Exhibit 10.1

TERM LOAN AND SECURITY AGREEMENT

LV ADMINISTRATIVE SERVICES, INC.,

as Administrative and Collateral Agent

THE LENDERS

From Time to Time Party Hereto

and

BIOVEST INTERNATIONAL, INC.

Dated:  November 17, 2010

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TABLE OF CONTENTS

 

          Page   1.   

General Definitions and Terms; Rules of Construction

     2    2.   

The BVTI Term Loans and Closing Shares

     2    3.   

Repayment of the BVTI Term Loans

     4    4.   

Reserved

     4    5.   

Interest and Payments

     4    6.   

Security Interest

     5    7.   

Representations, Warranties and Covenants Concerning the Collateral

     7    8.   

Payment of Accounts

     9    9.   

Reserved

     9    10.   

Inspections and Appraisals

     9    11.   

Financial Reporting

     10    12.   

Additional Representations and Warranties

     10    13.   

Covenants

     14    14.   

Closing and Conditions to Closing

     18    15.   

Further Assurances

     22    16.   

Representations, Warranties and Covenants of Lenders

     22    17.   

Confidentiality

     24    18.   

Power of Attorney

     25    19.   

Termination of Lien

     25    20.   

Events of Default

     26    21.   

Remedies

     26    22.   

Waivers

     27    23.   

Expenses

     27    24.   

Assignment; Register

     28    25.   

No Waiver; Cumulative Remedies

     29    26.   

Application of Payments

     29    27.   

Indemnity

     29    28.   

Revival

     30    29.   

Borrowing Agency Provisions

     30    30.   

Notices

     30    31.   

Governing Law, Jurisdiction and Waiver of Jury Trial

     31    32.   

Limitation of Liability

     32    33.   

Entire Understanding; Maximum Interest

     33    34.   

Severability

     33    35.   

Survival

     33    36.   

Captions

     33    37.   

Counterparts; Signatures

     33    38.   

Construction

     33   

 

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39.   

Publicity

     34    40.   

Joinder

     34    41.   

Legends

     34    42.   

Agency

     35   

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TERM LOAN AND SECURITY AGREEMENT

This TERM LOAN AND SECURITY AGREEMENT is made as of November 17, 2010 (as
amended, restated, supplemented and/or modified from time to time, this
“Agreement”), by and among the lenders from time to time party hereto (the
“Lenders”), LV ADMINISTRATIVE SERVICES, INC., a Delaware corporation, as
administrative and collateral agent for the Lenders (in such capacity, the
“Agent” and together with the Lenders, the “Creditor Parties”) and BIOVEST
INTERNATIONAL, INC., a Delaware corporation (“Biovest”).

BACKGROUND

WHEREAS, on November 10, 2008 (the “Petition Date”), each of Biovest, Biovax,
Inc., AutovaxID, Inc., Biolender, LLC and Biolender II, LLC commenced a
voluntary case for reorganization under Chapter 11 of Title 11 of the United
States Code, 11 U.S.C. §§ 101 et seq. (the “Bankruptcy Code”), in the United
States Bankruptcy Court for the Middle District of Florida, Tampa Division (the
“Bankruptcy Court”), which cases are currently being jointly administered under
Case No. 8:08-bk-17795-KRM (the “Bankruptcy Cases”);

WHEREAS, Biovest and Biovax, Inc., AutovaxID, Inc., Biolender, LLC and Biolender
II, LLC have been substantively consolidated pursuant to the terms of the
Confirmed Plan;

WHEREAS, as of the Petition Date, Biovest was indebted to Laurus Master Fund,
Ltd. (In Liquidation), Valens U.S. SPV I, LLC, Valens Offshore SPV I, Ltd. and
Valens Offshore SPV II, Corp. (collectively, the “Prepetition Lenders”) in an
aggregate principal amount of $30,154,082.65, plus interest and other amounts
due thereon, according to proofs of claim filed by the Prepetition Lenders in
the Biovest Bankruptcy Cases (the “Prepetition Debt”);

WHEREAS, in connection with Biovest incurring the Prepetition Debt, Biovest and
Accentia issued to certain of the Prepetition Lenders warrants (the “Biovest
Warrants”) to acquire shares of the Biovest Common Stock as listed on Exhibit A
attached hereto;

WHEREAS, in connection with Biovest incurring the Prepetition Debt, Biovest and
Accentia, pursuant to various agreements, granted to certain of the Prepetition
Lenders an aggregate royalty equal to 19.50% of the net sales and license
revenues from the Biovest Biologic Products received by Biovest (the “Biovest
Royalty”); and

WHEREAS, in satisfaction of the Prepetition Debt, the cancellation of the
Biovest Warrants, and the modification of the Biovest Royalty, certain of the
Prepetition Lenders have agreed to accept allowed secured claims against Biovest
in the Biovest Bankruptcy Cases in the aggregate amounts of $24,900,000.00 and
$4,160,000.00, respectively, and other consideration, in accordance with the
terms and conditions set forth herein and in the Confirmed Plan.

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AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants and undertakings and
the terms and conditions contained herein, the parties hereto agree as follows:

1.      General Definitions and Terms; Rules of Construction.

(a)      General Definitions. Capitalized terms used in this Agreement shall
have the meanings assigned to them in Annex A.

(b)      Accounting Terms. Any accounting terms used in this Agreement which are
not specifically defined herein shall have the meanings customarily given them
in accordance with GAAP and all financial computations in this Agreement shall
be computed, unless specifically provided herein, in accordance with GAAP
consistently applied.

(c)      Other Terms. Any capitalized terms used in this Agreement and defined
in the UCC shall have the meaning given therein, unless otherwise defined
herein.

(d)      Rules of Construction. All Schedules, Addenda, Annexes and Exhibits
hereto or expressly identified to this Agreement are incorporated herein by
reference and taken together with this Agreement constitute but a single
agreement. The words “herein”, “hereof” and “hereunder” or other words of
similar import refer to this Agreement as a whole, including the Exhibits,
Addenda, Annexes and Schedules thereto, as the same may be from time to time
amended, modified, restated or supplemented in accordance with the terms of this
Agreement, and not to any particular section, subsection or clause contained in
this Agreement. Wherever from the context it appears appropriate, each term
stated in either the singular or the plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, the feminine and the neuter. The term “or” is not
exclusive. The term “including” (or any form thereof) shall not be limiting or
exclusive. All references to statutes and related regulations shall include any
amendments of same and any successor statutes and regulations. All references in
this Agreement or in the Schedules, Addenda, Annexes and Exhibits to this
Agreement to sections, schedules, disclosure schedules, exhibits, and
attachments shall refer to the corresponding sections, schedules, disclosure
schedules, exhibits, and attachments of or to this Agreement. All references to
any instruments or agreements, including references to this Agreement or any of
the Ancillary Agreements, shall include any and all modifications or amendments
thereto and any and all extensions or renewals thereof.

(e)      This Agreement shall be subject to the terms and provisions of the
Confirmed Plan. To the extent that there is any conflict between the terms and
provisions of this Agreement and the terms and provisions of the Confirmed Plan,
the terms and provisions of this Agreement will control unless otherwise
expressly stated in the Confirmation Order.

2.      The BVTI Term Loans and Closing Shares.

(a)      The BVTI Term Notes.

(i)      Subject to the terms and conditions set forth herein and in the
Ancillary Agreements, at the Closing, the Lenders will receive in satisfaction
of the Prepetition

 

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Debt, (A) secured term promissory notes of Biovest in an aggregate principal
amount of $24,900,000.00 (the “Term A Notes”) and (B) secured term promissory
notes of Biovest in an aggregate principal amount of $4,160,000.00 (the “Term B
Notes” and together with the Term A Notes, the “BVTI Term Notes”). The BVTI Term
Notes shall be issued to the Lenders in the principal amounts set forth on
Schedule 2(a)(i) attached hereto.

(ii)      If Biovest at any time fails to perform or observe any of the
covenants contained in this Agreement or in any Ancillary Agreement (after any
applicable grace period and/or opportunity to cure), the Agent may upon written
notice to Biovest, but need not, perform or observe such covenant on behalf and
in the name, place and stead of Biovest (or, at the Agent’s option, in the
Agent’s name) and may, but need not, take any and all other actions which the
Agent may deem necessary to cure or correct such failure (including the payment
of Taxes, the satisfaction of Liens, the performance of obligations owed to
Account Debtors, lessors or other obligors, the procurement and maintenance of
insurance, the execution of assignments, security agreements and financing
statements, and the endorsement of instruments). The amount of all monies
expended and all out-of-pocket costs and reasonable expenses (including
attorneys’ fees and legal expenses) incurred by the Agent in connection with or
as a result of the performance or observance of such covenants or the taking of
such action by the Agent shall be charged to Biovest and added to the principal
amount of the BVTI Term Notes. To facilitate the Agent’s performance or
observance of such covenants by Biovest, Biovest hereby irrevocably appoints the
Agent, or the Agent’s delegate, acting alone, as Biovest’s attorney in fact
(which appointment is coupled with an interest) with the right (but not the
duty) from time to time to create, prepare, complete, execute, deliver, endorse
or file in the name and on behalf of Biovest any and all instruments, documents,
assignments, security agreements, financing statements, applications for
insurance and other agreements and writings required to be obtained, executed,
delivered or endorsed by Biovest.

(iii)      The Agent will account to Biovest monthly with a statement of all
advances, charges and payments made pursuant to this Agreement, and such account
rendered by the Agent shall be deemed final, binding and conclusive, absent
manifest error, unless the Agent is notified by Biovest in writing to the
contrary within thirty (30) days of the date such account was rendered
specifying the item or items to which objection is made.

