Item 1.01 Entry into a Material Definitive Agreement.
Merger Agreement
On February 14, 2022, BioDelivery Sciences International, Inc., a Delaware
corporation (“BDSI”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Collegium Pharmaceutical,
Inc., a Virginia corporation (“Collegium”), and Bristol Acquisition Company Inc., a Delaware corporation and wholly owned
subsidiary of Collegium (“Purchaser”).
Pursuant to the Merger Agreement, upon the terms and subject to the
conditions thereof, as promptly as practicable (but in no event more than 10 business days after the date of the Merger Agreement), Purchaser
will commence a cash tender offer (the “Offer”), to acquire all of the outstanding shares (the “Shares”) of BDSI’s
common stock, $0.001 par value per share (the “BDSI Common Stock”), at an offer price of $5.60 per Share in cash, subject
to applicable withholding taxes and without interest (the “Offer Price”). The Offer will initially remain open for 20 business
days from the date of commencement of the Offer, subject to extension under certain circumstances.
The obligation of Purchaser to purchase Shares tendered in the Offer
is subject to customary closing conditions set forth in the Merger Agreement, including, but not limited to, that (i) at least one Share
more than 50% of the total number of Shares of BDSI Common Stock issued and outstanding have been validly tendered into and not validly
withdrawn from the Offer and (ii) the waiting period (or any extension thereof) applicable to the Offer under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder, have expired or been terminated. Neither the
completion of the Offer nor the closing of the Merger are subject to a financing condition.
Following the completion of the Offer and subject to the satisfaction
or waiver of certain conditions set forth in the Merger Agreement, Purchaser will merge with and into BDSI, with BDSI surviving as a wholly
owned subsidiary of Collegium (the “Merger”). The Merger shall be governed by and effected under Section 251(h) of the Delaware
General Corporation Law (the “DGCL”), with no stockholder vote required to consummate the Merger. At the effective time of
the Merger (the “Effective Time”), the Shares then outstanding (other than Shares held by (i) BDSI or its subsidiaries (including
Shares held in BDSI’s treasury), (ii) Collegium, Purchaser, any other direct or indirect wholly owned subsidiary of Collegium, or
(iii) stockholders of BDSI who have properly exercised and perfected their statutory rights of appraisal under the DGCL) will each be
converted into the right to receive the Offer Price.
The board of directors of BDSI (the “BDSI Board”) has unanimously
(i) approved, adopted and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Offer and the
Merger (the “Transactions”), (ii) determined that the transactions contemplated thereby, including the Transactions, are in
the best interests of BDSI and its stockholders, (iii) resolved that the Merger shall be governed by and effected under Section 251(h)
of the DGCL and (iv) resolved to recommend that the stockholders of BDSI accept the Offer and tender their Shares to Purchaser pursuant
to the Offer.
The Merger Agreement provides that each stock option to purchase shares
of BDSI Common Stock (a “BDSI Option”) that is outstanding as of immediately prior to the Effective Time shall automatically
accelerate and become fully vested and exercisable effective immediately prior to, and contingent upon, the Effective Time. As of the
Effective Time, each BDSI Option with a per share exercise price less than the Offer Price that is then outstanding and unexercised shall
be cancelled and converted into the right to receive cash in an amount equal to the product of (x) the total number of Shares subject
to such BDSI Option multiplied by (y) the excess, if any, of the Offer Price over the exercise price payable per Share under such BDSI
Option, net of applicable withholding taxes. Each BDSI Option with an exercise price equal to, or greater than, the Offer Price that is
then outstanding and unexercised shall be cancelled without any consideration paid therefor whether before or after the Effective Time.
The Merger Agreement also provides that each restricted stock unit
award issued by BDSI (a “BDSI RSU”) that is outstanding as of immediately prior to the Effective Time shall automatically
accelerate and become fully vested immediately prior to, and contingent upon, the Effective Time. As of the Effective Time, each BDSI
RSU that is then outstanding shall be cancelled and converted into the right to receive cash in an amount equal to the product of (x)
the total number of Shares issuable in settlement of such BDSI RSU multiplied by (y) the Offer Price.
The Merger Agreement further provides that, as of the Effective Time,
each outstanding warrant to purchase shares of BDSI Common Stock (a “BDSI Warrant”) that is outstanding as of immediately
prior to the Effective Time with an exercise price less than the Offer Price shall be cancelled and converted into the right to receive
cash in an amount equal to the product of (x) the total number of Shares subject to such BDSI Warrant multiplied by (y) the excess, if
any, of the Offer Price over the exercise price payable per Share under such BDSI Warrant.
