncompliance by Borrower with such Minimum Cash Balances to Total Liabilities Ratio and (ii) prior to the expiration of any then-effective waiver period, Borrower delivers to Bank a writing stating that Borrower is exercising its option to extend the Waiver Period, accompanied by an additional Waiver Fee in the amount of $5,000 and an officer’s certificate stating that no other defaults exist pursuant to the Loan Agreement, then Bank shall extend the waiver period hereunder through the close of the next-following calendar month. This Agreement shall terminate automatically, without the requirement of any action by any party, if the foregoing deliveries and Waiver Fee is not delivered on or before July 1, 2004. For purposes of clarification, (A) for such waiver period to extend from July 1 through July 30, 2004, the foregoing notice and certificate, and Waiver Fee must be paid on or before July 1 for the waiver period to continue; and if such deliveries and payment is not made on or before July 1, 2004 this Agreement (and the waiver and forbearance described herein) shall automatically terminate without any requirement of action by any party and upon such termination shall be of no further force and effect; (B) if the waiver period is extended through July 30, 2004 pursuant to the provisions of this Agreement, for such waiver period to extend further from August 2 (being the first business day in August) through August 31, 2004, the foregoing notice and certificate, and Waiver Fee must be paid on or before August 2 for the waiver period to continue; and if such deliveries and payment is not made on or before August 2, 2004 this Agreement (and the waiver and forbearance described herein) shall automatically terminate without any requirement of action by any party and upon such termination shall be of no further force and effect; and (C) if the waiver period is extended through August 31, 2004 pursuant to the provisions of this Agreement, for such waiver period to extend further from September 1 through September 30, 2004, the foregoing notice and certificate, and Waiver Fee must be paid on or before September 1 for the waiver period to continue; and if such deliveries and payment is not made on or before September 1, 2004 this Agreement (and the waiver and forbearance described herein) shall automatically terminate without any requirement of action by any party and upon such termination shall be of no further force and effect.

3. In no event shall any waiver or forbearance hereunder extend beyond June 30, 2004 or, upon extension pursuant to the provisions of Paragraph 2 above, beyond the applicable extension period which in no event may be September 30, 2004. This Agreement shall be terminable by the Bank immediately upon any default by the Borrower of any provision of the Loan Documents other than Section 6.2 of the Loan Agreement.

4. Nothing in this Agreement shall be deemed to be a modification of any provision of the Loan Documents, or any agreement to waive any provision or requirement of the Loan Documents except as specifically set forth above.

5. This Agreement contains the final, complete and exclusive expression of the understanding of Borrower and Bank with respect to the transactions contemplated by the Loan Documents and supersede any prior or contemporaneous agreement or representation oral or written, by or between the parties related to the subject matter hereof. This Agreement shall be governed by Florida law. In the event of any dispute arising pursuant to the provisions of this Agreement, venue and jurisdiction shall be exclusively in the courts of Hillsborough County, Florida. Pursuant to the provisions of Section 8.8 of the Loan Agreement, the Borrower shall pay the Bank all legal fees associated with the preparation of this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the effective date set forth in the preamble above.