(b)      Closing Shares. In addition to the issuance of the BVTI Term Notes to
the Lenders, in consideration of the cancellation of the Biovest Warrants and
the modification of the Biovest Royalty, at the Closing, Biovest shall issue to
certain of the Lenders an original stock certificate issued in its name
evidencing such Lender’s allocable portion of the Closing Shares, which shares
shall be subject to the conditions and restrictions set forth herein and in the
Closing Shares Lock-Up Agreement. The total number of Closing Shares to be
issued to the Lenders will be Fourteen Million Eight Hundred Thirty-Four
Thousand Seven Hundred Eighty-Two (14,834,782), which shall be allocated among
the Lenders in accordance with Schedule 2(b) attached hereto. Except for the
Closing Shares, the Lenders shall not be entitled to receive any shares of the
Biovest Common Stock under this Agreement or the Accentia Security Agreement.
The number and allocation of the Closing Shares to the Lenders shall be as set
forth on Schedule 2(b) attached hereto. Notwithstanding the provision in the
Closing Shares Lock-Up Agreement which provides that the Seller Lenders (as such
term is defined in the Closing Shares Lock-Up Agreement) are subject to Rule
144(e) of the Securities Act, Biovest hereby acknowledges that it

 

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does not consider the Lenders, either individually or in the aggregate, to be an
Affiliate or Affiliates of Biovest.

3.      Repayment of the BVTI Term Loans.  The BVTI Term Loans shall be repaid
in accordance with the terms of the BVTI Term Notes and as set forth herein.
Biovest may prepay the BVTI Term Loans from time to time in accordance with the
terms and provisions of the BVTI Term Notes.

4.      Reserved.

5.      Interest and Payments.

(a)      Interest.

(i)      Biovest shall pay interest on the BVTI Term Loans at the rates per
annum set forth in the BVTI Term Notes.

(ii)      In no event shall the aggregate interest payable hereunder or under
the BVTI Term Notes exceed the maximum rate permitted under any applicable law
or regulation, as in effect from time to time (the “Maximum Legal Rate”), and if
any provision of this Agreement or any Ancillary Agreement is in contravention
of any such law or regulation, interest payable under this Agreement and each
Ancillary Agreement shall be computed on the basis of the Maximum Legal Rate (so
that such interest will not exceed the Maximum Legal Rate).

(iii)      Biovest shall pay principal, interest and all other amounts payable
hereunder, or under any Ancillary Agreement, without any deduction whatsoever,
including any deduction for any set-off or counterclaim.

(iv)      All Contract Rate payments made by Biovest under the BVTI Term Notes
shall be made free and clear of, and without deduction or withholding for or on
account of, any future Taxes hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority, other than Excluded Taxes. If any
Non-Excluded Taxes or Other Taxes are required to be withheld from any amounts
payable to any Creditor Party hereunder, the amounts so payable to such Creditor
Party shall be increased to the extent necessary to yield to such Creditor Party
(after payment of all Non-Excluded Taxes and Other Taxes, including those
imposed on payments made pursuant to this paragraph (iv) of this Section 5(a))
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement, provided, however, that Biovest shall not
be required to increase any such amounts payable to any Lender with respect to
any Non-Excluded Taxes that are directly attributable to such Lender’s failure
to comply with the requirements of paragraph (vii) of this Section 5(a); and
provided, further, however, that if Biovest is required to increase the amounts
payable to any Creditor Party by reason of this Section 5(a)(iv), Biovest shall
pay such increased amounts within ninety (90) days following the date on which
such Non-Excluded Taxes or Other Taxes were withheld.

 

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(v)      In addition, subject to 11 U.S.C. §1146(a) and the terms of the
Confirmation Order, Biovest shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

(vi)      Whenever any Non-Excluded Taxes or Other Taxes are payable by Biovest,
as promptly as possible thereafter Biovest shall send to the Agent for its own
account or for the account of the relevant Lender, as the case may be, a
certified copy of an original official receipt received by Biovest showing
payment thereof (or such other evidence reasonably satisfactory to the Agent).
If Biovest fails to pay any Non-Excluded Taxes or Other Taxes when due to the
appropriate taxing authority or fails to remit to the Agent the required
receipts or other required documentary evidence, Biovest shall indemnify the
Creditor Parties for any incremental taxes, interest or penalties that may
become payable by any Creditor Party as a result of any such failure.

(vii)      Each Lender (or its assignee) that is not a “United States person,”
as defined in Section 7701(a)(30) of the Code (a “Non-U.S. Lender”) shall, and
hereby agrees to, deliver to Biovest and the Agent two completed originals of an
appropriate U.S. Internal Revenue Service Form W-8, as applicable, or any
subsequent versions thereof or successors thereto, properly completed and duly
executed by such Non-U.S. Lender. Such forms shall be delivered by each Non-U.S.
Lender on or before the date it becomes a party to this Agreement. In addition,
each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S. Lender. Each
Non-U.S. Lender shall promptly notify Biovest at any time it determines that it
is no longer in a position to provide any previously delivered certificate to
Biovest (or any other form of certification adopted by the U.S. taxing
authorities for such purpose). Notwithstanding any other provision of this
paragraph, a Non-U.S. Lender shall not be required to deliver any form pursuant
to this paragraph that such Non-U.S. Lender is not legally able to deliver.

(viii)      The agreements in this Section 5(a) shall survive the termination of
this Agreement and the payment of the BVTI Term Loans and all other amounts
payable hereunder or under any other Ancillary Agreement.

(b)      Failure to Provide Financial Information. Without affecting the
Lenders’ rights and remedies, in the event Biovest fails to deliver the
financial information required by Section 11 on or before the dates set forth
therein, Biovest shall pay each Lender its pro rata share of an aggregate fee in
the amount of $250.00 per week (or portion thereof) for each such failure until
the missing financial information is delivered to the Agent. All amounts
incurred pursuant to this Section 5(b) shall be due and payable upon receipt by
Biovest of an invoice from the Agent for such amounts, which shall be paid
monthly, in arrears, on the first Business Day of each calendar month.

6.      Security Interest.

(a)      Subject only to the Permitted Liens, to secure the prompt payment to
the Creditor Parties of the Obligations, Biovest hereby assigns, pledges and
grants to the Agent, for the ratable benefit of the Creditor Parties, a
continuing security interest in and Lien upon all of the Collateral. All of
Biovest’s Books and Records relating to the Collateral shall, until

 

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delivered to or removed by the Agent, be kept by Biovest in trust for the
Creditor Parties until the termination of this Agreement and the payment in full
of all Obligations. Each confirmatory assignment schedule or other form of
assignment hereafter executed by Biovest shall be deemed to include the
foregoing grant, whether or not the same appears therein. Notwithstanding the
foregoing, the continuing security interests in and Lien upon the Collateral, as
provided for herein, shall terminate upon the payment in full of the BVTI Term
Notes and all interest, fees, costs, charges, expenses, or other sums payable
hereunder and under any Ancillary Agreements (other than the Biovest Contingent
Payment Agreement).

(b)      Biovest hereby (i) authorizes the Agent to file any financing
statements, continuation statements or other amendments thereto that
(A) indicate the Collateral (1) as all assets and personal property of Biovest
or words of similar effect, regardless of whether any particular asset comprised
in the Collateral falls within the scope of Article 9 of the UCC of the
applicable jurisdiction, or (2) as being of an equal or lesser scope or with
greater detail, and (B) contain any other information required by Part 5 of
Article 9 of the UCC for the sufficiency or filing office acceptance of any
financing statement, continuation statement or other amendment and (ii) ratifies
its authorization for the Agent to have filed any initial financial statements,
or amendments thereto if filed prior to the date hereof. Except as otherwise
provided in the Confirmed Plan, Biovest acknowledges that it is not authorized
to file and, except as expressly set forth in this Agreement, will not give any
authorization to anyone other than the Agent (including pursuant to
Section 9-509(b) of the UCC) to file, any financing statement or amendment or
termination statement with respect to any financing statement without the prior
written consent of the Agent and agrees that it will not do so without the prior
written consent of the Agent, subject to Biovest’s rights under
Section 9-509(d)(2) of the UCC.

(c)      Biovest hereby grants to the Agent, for the ratable benefit of the
Creditor Parties, an irrevocable, non-exclusive, worldwide license without
payment of royalty or other compensation to Biovest, upon the occurrence and
during the continuance of an Event of Default, to use or otherwise exploit in
any manner as to which authorization of the holder of such Intellectual Property
would be required, and to license or sublicense such rights in, to and under any
Intellectual Property now or hereafter owned by or licensed to Biovest, and
wherever the same may be located, and including in such license access to all
media in which any of such Intellectual Property may be recorded or stored and
to all software and hardware used for the compilation or printout thereof.
Biovest represents, promises and agrees that any such license or sublicense is
not and will not be in conflict with the contractual or commercial rights of any
third Person and subject, in the case of trademarks and service marks, to
sufficient rights to quality control and inspection in favor of Biovest to avoid
the right of invalidation of said trademarks and service marks. The foregoing
license and sublicense will terminate on the termination of this Agreement and
the payment in full of the Obligations; provided, however, that any license,
sublicense, or other rights granted by the Agent pursuant to such license during
its term in connection with any enforcement of remedies by Agent hereunder shall
remain in effect in accordance with its terms.

(d)      Any proceeds received by the Agent from the foreclosure, sale, lease or
other disposition of any of the Collateral shall be paid over to the Lenders for
application in accordance with Section 21.

 

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7.      Representations, Warranties and Covenants Concerning the Collateral.
Biovest represents, warrants and covenants as of the date hereof as follows:

(a)      All of the Collateral (i) is owned by it free and clear of all Liens
(including any claim of infringement) except those in the Agent’s favor and
Permitted Liens and (ii) is not subject to any agreement prohibiting the
granting of a Lien or requiring notice of or consent to the granting of a Lien.