The Merger Agreement includes representations, warranties and covenants
of the parties customary for a transaction of this nature. From the date of the Merger Agreement until the earlier of the Effective Time
and the termination of the Merger Agreement, BDSI has agreed, subject to certain exceptions, to conduct in all material respects its business
and operations in the ordinary course and has agreed to certain other customary operating covenants, as set forth more fully in the Merger
Agreement. BDSI has also agreed not to, directly or indirectly, (i) solicit, initiate or knowingly facilitate or encourage (including
by way of furnishing non-public information) any inquiries regarding, or the making of any proposal or offer that constitutes, or could
reasonably be expected to lead to, an Acquisition Proposal (as defined in the Merger Agreement), (ii) engage in, continue or otherwise
participate in any discussions (except to notify a person that makes any inquiry or offer with respect to an Acquisition Proposal of the
existence of the applicable provisions of the Merger Agreement or to clarify whether any such inquiry, offer or proposal constitutes an
Acquisition Proposal) or negotiations regarding, or furnish to any other person any information in connection with, or for the purpose
of soliciting, knowingly encouraging or facilitating, an Acquisition Proposal, (iii) adopt, approve or enter into any letter of intent,
acquisition agreement, agreement in principle or similar agreement with respect to an Acquisition Proposal or any proposal or offer that
constitutes, or could reasonably be expected to lead to, an Acquisition Proposal or (iv) waive or release any person from, fail to use
reasonable best efforts to enforce any standstill agreement or any standstill provisions of any contract entered into in respect of an
Acquisition Proposal or any proposal or offer that constitutes or could reasonably be expected to lead to an Acquisition Proposal. Notwithstanding
these restrictions, BDSI may under certain circumstances provide, pursuant to an acceptable confidentiality agreement, information to
and engage in or otherwise participate in discussions or negotiations with third parties with respect to an unsolicited bona fide written
Acquisition Proposal that the BDSI Board has determined in good faith, after consultation with its financial advisors and outside legal
counsel, constitutes or could reasonably be expected to lead to a Superior Offer (as defined in the Merger Agreement).
The Merger Agreement also includes customary termination provisions
for both BDSI and Collegium and provides that, in connection with the termination of the Merger Agreement under specified circumstances,
including termination by BDSI to accept and enter into a definitive agreement with respect to a Superior Offer, BDSI will be required
to pay Collegium a termination fee of an amount in cash equal to approximately $18.1 million (the “Termination Fee”). Any
such termination of the Merger Agreement by BDSI in connection with a Superior Offer is subject to certain conditions, including BDSI’s
compliance with certain procedures set forth in the Merger Agreement, a determination by the BDSI Board that the failure to take such
action would be inconsistent with the BDSI Board’s fiduciary duties to BDSI’s stockholders under applicable law and the payment
of the Termination Fee by BDSI. The Merger Agreement also provides that if the Merger Agreement is terminated on August 13, 2022, then
a termination fee of approximately $12.1 million will be payable by Collegium upon termination of the Merger Agreement if all other conditions
to closing not relating to antitrust or competition laws have been satisfied or validly waived.
The foregoing description of the Merger Agreement is not complete and
is qualified in its entirety by reference to the Merger Agreement, which is attached as Exhibit 2.1 to this Current Report on Form 8-K
and incorporated by reference herein.
The Merger Agreement and the foregoing description of the Merger Agreement
have been included to provide investors and stockholders with information regarding the terms of the Merger Agreement. The assertions
embodied in the representations and warranties contained in the Merger Agreement are qualified by information in confidential disclosure
schedules delivered by BDSI to Collegium and Purchaser in connection with the signing of the Merger Agreement. Moreover, certain representations
and warranties in the Merger Agreement were made as of a specified date, may be subject to a contractual standard of materiality different
from what might be viewed as material to stockholders, or may have been used for the purpose of allocating risk between the parties to
the Merger Agreement. Accordingly, the representations and warranties in the Merger Agreement should not be relied on as characterizations
of the actual state of facts and circumstances of BDSI, Collegium or Purchaser, as applicable, at the time they were made and investors
should consider the information in the Merger Agreement in conjunction with the entirety of the factual disclosure about BDSI or Collegium
and/or Purchaser, as applicable, in their respective public reports filed with the Securities and Exchange Commission (the “SEC”).
Information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which
subsequent information may or may not be fully reflected in BDSI’s or Collegium’s public disclosures, as applicable.
Debt Financing Commitment
In connection with the entry into the Merger Agreement, Collegium entered
into a commitment letter (the “Debt Commitment Letter”) with Pharmakon Advisors, L.P. (“Pharmakon”), pursuant
to which funds managed by Pharmakon have committed, subject to customary conditions, to provide to Collegium a four year senior secured
term loan facility in an aggregate principal amount of $650 million (the “Term Facility”). Proceeds from the Term Facility
will be used to finance a portion of Collegium’s acquisition of BDSI, as well as to repay the outstanding debt of Collegium and
BDSI and pay certain fees and expenses related thereto. The obligation of Pharmakon to provide the financing under the Debt Commitment
Letter is subject to a number of conditions, including the receipt by Pharmakon of executed loan documentation, the accuracy of certain
representations and warranties in all material respects and consummation of the Transactions as contemplated by the Merger Agreement.
Tender and Support Agreements
On February 14, 2022, in connection with the execution of the
Merger Agreement, certain stockholders of BDSI, including BDSI’s executive officers and members of the BDSI Board (the
“Supporting Stockholders”), entered into Tender and Support Agreements with Collegium and Purchaser (the “Support
Agreements”). Under the terms of the Support Agreements, the Supporting Stockholders have agreed, among other things, to
tender, pursuant to the Offer, their Shares in the Offer, vote their Shares in favor of the Merger, as applicable, and, subject to
certain exceptions, not to transfer any of the Shares that are subject to the Support Agreements. As of February 14, 2022, the
Supporting Stockholders beneficially owned an aggregate of approximately 9.59% of the outstanding Shares. The Support Agreements
will terminate upon termination of the Merger Agreement and certain other specified events.
The foregoing description of the Support Agreements is not complete
and is qualified in its entirety by reference to the form of Support Agreement, which is attached as Exhibit 99.2 to this Current Report
on Form 8-K and incorporated by reference herein.