(b)      It shall not encumber, mortgage, pledge, assign or grant any security
interest in or Lien upon any Collateral to anyone other than the Agent and the
other Creditor Parties and except for Permitted Liens.

(c)      The Liens granted pursuant to this Agreement, upon the filing of UCC-1
financing statements in respect of Biovest in favor of the Agent in the
applicable filing office of the state of organization of Biovest, the recording
of the Liens in favor of the Agent in the U.S. Patent and Trademark Office and
the U.S. Copyright Office, as applicable, the taking of any actions required
under the laws of jurisdictions outside the United States with respect to
Intellectual Property included in the Collateral which is created under such
laws, and the completion of the other filings and actions listed on Schedule
7(c) attached hereto, have been delivered to the Agent in duly executed form,
constitute valid perfected security interests in all of the Collateral in favor
of the Agent as security for the payment of the Obligations, enforceable in
accordance with the terms hereof against any and all of Biovest’s creditors and
purchasers and such security interests are prior to all other Liens in existence
on the date hereof except those relating to the Permitted Liens, which, pursuant
to the Confirmed Plan, are senior in priority to the Liens granted in favor of
the Agent under this Agreement.

(d)      No effective security agreement, mortgage, deed of trust, financing
statement, equivalent security or Lien instrument or continuation statement
covering all or any part of the Collateral is on file or of record in any public
office, except those relating to Permitted Liens.

(e)      It shall not dispose of any of the Collateral whether by sale, lease or
otherwise except for Permitted Liens, the sale of Inventory or license of
Intellectual Property in the ordinary course of business, and the disposition or
transfer in the ordinary course of business during any fiscal year of obsolete
and worn-out Equipment having an aggregate fair market value of not more than
$50,000 or to the extent that (i) the proceeds of any such disposition are used
to acquire replacement Equipment which is subject to the Agent’s first priority
security interest or are used to repay BVTI Term Loans or to pay general
corporate expenses, or (ii) following the occurrence of an Event of Default
which continues to exist, the proceeds of which are remitted to the Agent to be
held as cash collateral for the Obligations.

(f)      It shall defend the right, title and interest of the Agent in and to
the Collateral against the claims and demands of all Persons whomsoever, and
take such actions, including (i) all actions necessary to grant the Agent
“control” of any Investment Property, Deposit Accounts, Letter-of-Credit Rights
or electronic Chattel Paper owned by Biovest, with any agreements establishing
control to be in form and substance satisfactory to the Agent, (ii) the prompt
(but in no event later than five (5) Business Days following the Agent’s request
therefor)

 

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delivery to the Agent of all original Instruments, Chattel Paper, negotiable
Documents and certificated Equity Interests owned by it (in each case,
accompanied by stock powers, allonges or other instruments of transfer executed
in blank), (iii) notification to third parties of the Agent’s interest in the
Collateral at the Agent’s request, and (iv) the institution of litigation
against third parties as shall be prudent in order to protect and preserve its
and/or the Agent’s respective and several interests in the Collateral.

(g)      It shall promptly, and in any event within five (5) Business Days after
the same is acquired by it, notify the Agent of any Commercial Tort Claim
acquired by it and, unless otherwise consented to by the Agent, it shall enter
into a supplement to this Agreement granting to the Agent a Lien in such
Commercial Tort Claim.

(h)      It shall place notations upon its Books and Records and any of its
financial statements to disclose the Agent’s Lien in the Collateral.

(i)      Subject to any Permitted Liens, if it retains possession of any Chattel
Paper or Instrument with the Agent’s consent, such Chattel Paper and Instruments
shall be marked with the following legend: “This writing and obligations
evidenced or secured hereby are subject to the security interest of LV
Administrative Services, Inc., as agent.” Notwithstanding the foregoing, upon
the reasonable request of the Agent, such Chattel Paper and Instruments shall be
delivered to the Agent.

(j)      It shall perform in a reasonable time all other steps requested by the
Agent to create and maintain in the Agent’s favor a valid perfected first Lien
in all Collateral subject only to Permitted Liens, which, pursuant to the
Confirmed Plan, are senior in priority to the Liens granted in favor of the
Agent under this Agreement.

(k)      It shall keep and maintain its Equipment in good operating condition,
except for ordinary wear and tear, and shall make all necessary repairs and
replacements thereof so that the value and operating efficiency shall at all
times be maintained and preserved. It shall not permit any such items to become
a Fixture to real estate or accessions to other personal property.

(l)      It shall maintain and keep all of its Books and Records concerning the
Collateral at its executive offices listed in Schedule 12(n).

(m)      It shall maintain and keep the tangible Collateral at the addresses
listed in Schedule 12(n); provided, that (i) it may change such locations or
open a new location if it provides the Agent at least thirty (30) days prior
written notice of such changes or new location and (ii) prior to such change or
opening of a new location where Collateral having a value of more than $50,000
will be located, it executes and delivers to the Agent such agreements as are
deemed reasonably necessary or prudent by the Agent, including landlord
agreements, mortgagee agreements and warehouse agreements, each in form and
substance satisfactory to the Agent, to adequately protect and maintain the
Agent’s security interest in such Collateral.

(n)      Schedule 7(n) attached hereto lists all banks and other financial
institutions at which it maintains deposits and/or other accounts, and such
Schedule 7(n) correctly identifies the name, address and telephone number of
each such depository, the name in

 

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which the account is held, and the complete account number. It shall not
establish any depository or other bank account with any financial institution
(other than the accounts set forth on Schedule 7(n)) without the Agent’s prior
written consent.

(o)      Its exact legal name (as indicated in the public record of its
jurisdiction of organization), jurisdiction of organization, organizational
identification number, if any, from the jurisdiction of organization, and the
location of its chief executive office or sole place of business or principal
residence, as the case may be, are specified on Schedule 7(o) attached hereto.
It has furnished to the Agent a certified charter, certificate of incorporation
or other organization document and long-form good standing certificate as of a
date which is recent to the date hereof. It is organized solely under the law of
the jurisdiction so specified and has not filed any certificates of
domestication, transfer or continuance in any other jurisdiction. Except as
specified on Schedule 7(o), it has not changed its name, jurisdiction of
organization, chief executive office or sole place of business or its corporate
structure in any way (e.g., by merger, consolidation, change in corporate form
or otherwise) within the past five years and has not within the last five years
become bound (whether as a result of merger or otherwise) as a grantor under a
security agreement entered into by another Person, which has not heretofore been
terminated.

(p)      It will not, except upon 30 days’ prior written notice to the Agent and
delivery to the Agent of (i) all additional financing statements and other
documents reasonably requested by the Agent to maintain the validity, perfection
and priority of the security interests provided for herein and (ii) if
applicable, a written supplement to Schedule 12(n) showing any additional
location at which Inventory or Equipment in excess of $50,000 in the aggregate
shall be kept: (A) change its jurisdiction of organization or the location of
its chief executive office or sole place of business or principal residence from
that referred to in Section 7(o); (B) change its name, identity or
organizational structure; or (C) permit any of the Inventory or Equipment in
excess of $50,000 in the aggregate to be kept at a location other than those
listed on Schedule 12(n).

8.      Payment of Accounts.  At the Agent’s election, following the occurrence
of an Event of Default which is continuing, the Agent may notify Biovest’s
Account Debtors of the Agent’s security interest in the Accounts, collect them
directly and charge the collection costs and reasonable expenses thereof to
Biovest.

9.      Reserved.

10.      Inspections and Appraisals.  At all times during normal business hours,
the Agent, and/or any agent of the Agent, shall have the right to (a) have
access to, visit, inspect, review, evaluate and make physical verification and
appraisals of Biovest’s properties and the Collateral, (b) inspect, copy (or
take originals if necessary) and make extracts from Biovest’s Books and Records,
including management letters prepared by the Accountants, and (c) discuss with
Biovest’s directors, principal officers, and Accountants, Biovest’s business,
assets, liabilities, financial condition, results of operations and business
prospects. So long as no Default or Event of Default has occurred and is
continuing, such inspection and appraisal rights shall be limited to twice per
year. Biovest will deliver to the Agent any instrument necessary for the Agent
to obtain records from any service bureau maintaining records for Biovest. If
any internally

 

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prepared financial information is unsatisfactory in any manner to the Agent, the
Agent may request that the Accountants review the same.

11.      Financial Reporting.  Biovest will deliver, or cause to be delivered,
to the Agent each of the following, which shall be in form and detail acceptable
to the Agent (with the filing of such information with the SEC pursuant to and
in accordance with SEC rules and regulations to be deemed delivery to the Agent
for purposes hereof):

(a)      As soon as available and in any event within one hundred five
(105) days after the end of each fiscal year of Biovest, Biovest’s audited
annual financial statements with a report of independent certified public
accountants of recognized standing selected by Biovest and acceptable to the
Agent (the “Accountants”), which annual financial statements shall be without
qualification (other than a going-concern qualification, if applicable) and
shall include Biovest’s balance sheet as at the end of such fiscal year and
Biovest’s related statement of income, retained earnings and cash flows for the
fiscal year then ended, prepared on a consolidating and consolidated basis to
include Biovest and each of its affiliates, all in reasonable detail and
prepared in accordance with GAAP. Biovest will also deliver to the Agent at such
time, if available, copies of any management letters prepared by the
Accountants;

(b)      As soon as available and in any event within fifty (50) days after the
end of each fiscal quarter that is not a fiscal year end of Biovest, an
unaudited/internal balance sheet and statements of income, retained earnings and
cash flows of Biovest as at the end of and for such quarter and for the year to
date period then ended, prepared on a consolidating and consolidated basis to
include Biovest and its affiliates, in reasonable detail and stating in
comparative form the figures for the corresponding date and periods in the
previous year, all prepared in accordance with GAAP, subject to year-end
adjustments and accompanied by a certificate of Biovest’s president, chief
executive officer or chief financial officer stating that such financial
statements have been prepared in accordance with GAAP, subject to year-end audit
adjustments;

(c)      As soon as available and in any event within twenty-five (25) days
after the end of each calendar month, an unaudited/internal balance sheet and
statements of income, retained earnings and cash flows of Biovest as at the end
of and for such month and for the year to date period then ended, prepared on a
consolidating and consolidated basis to include Biovest and each of its
affiliates, in reasonable detail and stating in comparative form the figures for
the corresponding date and periods in the previous year, all prepared in
accordance with GAAP, subject to year-end adjustments and accompanied by a
certificate of Biovest’s president, chief executive officer or chief financial
officer stating that such financial statements have been prepared in accordance
with GAAP, subject to year-end audit adjustments; and

(d)      Such other financial information as to Biovest as the Agent shall
reasonably request.

12.      Additional Representations and Warranties.  Biovest hereby represents
and warrants to each Creditor Party as of the date hereof as follows:

 

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(a)      Organization, Good Standing and Qualification.  It is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. It has the corporate power and authority to own and operate
its properties and assets and, insofar as it is or shall be a party thereto, to
(i) execute and deliver this Agreement and the Ancillary Agreements, (ii) issue
the BVTI Term Notes and the Closing Shares, and (iii) carry out the provisions
of this Agreement and the Ancillary Agreements and to carry on its business as
presently conducted. It is duly qualified and is authorized to do business and
is in good standing as a foreign corporation in all jurisdictions in which the
nature or location of its activities and of its properties (both owned and
leased) makes such qualification necessary, except for those jurisdictions in
which the failure to do so has not had, or could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.

(b)      Subsidiaries.  Each direct and indirect Subsidiary of Biovest and its
percentage ownership thereof is set forth on Schedule 12(b) attached hereto.

(c)      Capitalization; Voting Rights.

(i)      The authorized capital stock of Biovest consists of 350,000,000 shares,
of which (A) 300,000,000 are shares of Biovest Common Stock, 98,149,783 shares
of which are issued and outstanding (not taking into account the shares of
Biovest Common Stock that may be issued or are issuable pursuant to the
Confirmed Plan), and (B) 50,000,000 are shares of preferred stock, par value
$.01 per share, none of which are issued and outstanding.

(ii)      Except for (A) as disclosed on Schedule 12(c), (B) the shares of
Biovest Common Stock that may be issued or are issuable pursuant to the
Confirmed Plan, including those that may be issued to the Investor DIP Lenders,
and (C) the Closing Shares that will be issued pursuant to this Agreement and
the Ancillary Agreements, there are no outstanding options, warrants, rights
(including conversion or preemptive rights and rights of first refusal), proxy
or stockholder agreements, or arrangements or agreements of any kind for the
purchase or acquisition from Biovest of any of its securities. Except as
disclosed on Schedule 12(c) or as provided in the Confirmed Plan, neither the
offer or issuance of any of the BVTI Term Notes or the Closing Shares, nor the
consummation of any transaction contemplated hereby, will result in a change in
the price or number of any securities of Biovest outstanding, under
anti-dilution or other similar provisions contained in or affecting any such
securities.

(iii)      All issued and outstanding shares of Biovest Common Stock: (A) have
been duly authorized and validly issued and are fully paid and non-assessable;
and (B) were issued in compliance with all applicable state and federal laws
concerning the issuance of securities.

(iv)      The rights, preferences, privileges and restrictions of the Biovest
Common Stock are as stated in Biovest’s Charter. When issued in compliance with
the provisions of this Agreement and Biovest’s Charter, the Closing Shares will
be validly issued, fully paid and non-assessable, and free of any Liens.

(d)      Authorization; Binding Obligations.  All corporate action on its part
(including of its officers and directors) necessary for the authorization of
this Agreement and the

 

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Ancillary Agreements, the performance of all of its obligations hereunder and
under the Ancillary Agreements on the Closing Date, and the authorization,
issuance and delivery of the BVTI Term Notes and the Closing Shares has been
taken or will be taken prior to the Closing Date. This Agreement and the
Ancillary Agreements, when executed and delivered and to the extent it is a
party thereto, will be its valid and binding obligations enforceable against it
in accordance with their terms, except:

(i)      as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors’ rights; and

(ii)      general principles of equity that restrict the availability of
equitable or legal remedies.

The issuance of the BVTI Term Notes and the Closing Shares are not and will not
be subject to any preemptive rights or rights of first refusal that have not
been properly waived or complied with.

(e)      Liabilities.  Except for (i) the BVTI Term Notes and any of the
Indebtedness hereunder and under the Ancillary Agreements, (ii) the allowed and
disputed claims of creditors of Biovest, Biovax, Inc., AutovaxID, Inc.,
Biolender, LLC and Biolender II, LLC in the Biovest Bankruptcy Cases (including
the allowed claim of the Exit Lender), and (iii) liabilities incurred in the
ordinary course of business, it does not have any liabilities nor is it indebted
to any Person.

(f)      Agreements; Action.

(i)      It maintains disclosure controls and procedures (“Disclosure Controls”)
designed to ensure that information required to be disclosed by Biovest in the
reports that it files or submits under the Exchange Act is recorded, processed,
summarized, and reported, within the time periods specified in the rules and
forms of the SEC.

(ii)      It makes and keeps books, records, and accounts that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of its
assets. It maintains internal control over financial reporting (“Financial
Reporting Controls”) designed by, or under the supervision of, its principal
executive and principal financial officers, and effected by its board of
directors, management, and other personnel, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with GAAP.

(g)      Title to Properties and Assets; Liens, Etc.  Except as set forth on
Schedule 12(g) attached hereto and except as otherwise contemplated by the
Confirmed Plan, it has good and marketable title to its properties and assets
(tangible or intangible), and good title to its leasehold interests, in each
case subject to no Lien, other than Permitted Liens. All facilities, Equipment,
Fixtures, vehicles and other properties owned, leased or used by it are in good
operating condition and repair and are reasonably fit and usable for the
purposes for which they are being used, subject to normal wear and tear.

 

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(h)      Registration Rights and Voting Rights.  Except (i) as set forth on
Schedule 12(h) attached hereto, (ii) as disclosed in Exchange Act Filings, and
(iii) as disclosed in the Confirmed Plan or in the Bankruptcy Cases, it is not
presently under any obligation, nor has it granted any rights, to register any
of its presently outstanding securities or any of its securities that may
hereafter be issued. Except as set forth on Schedule 12(h) and except as
disclosed in Exchange Act Filings, to its knowledge, none of its stockholders
has entered into any agreement with respect to its voting of equity securities
of Biovest.

(i)      Compliance with Laws; Permits.  No governmental orders, permissions,
consents, approvals or authorizations are required to be obtained, and no
registrations or declarations are required to be filed, in connection with the
execution and delivery of this Agreement or any Ancillary Agreement and the
issuance of the BVTI Term Notes or the Closing Shares, except for such as have
been duly and validly obtained or filed and except for the Compromise Order, or
with respect to any filings that must be made after the Closing Date, which will
be filed in a timely manner. It has all material franchises, permits, licenses
and any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

(j)      Valid Offering.  Assuming the accuracy of the representations and
warranties of the Lenders contained in this Agreement, the offer and sale of the
BVTI Term Notes and the Closing Shares will be exempt from the registration
requirements of the Securities Act, and will have been registered or qualified
(or are exempt from registration and qualification) under the registration,
permit or qualification requirements of all applicable state securities laws.

(k)      No Integrated Offering.  Neither it, nor any of its Affiliates, nor any
Person acting on its or their behalf, has directly or indirectly made any offers
or sales of any security or solicited any offers to buy any security under
circumstances that would cause the offering of the BVTI Term Notes or the
Closing Shares pursuant to this Agreement or any Ancillary Agreement to be
integrated with prior offerings by it for purposes of the Securities Act which
would prevent it from issuing the BVTI Term Notes or the Closing Shares pursuant
to Rule 506 under the Securities Act, or any applicable exchange-related
stockholder approval provisions. Neither it nor any of its Affiliates will take
any action or steps that would cause the offering of the BVTI Term Notes or the
Closing Shares to be integrated with other offerings.

(l)      Stop Transfer.  The Closing Shares and any Conversion Shares that may
be issued will be issued pursuant to Section 1145(a) of the Bankruptcy Code. It
will not issue any stop transfer order or other order impeding the sale and
delivery of any of the Closing Shares or any of the Conversion Shares as may be
permitted pursuant to the terms of the Closing Shares Lock-Up Agreement and the
BVTI Term Notes, or at such time as the Closing Shares or the Conversion Shares
are registered for public sale or an exemption from registration is available,
except as required by state and federal securities laws.

(m)      Patriot Act.  It certifies that, to the best of its knowledge, it has
not been designated, nor is or shall be owned or controlled, by a “suspected
terrorist” as defined in Executive Order 13224. It hereby acknowledges that each
of the Creditor Parties seeks to comply with all applicable laws concerning
money laundering and related activities. In

 

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furtherance of those efforts, it hereby represents, warrants and covenants that:
(i) none of the cash or property that it will pay or will contribute to any
Creditor Party has been or shall be derived from, or related to, any activity
that is deemed criminal under United States law; and (ii) no contribution or
payment by it to any Creditor Party, to the extent that they are within its
control, shall cause such Creditor Party to be in violation of the United States
Bank Secrecy Act, the United States International Money Laundering Control Act
of 1986 or the United States International Money Laundering Abatement and
Anti-Terrorist Financing Act of 2001. It shall promptly notify the Agent if any
of these representations, warranties and covenants ceases to be true and
accurate regarding it. It shall provide any Creditor Party with any additional
information regarding it that such Creditor Party deems necessary or convenient
to ensure compliance with all applicable laws concerning money laundering and
similar activities. It understands and agrees that if at any time it is
discovered that any of the foregoing representations, warranties and covenants
are incorrect, or if otherwise required by applicable law or regulation related
to money laundering or similar activities, the Creditor Parties may undertake
appropriate actions to ensure compliance with applicable law or regulation,
including but not limited to segregation and/or redemption of any Lender’s
investment in it. It further understands that the Creditor Parties may release
confidential information about it and, if applicable, any underlying beneficial
owners, to proper authorities if such Creditor Party, in its sole discretion,
determines that it is in the best interests of such Creditor Party in light of
relevant rules and regulations under the laws set forth in subsection
(ii) above.

(n)      Name; Locations of Offices, Records and Collateral.  Schedule 12(n)
attached hereto sets forth Biovest’s name as it appears in official filings in
the jurisdiction of its organization, the type of entity of Biovest, the
organizational identification number issued by Biovest’s jurisdiction of
organization or a statement that no such number has been issued, Biovest’s
jurisdiction of organization, and the location of Biovest’s chief executive
office, corporate offices, warehouses, other locations of Collateral and
locations where records with respect to Collateral are kept (including in each
case the county of such locations) and, except as set forth in such Schedule
12(n), such locations have not changed during the preceding twelve months. As of
the Closing Date, during the prior five years, except as set forth in Schedule
12(n), Biovest has not been known as or conducted business in any other name
(including trade names). Biovest has only one state of organization.

(o)      Status of Obligations.  All of the Obligations shall be reported as
debt for U.S. federal income tax purposes on all applicable tax returns filed by
Biovest, and Biovest shall not take a position on any tax return or in any
judicial or administrative proceeding that is inconsistent with such
characterization (unless otherwise required by law).

13.      Covenants.  Biovest covenants and agrees with the Creditor Parties as
of the date hereof as follows:

(a)      Stop Orders.  Biovest shall advise the Agent, promptly after it
receives notice of issuance by the SEC, any state securities commission or any
other regulatory authority, of any stop order or of any order preventing or
suspending any offering of any securities of Biovest, or of the suspension of
the qualification of the Biovest Common Stock for offering or sale in any
jurisdiction, or the initiation of any proceeding for any such purpose.

 

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(b)      Listing.  Biovest shall promptly secure the listing or quotation, as
applicable, of the Closing Shares on the Principal Market upon which shares of
Biovest Common Stock are listed or quoted, as applicable (subject to official
notice of issuance), and shall maintain such listing or quotation, as
applicable, so long as any other shares of Biovest Common Stock shall be so
listed or quoted, as applicable. Biovest shall maintain the listing or
quotation, as applicable, of the Biovest Common Stock on the Principal Market,
and will comply in all material respects with Biovest’s reporting, filing and
other obligations under the bylaws or rules of the Financial Industry Regulatory
Authority (“FINRA”) and such exchanges, as applicable.

(c)      Market Regulations.  Biovest shall notify the SEC, FINRA and applicable
state authorities, in accordance with their requirements, of the transactions
contemplated by this Agreement, and shall take all other necessary action and
proceedings as may be required and permitted by applicable law, rule and
regulation for the legal and valid issuance of the BVTI Term Notes and the
Closing Shares to the Lenders and promptly provide copies thereof to the Agent.

(d)      Reporting Requirements.  Biovest shall file with the SEC all reports
required to be filed pursuant to the Exchange Act and refrain from terminating
its status as an issuer required by the Exchange Act to file reports thereunder
even if the Exchange Act or the rules or regulations thereunder would permit
such termination.

(e)      Insurance.

(i)      Biovest shall bear the full risk of loss from any loss of any nature
whatsoever with respect to the Collateral and Biovest and each of its
Subsidiaries will, jointly and severally, bear the full risk of loss from any
loss of any nature whatsoever with respect to the Collateral pledged to the
Agent as security for the Obligations. Furthermore, Biovest will insure or cause
the Collateral to be insured in the Agent’s name as an additional insured and
lender loss payee, with an appropriate loss payable endorsement in form and
substance satisfactory to the Agent, against loss or damage by fire, flood,
sprinkler leakage, theft, burglary, pilferage, loss in transit and other risks
customarily insured against by companies in similar businesses similarly
situated as Biovest and its Subsidiaries, including but not limited to workers
compensation, public and product liability and business interruption, and such
other hazards as the Agent shall specify in amounts and under insurance policies
and bonds by insurers acceptable to the Agent and all premiums thereon shall be
paid by Biovest and the policies delivered to the Agent. If Biovest fails to
obtain the insurance and in such amounts of coverage as otherwise required
pursuant to this Section 13(e), the Agent may procure such insurance and the
cost thereof shall be promptly reimbursed by Biovest and shall constitute
Obligations.

(ii)      Biovest’s insurance coverage shall not be impaired or invalidated by
any act or neglect of Biovest and the insurer will provide the Agent with no
less than thirty (30) days notice prior to cancellation.

(iii)      The Agent, in connection with its status as a lender loss payee, will
be assigned at all times, subject to the prior lien of the Exit Lender and any
Permitted Liens, which, pursuant to the Confirmed Plan, are senior in priority
to the Liens granted in favor of the

 

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Agent under this Agreement, a first lien position as to any insurance policy and
the proceeds thereof until such time as all Obligations have been indefeasibly
satisfied in full.

(f)      Intellectual Property.  Biovest:

(i)      shall maintain in full force and effect its existence, rights and
franchises and all licenses and other rights to own or use its Intellectual
Property, including registrations and applications therefor, that are necessary
to the conduct of its business, as now conducted or as presently proposed to be
conducted, and shall not do any act or omit to do any act whereby any of such
Intellectual Property may lapse, or become abandoned, dedicated to the public,
or unenforceable, or the Lien therein in favor of the Agent for the ratable
benefit of the Creditor Parties would be adversely affected;

(ii)      shall report to the Agent (A) the filing of any application to
register a copyright no later than ten (10) days after such filing occurs, and
(B) the filing of any application to register any other Intellectual Property
with any other Intellectual Property registry, and the issuance thereof, no
later than thirty (30) days after such filing or issuance occurs and, in each
case, shall, simultaneously with such report, deliver to the Agent
fully-executed documents required to acknowledge, confirm, register, record or
perfect the Lien in such Intellectual Property. In addition, Biovest will
cooperate with the Agent in effecting any amendment to this Agreement or any
Ancillary Agreement to include any new item of Intellectual Property included in
the Collateral;

(iii)      shall, promptly upon the reasonable request of the Agent, execute and
deliver to the Agent any document or instrument required to acknowledge,
confirm, register, record, or perfect the Lien of the Agent in any part of the
Intellectual Property owned by Biovest; and

(iv)      shall not sell, assign, transfer, license, grant any option, or create
or suffer to exist any Lien upon or with respect to Intellectual Property,
except for the Liens in favor of the Agent and the Permitted Liens and except
for any license of Intellectual Property in the ordinary course of its business.

(g)      Properties.  It shall keep its properties in good repair, working order
and condition, reasonable wear and tear excepted, and from time to time make all
needful and proper repairs, renewals, replacements, additions and improvements
thereto; and it shall at all times comply with each provision of all leases to
which it is a party or under which it occupies property if the breach of such
provision could reasonably be expected to have a Material Adverse Effect.

(h)      Confidentiality.  Except pursuant to the Confirmed Plan or as otherwise
required in connection with the Bankruptcy Cases, Biovest will not disclose, nor
will it include in any public announcement, the name of any Creditor Party,
unless expressly agreed to by such Creditor Party or unless and until such
disclosure is required by law or applicable regulation, and then only to the
extent of such requirement. Notwithstanding the foregoing, Biovest may disclose
any Creditor Party’s identity and the terms of this Agreement and the Ancillary
Agreements to its current and prospective debt and equity financing sources.

 

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(i)      Reissuance of Certificates.  Biovest shall reissue certificates
representing the Closing Shares or any Conversion Shares without the legends set
forth in Section 41 below as follows:

(i)      at such time as the holder thereof is permitted to dispose of the
Closing Shares or any Conversion Shares pursuant to Rule 144(e) under the
Securities Act and the terms of the Closing Shares Lock-Up Agreement; or

(ii)      upon resale subject to an effective registration statement after the
Closing Shares or any Conversion Shares are registered under the Securities Act.

Biovest agrees to cooperate with the Lenders in connection with all resales
pursuant to Rule 144(e) and, at Biovest’s expense, to provide legal opinions
necessary to allow such resales provided Biovest and its counsel receive
reasonably requested representations from the Lenders and broker, if any.

(j)      Legal Name, Etc.  It shall not, without providing the Agent with thirty
(30) days prior written notice, change (i) its name as it appears in the
official filings in the jurisdiction of its organization, (ii) the type of legal
entity it is, (iii) its organization identification number, if any, issued by
its jurisdiction of organization, (iv) its jurisdiction of organization, or
(v) its certificate of incorporation, by-laws or other organizational document.

(k)      Compliance with Laws.  The operation of its business is and shall
continue to be in compliance in all material respects with all applicable
federal, state and local laws, rules and ordinances, including all laws, rules,
regulations and orders relating to taxes, payment and withholding of payroll
taxes, employer and employee contributions and similar items, securities,
employee retirement and welfare benefits, employee health and safety and
environmental matters.

(l)      Notices.  It shall promptly inform the Agent in writing of:  (i) the
commencement of all proceedings and investigations by or before, and/or the
receipt of any notices from, any governmental or nongovernmental body and all
actions and proceedings in any court or before any arbitrator against or in any
way concerning any event which could reasonably be expected to have, singly or
in the aggregate, a Material Adverse Effect; (ii) any change which has had, or
could reasonably be expected to have, a Material Adverse Effect; and (iii) any
Event of Default or Default.

(m)      FIRPTA.  It is not a “United States real property holding corporation”
as such term is defined in Section 897(c)(2) of the Code and Treasury Regulation
Section 1.897-2 promulgated thereunder, and it and each of its Subsidiaries
shall at no time take any action or otherwise acquire any interest in any asset
or property to the extent the effect of which shall cause it and/or such
Subsidiary, as the case may be, to be a “United States real property holding
corporation” as such term is defined in Section 897(c)(2) of the Code and
Treasury Regulation Section 1.897-2 promulgated thereunder.

(n)      Accentia Loans or Capital Contributions to Biovest.  Notwithstanding
anything to the contrary contained in this Agreement or in any of the Ancillary
Agreements, Biovest shall be permitted to incur indebtedness to Accentia and
accept contributions of capital

 

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from Accentia only so long as Accentia and Biovest both comply with Section 2.2
of the Accentia Term Notes and the BVTI Term Notes, respectively, and which
indebtedness to Accentia shall be subject to the terms of the Accentia
Subordination Agreement.

14.      Closing and Conditions to Closing.

 (a)      Closing Date.  Subject to the satisfaction of the conditions set forth
in Sections 14(e), (f) and (g) hereof (or the waiver thereof by the party
entitled to waive that condition), the closing of the transactions contemplated
by this Agreement (the “Closing”) shall take place at the offices of Cole,
Schotz, Meisel, Forman & Leonard, P.A., 900 Third Avenue, 16th Floor, New York,
New York 10022 (or at such other place as the parties may designate in writing)
at 10:00 a.m. (Eastern Standard Time) on the date on which the conditions set
forth in Sections 14(e), (f) and (g) are satisfied or waived (other than
conditions that by their nature are to be satisfied at the Closing, but subject
to the satisfaction or waiver of such conditions), unless another time or date,
or both, are agreed to in writing by the parties hereto. The date on which the
Closing shall be held is referred to in this Agreement as the “Closing Date.”

 (b)      Deliveries by Biovest.  At the Closing, Biovest shall deliver to the
Agent:

(i)      the executed BVTI Term Notes in the form attached hereto as Exhibit B;

(ii)      the executed Accentia Limited Guaranty in the form attached hereto as
Exhibit C;

(iii)      the executed Accentia Subordination Agreement in the form attached
hereto as Exhibit D;

(iv)      the executed Exit Lender Subordination Agreement in the form attached
as Exhibit E;

(v)      the executed Accentia Pledge Agreement in the form attached hereto as
Exhibit F;

(vi)      the executed Analytica Security Agreement in the form attached hereto
as Exhibit G;

(vii)      the executed Analytica Guaranty in the form attached hereto as
Exhibit H;

(viii)      the executed Closing Shares Lock-Up Agreement in the form attached
hereto as Exhibit I;

(ix)      the executed Biovest Contingent Payment Agreement in the form attached
hereto as Exhibit J;

(x)      the executed Intellectual Property Security Agreements in the forms
attached hereto as Exhibit K;

 

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(xi)      the executed Biovest Amendments to Organizational Documents in the
form attached hereto as Exhibit L;

(xii)      the executed Royalty Assignment Termination Agreement in the form
attached hereto as Exhibit M;

(xiii)      the executed AutovaxID Royalty Termination Agreement in the form
attached hereto as Exhibit N;

(xiv)      the executed Warrant Termination Agreements in the forms attached
hereto as Exhibit O;

(xv)      the executed Royalty Termination Agreements in the forms attached
hereto as Exhibit P;

(xvi)      the executed Accentia Royalty Termination Agreement in the form
attached hereto as Exhibit Q; and

(xvii)      such other documents and instruments as the Agent shall reasonably
request.

 (c)      Deliveries by the Agent and the Lenders.  At the Closing, the Agent
and the Lenders, as applicable, shall deliver to Biovest:

(i)      the executed Accentia Limited Guaranty;

(ii)      the executed Accentia Subordination Agreement;

(iii)      the executed Exit Lender Subordination Agreement;

(iv)      the executed Accentia Pledge Agreement;

(v)      the executed Analytica Security Agreement;

(vi)      the executed Closing Shares Lock-Up Agreement;

(vii)      the executed Biovest Contingent Payment Agreement;

(viii)      the executed Intellectual Property Security Agreements;

(ix)      the executed Royalty Assignment Termination Agreement;

(x)      the executed AutovaxID Royalty Termination Agreement;

(xi)      the executed Warrant Termination Agreements;

(xii)      the executed Royalty Termination Agreements;

(xiii)      the executed Accentia Royalty Termination Agreement;

 

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(xiv)      written acknowledgment of the withdrawal of any proofs of claim filed
by the Creditor Parties against Biovest, Biovax, Inc., AutovaxID, Inc.,
Biolender, LLC, and Biolender II, LLC in the Biovest Bankruptcy Cases; and

(xv)      such other documents and instruments as Biovest shall reasonably
request.

(d)      Termination of Agreement.  This Agreement may be terminated prior to
the Closing as follows:

(i)      by Biovest or the Agent, if the Closing shall not have occurred by the
close of business on November 17, 2010 (the “Termination Date”); provided,
however, that if the Closing shall not have occurred on or before the
Termination Date due to a material breach of any representations, warranties,
covenants or agreements contained in this Agreement by Biovest or the Agent or
the Lenders, then the breaching party may not terminate this Agreement pursuant
to this Section 14(d)(i); and provided, further, that Biovest shall have the
right to extend the Termination Date for a period not to exceed forty-five
(45) days in the aggregate;

(ii)      by mutual written consent of Biovest, the Agent and the Lenders;

(iii)      by the Agent, if any condition to the obligations of the Lenders set
forth in Section 14(e) or (g) shall have become incapable of fulfillment, other
than as a result of a breach by the Agent or the Lenders of any covenant or
agreement contained in this Agreement, and such condition is not waived by the
Agent and the Lenders;

(iv)      by Biovest, if any condition to the obligations of Biovest set forth
in Section 14(f) or (g) shall have become incapable of fulfillment, other than
as a result of a breach by Biovest of any covenant or agreement contained in
this Agreement, and such condition is not waived by Biovest;

(v)      by the Agent and the Lenders, if there shall be a material breach by
Biovest of any representation, warranty, covenant or agreement contained in this
Agreement which would result in a failure of a condition set forth in
Section 14(e) or (g) and which breach has not been cured by the earlier of
(i) ten (10) Business Days after the giving of written notice by the Agent to
Biovest of such breach and (ii) the Termination Date;

(vi)      by Biovest, if there shall be a material breach by the Agent or the
Lenders of any representation, warranty, covenant or agreement contained in this
Agreement which would result in a failure of a condition set forth in
Section 14(f) or (g) and which breach has not been cured by the earlier of
(i) ten (10) Business Days after the giving of written notice by Biovest to the
Agent of such breach and (ii) the Termination Date; or

(vii)      by Biovest or the Agent and the Lenders, if there shall be in effect
a Final Order of a Governmental Authority of competent jurisdiction restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement, it being agreed that the parties hereto shall
promptly appeal any adverse determination which is not non-appealable (and
pursue such appeal with reasonable diligence).

 

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(e)      Conditions Precedent to Obligations of the Lenders.  The obligation of
the Lenders to consummate the transactions contemplated by this Agreement is
subject to the fulfillment, on or prior to the Closing Date, of each of the
following conditions (any or all of which may be waived by the Lenders in whole
or in part to the extent permitted by applicable law):

(i)      the representations and warranties of Biovest contained in this
Agreement (x) that are not qualified by materiality or Material Adverse Effect
shall be true and correct in all respects on and as of the Closing, except to
the extent expressly made as of an earlier date, in which case as of such
earlier date, and except to the extent that the failure of such representations
and warranties to be true and correct would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect and (y) that are
qualified by materiality or Material Adverse Effect shall be true and correct in
all respects on and as of the Closing (disregarding any materiality or Material
Adverse Effect qualifier contained therein), except to the extent expressly made
as of an earlier date, in which case as of such earlier date, and except to the
extent that the failure of such representations and warranties to be true and
correct would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect;

(ii)      Biovest shall have performed and complied in all material respects
with all obligations and agreements required in this Agreement to be performed
or complied with by it prior to the Closing Date; and

(iii)      Biovest shall have delivered, or caused to be delivered, to the Agent
all of the items set forth in Section 14(b).

(f)      Conditions Precedent to Obligation of Biovest.  The obligations of
Biovest to consummate the transactions contemplated by this Agreement are
subject to the fulfillment, on or prior to the Closing Date, of each of the
following conditions (any or all of which may be waived by Biovest in whole or
in part to the extent permitted by applicable law):

(i)      the representations and warranties of the Lenders contained in this
Agreement (x) that are not qualified by materiality shall be true and correct in
all respects on and as of the Closing, except to the extent expressly made as of
an earlier date, in which case as of such earlier date, and except to the extent
that the failure of such representations and warranties to be true and correct
would not reasonably be expected to have, individually or in the aggregate, a
material adverse change and (y) that are qualified by materiality shall be true
and correct in all respects on and as of the Closing (disregarding any
materiality qualifier contained therein), except to the extent expressly made as
of an earlier date, in which case as of such earlier date, and except to the
extent that the failure of such representations and warranties to be true and
correct would not reasonably be expected to have, individually or in the
aggregate, a material adverse change;

(ii)      the Lenders shall have performed and complied in all material respects
with all obligations and agreements required by this Agreement to be performed
or complied with by the Lenders on or prior to the Closing Date; and

 

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(iii)      the Agent and the Lenders, as applicable, shall have delivered to
Biovest all of the items set forth in Section 14(c).

(g)      Conditions Precedent to Obligations of Biovest and the Lenders.  The
respective obligations of Biovest and the Lenders to consummate the transactions
herein are subject to the fulfillment, on or prior to the Closing Date, of each
of the following conditions (any or all of which may be waived by Biovest and
the Lenders in whole or in part to the extent permitted by applicable law):

(i)      there shall not be in effect any Final Order by a Governmental
Authority of competent jurisdiction restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated by this Agreement;

(ii)      the Confirmation Order shall have become a Final Order;

(iii)      the closing shall have occurred under the Accentia Security
Agreement; and

(iv)      the Effective Date under the Confirmed Plan shall have occurred.

(h)      Frustration of Closing Conditions.  No party may rely on the failure of
any condition set forth in Section 14(e), (f) or (g), as the case may be, if
such failure was caused by such party’s failure to comply with any provision of
this Agreement.

15.      Further Assurances.  At any time and from time to time, upon the
written request of the Agent and at the sole expense of Biovest, Biovest shall
promptly and duly execute and deliver any and all such further instruments and
documents and take such further action as the Agent may reasonably request
(a) to obtain the full benefits of this Agreement and the Ancillary Agreements,
(b) to protect, preserve, perfect and maintain the Agent’s rights in the
Collateral and under this Agreement or any Ancillary Agreement, and/or (c) to
enable the Agent to exercise all or any of the rights and powers granted herein
or in any Ancillary Agreement.

16.      Representations, Warranties and Covenants of Lenders.  Each Lender,
severally and not jointly, hereby represents, warrants and covenants to Biovest
as follows:

(a)      Requisite Power and Authority.  Such Lender has all necessary power and
authority under all applicable provisions of law to execute and deliver this
Agreement and the Ancillary Agreements and to carry out their provisions. All
corporate action on such Lender’s part required for the lawful execution and
delivery of this Agreement and the Ancillary Agreements has been or will be
effectively taken prior to the Closing Date. Upon their execution and delivery,
this Agreement and the Ancillary Agreements shall be valid and binding
obligations of such Lender, enforceable in accordance with their terms, except
(i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws of general application affecting enforcement of creditors’ rights,
and (ii) as limited by general principles of equity that restrict the
availability of equitable and legal remedies.

(b)      Investment Representations.  Such Lender understands that the BVTI Term
Notes, the Closing Shares and the Conversion Shares are being offered and sold
pursuant

 

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to an exemption from registration contained in Section 1145(a) of the Bankruptcy
Code and the Securities Act based in part upon such Lender’s representations
contained in this Agreement, including, without limitation, that such Lender is
an “accredited investor” within the meaning of Regulation D under the Securities
Act. Such Lender has received or has had full access to all the information it
considers necessary or appropriate to make an informed investment decision with
respect to the Closing Shares and the BVTI Term Notes to be issued to it under
this Agreement.

(c)      Lender Bears Economic Risk.  Such Lender has substantial experience in
evaluating and investing in private placement transactions of securities in
companies similar to Biovest so that it is capable of evaluating the merits and
risks of its investment in Biovest and has the capacity to protect its own
interests. Such Lender must bear the economic risk of this investment until the
BVTI Term Notes and the Closing Shares are sold pursuant to (i) an effective
registration statement under the Securities Act, or (ii) an exemption from
registration is available, and subject to the terms of the Closing Shares
Lock-Up Agreement.

(d)      Investment for Own Account.  The BVTI Term Notes and the Closing Shares
are being issued to such Lender for its own account for investment only, and not
as a nominee or agent and not with a view towards or for resale in connection
with their distribution.

(e)      Lender Can Protect Its Interest.  Such Lender represents that by reason
of its, or of its management’s, business and financial experience, such Lender
has the capacity to evaluate the merits and risks of its investment in the BVTI
Term Notes and the Closing Shares and to protect its own interests in connection
with the transactions contemplated in this Agreement and the Ancillary
Agreements. Further, such Lender is aware of no publication of any advertisement
in connection with the transactions contemplated in this Agreement or the
Ancillary Agreements.

(f)      Accredited Investor.  Such Lender represents that it is an accredited
investor within the meaning of Regulation D under the Securities Act.

(g)      Patriot Act.  Such Lender certifies that, to the best of such Lender’s
knowledge, such Lender has not been designated, and is not owned or controlled,
by a “suspected terrorist” as defined in Executive Order 13224. Such Lender
seeks to comply with all applicable laws concerning money laundering and related
activities. In furtherance of those efforts, such Lender hereby represents,
warrants and covenants that: (i) none of the cash or property that such Lender
will use to make the BVTI Term Loans has been or shall be derived from, or
related to, any activity that is deemed criminal under United States law; and
(ii) no disbursement by such Lender to Biovest, to the extent within such
Lender’s control, shall cause such Lender to be in violation of the United
States Bank Secrecy Act, the United States International Money Laundering
Control Act of 1986 or the United States International Money Laundering
Abatement and Anti-Terrorist Financing Act of 2001. Such Lender shall promptly
notify Biovest if any of these representations ceases to be true and accurate
regarding such Lender. Such Lender agrees to provide Biovest any additional
information regarding such Lender that Biovest deems necessary or convenient to
ensure compliance with all applicable law concerning money laundering and
similar activities. Such Lender understands and agrees that if at any time it is
discovered that any of the foregoing representations are incorrect, or if
otherwise required by applicable law or regulation related to money laundering
or similar activities, such

 

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Lender may undertake appropriate actions to ensure compliance with applicable
law or regulation, including but not limited to segregation and/or redemption of
such Lender’s investment in Biovest. Such Lender further understands that
Biovest may release information about such Lender and, if applicable, any
underlying beneficial owners, to proper authorities if Biovest, in its sole
discretion, determines that it is in the best interests of Biovest in light of
relevant rules and regulations under the laws set forth in subsection
(ii) above.

(h)      Limitation on Acquisition of Stock.  Notwithstanding anything to the
contrary contained in this Agreement, any Ancillary Agreement, or any document,
instrument or agreement entered into in connection with any other transaction
entered into by and between such Lender and Biovest (and/or Affiliates of
Biovest), such Lender (and/or Subsidiaries or Affiliates of such Lender) shall
not acquire stock in Biovest (including, without limitation, pursuant to a
contract to purchase, by exercising an option or warrant, by converting any
other security or instrument, by acquiring or exercising any other right to
acquire shares of stock or other security convertible into shares of stock in
Biovest, or otherwise, and such options, warrants, conversion or other rights
shall not be exercisable) to the extent such stock acquisition would cause any
interest (including any original issue discount) payable by Biovest to a
Non-U.S. Lender not to qualify as portfolio interest, within the meaning of
Section 871(h)(2) or Section 881(c)(2) of the U.S. Internal Revenue Code of
1986, as amended (the “Code”) by reason of Section 87l(h)(3) or
Section 88l(c)(3)(B) of the Code, as applicable, taking into account the
constructive ownership rules under Section 871(h)(3)(C) of the Code (the “Stock
Acquisition Limitation”).

(i)      No Net Short Position.  From and after the date of this Agreement, such
Lender agrees that it shall not, either individually or collectively, maintain a
Net Short Position. “Net Short Position” shall mean that the aggregate number of
shares of Biovest Common Stock held in a short position by such Lender exceeds
the number of shares of Biovest Common Stock then owned by such Lender.

(j)      Ancillary Agreements and Other Closing Documents.  The Agent and the
Lenders acknowledge and agree that, as a condition to the Closing, the closing
under the Accentia Security Agreement shall have occurred and the Agent and the
Lenders, as the case may be, shall have executed and delivered each of the
Ancillary Agreements and other documents listed in Section 14(c).

17.      Confidentiality.  Except in connection with the Bankruptcy Cases, each
Lender covenants and agrees with Biovest that such Lender will not disclose, and
will not include in any public announcement, Biovest’s name, unless expressly
agreed to by Biovest or unless and until such disclosure is required by law or
applicable regulation, and then only to the extent of such requirement.
Notwithstanding the foregoing, (i) such Lender shall be permitted to discuss,
distribute or otherwise transfer any non-public information of Biovest in such
Lender’s possession now or in the future to (x) its employees, agents, counsel,
professional consultants and accountants who, in each such case, have a specific
need to know such information, and (y) potential or actual (A) direct or
indirect investors in such Lender and (B) assignees or transferees of all or a
portion of the Obligations, to the extent that such investor or assignee or
transferee enters into a confidentiality agreement for such benefit of Biovest
in such form as may be necessary to address Biovest’s Regulation FD
requirements; (ii) such Lender (and each

 

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employee, representative, or other agent of such Lender) may disclose to any and
all Persons, without limitation of any kind, the tax treatment and any facts
that may be relevant to the tax structure of the transactions contemplated by
this Agreement and the Ancillary Agreements and the agreements referred to
therein; provided, however, that no Lender (and no employee, representative or
other agent thereof) shall disclose pursuant to this clause (ii) any other
information that is not relevant to understanding the tax treatment or tax
structure of such transactions (including the identity of any party or any
information that could lead another to determine the identity of any party); and
(iii) the Agent or any Affiliate thereof shall be entitled to post on its
website a summary of the transactions contemplated by this Agreement, including
Biovest’s name.

18.      Power of Attorney.  Biovest hereby appoints the Agent, or any other
Person whom the Agent may designate as Biovest’s attorney, with power to: (a)(i)
execute any security related documentation on Biovest’s behalf and to supply any
omitted information and correct patent errors in any documents executed by
Biovest or on Biovest’s behalf; (ii) file financing statements and other
evidence of Liens granted hereunder against Biovest covering the Collateral
(and, in connection with the filing of any such financing statements, describe
the Collateral as “all assets and all personal property, whether now owned
and/or hereafter acquired” (or any substantially similar variation thereof));
(iii) sign Biovest’s name on any invoice or bill of lading relating to any
Accounts, drafts against Account Debtors, schedules and assignments of Accounts,
notices of assignment, financing statements and other evidence of the Agent’s
Liens granted hereunder and other public records, verifications of Account and
notices to or from Account Debtors; (iv) in the case of any Intellectual
Property, execute and deliver, and have recorded, any and all agreements,
instruments, documents and papers as the Agent may request to evidence the
Agent’s security interest in such Intellectual Property and the goodwill and
general intangibles of Biovest relating thereto or represented thereby; and
(v) do all other things the Agent deems necessary to carry out the terms of
Section 6 of this Agreement; and (b) upon the occurrence and during the
continuance of an Event of Default (i) endorse Biovest’s name on any checks,
notes, acceptances, money orders, drafts or other forms of payment or security
that may come into the Agent’s possession; (ii) verify the validity, amount or
any other matter relating to any Account by mail, telephone, telegraph or
otherwise with Account Debtors; (iii) do all other things necessary to carry out
this Agreement, any Ancillary Agreement and all related documents; and
(iv) notify the post office authorities to change the address for delivery of
Biovest’s mail to an address designated by the Agent, and to receive, open and
dispose of all mail addressed to Biovest. Biovest hereby ratifies and approves
all acts of the attorney. Neither the Agent nor the attorney will be liable for
any acts or omissions or for any error of judgment or mistake of fact or law,
except for gross negligence or willful misconduct. This power, being coupled
with an interest, is irrevocable so long as the Agent has a security interest
and until the Obligations have been fully satisfied.

19.      Termination of Lien.  The Liens and rights granted to the Agent
hereunder and in any Ancillary Agreements, and the financing statements filed in
connection herewith or therewith, shall continue in full force and effect until
all of the Obligations have been indefeasibly paid or performed in full. The
Agent shall not be required to send termination statements or other evidence of
the release of the Liens granted hereunder to Biovest, or to file them with any
filing office, unless and until this Agreement and the Ancillary Agreements
shall

 

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have been terminated in accordance with their terms and all Obligations
indefeasibly paid in full in immediately available funds.

20.      Events of Default.  The occurrence of any of the following shall
constitute an “Event of Default”:

(a)      failure to make payment of any principal, interest, fees, costs,
charges, expenses, or other sums payable from time to time hereunder, under the
BVTI Term Notes, under Section 5(b) of this Agreement, if any, or under any of
the Ancillary Agreements when required hereunder or thereunder, and, in any such
case, such failure shall continue for (i) in the case of a payment of scheduled
principal or interest, a period of five (5) Business Days following the date
upon which any such payment was due, (ii) in the case of payments due under
Section 5(b), if any, that are not paid when due on eight (8) occasions, or
(iii) in the case of any other amount payable, a period of five (5) Business
Days following the date of Biovest’s written receipt from the Agent of a written
notice identifying the amount due and providing reasonable supporting details;

(b)      Biovest shall (i) apply for, consent to or suffer to exist the
appointment of or the taking of possession by, a receiver, custodian, trustee or
liquidator of itself or of all or a substantial part of its property, (ii) make
a general assignment for the benefit of creditors, (iii) commence a voluntary
case under the federal bankruptcy laws (as now or hereafter in effect), (iv) be
adjudicated bankrupt or insolvent, (v) file a petition seeking to take advantage
of any other law providing for the relief of debtors, (vi) acquiesce to without
challenge within ten (10) days of the filing thereof, or fail to have dismissed
within forty-five (45) days, any petition filed against it in any involuntary
case under such bankruptcy laws, or (vii) take any action for the purpose of
effecting any of the foregoing;

(c)      Biovest shall cease operation of its present business; or

(d)      Biovest directly or indirectly sells, assigns, transfers, conveys, or
suffers or permits to occur any sale, assignment, transfer or conveyance of all
or substantially all of its assets, except as permitted herein.

21.      Remedies.  Following the occurrence of an Event of Default that is
continuing, the Agent shall have the right to demand repayment in full of all
Obligations, whether or not otherwise due. Until all Obligations have been fully
and indefeasibly satisfied, the Agent shall retain its Lien in all Collateral.
The Agent shall have, in addition to all other rights provided herein and in
each Ancillary Agreement, the rights and remedies of a secured party under the
UCC, and under other applicable law, all other legal and equitable rights to
which the Agent may be entitled, including the right to take immediate
possession of the Collateral, to require Biovest to assemble the Collateral, at
Biovest’s expense, and to make it available to the Agent at a place designated
by the Agent which is reasonably convenient to both parties and to enter any of
the premises of Biovest or wherever the Collateral shall be located, with or
without force or process of law, and to keep and store the same on said premises
until sold (and if said premises be the property of Biovest, Biovest agrees not
to charge the Agent or any Lender for storage thereof), and the right to apply
for the appointment of a receiver for Biovest’s property. Further, the Agent
may, at any time or times after the occurrence of an Event of Default that is
continuing,

 

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sell and deliver all Collateral held by or for the Agent at public or private
sale for cash, upon credit or otherwise, at such prices and upon such terms as
the Agent, in its sole discretion, deems advisable or the Agent may otherwise
recover upon the Collateral in any commercially reasonable manner. The
requirement of reasonable notice shall be met if such notice is mailed postage
prepaid to Biovest at Biovest’s address as shown in Section 30, at least ten
(10) days before the time of the event of which notice is being given. The Agent
may be the purchaser at any sale, if it is public. In connection with the
exercise of the foregoing remedies, and not without limitations of any remedies
with respect to Intellectual Property Collateral, the Agent may exercise the
rights and license granted under Section 6(c) hereof. The proceeds of sale shall
be applied first to all costs and expenses of sale, including reasonable
attorneys’ fees, and second to the payment (in whatever order the Agent elects)
of all Obligations. After the indefeasible payment and satisfaction in full of
all of the Obligations, and after the payment by the Agent of any other amount
required by any provision of law, including Section 9-608(a)(1) of the UCC (but
only after the Agent has received what the Agent considers reasonable proof of a
subordinate party’s security interest), the surplus, if any, shall be paid to
Biovest or its representatives or to whosoever may be lawfully entitled to
receive the same, or as a court of competent jurisdiction may direct. Biovest
shall remain liable to the Creditor Parties for any deficiency. The parties
hereto each hereby agree that the exercise by any party hereto of any right
granted to it or the exercise by any party hereto of any remedy available to it
(including, without limitation, the issuance of a notice of redemption, a
borrowing request and/or a notice of default), in each case, hereunder or under
any Ancillary Agreement shall not constitute confidential information and no
party shall have any duty to the other party to maintain such information as
confidential, except for the portions of such publicly filed documents that are
subject to a confidential treatment request made by Biovest to the SEC.

22.      Waivers.  To the full extent permitted by applicable law, Biovest
hereby waives (a) presentment, demand and protest, and notice of presentment,
dishonor, intent to accelerate, acceleration, protest, default, nonpayment,
maturity, release, compromise, settlement, extension or renewal of any or all of
this Agreement and the Ancillary Agreements or any other notes, commercial
paper, Accounts, contracts, Documents, Instruments, Chattel Paper and guaranties
at any time held by the Agent on which Biovest may in any way be liable, and
hereby ratifies and confirms whatever the Agent may do in this regard; (b) all
rights to notice and a hearing prior to the Agent’s taking possession or control
of, or to the Agent’s replevy, attachment or levy upon, any Collateral or any
bond or security that might be required by any court prior to allowing the Agent
to exercise any of its remedies; and (c) the benefit of all valuation, appraisal
and exemption laws. Biovest acknowledges that it has been advised by counsel of
its choices and decisions with respect to this Agreement, the Ancillary
Agreements and the transactions evidenced hereby and thereby.

23.      Expenses.  Biovest shall pay all of the Agent’s out-of-pocket costs and
expenses, including reasonable fees and disbursements of outside counsel and
appraisers, in connection with the prosecution or defense of any action,
contest, dispute, suit or proceeding concerning any matter in any way arising
out of, related to or connected with this Agreement or any Ancillary Agreement.
Biovest shall also pay all of the Agent’s reasonable fees, charges,
out-of-pocket costs and expenses, including fees and disbursements of counsel
and appraisers, in connection with (a) the preparation, execution and delivery
of any waiver, any amendment thereto or consent proposed or executed in
connection with the transactions contemplated by this

 

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Agreement or the Ancillary Agreements, (b) the Agent’s obtaining performance of
the Obligations under this Agreement and any Ancillary Agreements, including,
but not limited to, the enforcement or defense of the Agent’s security
interests, assignments of rights and Liens hereunder as valid perfected security
interests, (c) any attempt to inspect, verify, protect, collect, sell, liquidate
or otherwise dispose of any Collateral, (d) any appraisals or re-appraisals of
any property (real or personal) pledged to the Agent by Biovest as Collateral
for, or any other Person as security for, the Obligations hereunder, and (e) any
consultations in connection with any of the foregoing. Biovest shall also pay
each Creditor Party the customary bank charges for any bank services (including
wire transfers) performed or caused to be performed by it at its request or in
connection with Biovest’s loan account with such Creditor Party. All such costs
and expenses together with all filing, recording and search fees, taxes and
interest payable by Biovest to the Creditor Parties shall be payable on demand
and shall be secured by the Collateral. If any tax by any Governmental Authority
is or may be imposed on or as a result of any transaction between Biovest, on
the one hand, and Creditor Party on the other hand, which such Creditor Party is
or may be required to withhold or pay, Biovest hereby indemnifies and holds such
Creditor Party harmless in respect of such taxes, and Biovest will repay to such
Creditor Party the amount of any such taxes which shall be charged to Biovest’s
account; and until Biovest shall furnish such Creditor Party with indemnity
therefor (or supply such Creditor Party with evidence satisfactory to it that
due provision for the payment thereof has been made), such Creditor Party may
hold without interest any balance standing to Biovest’s credit and the Agent
shall retain its Liens in any and all Collateral.

24.      Assignment; Register.

(a)      Each Lender may assign any or all of the Obligations to any Person and,
subject to acceptance and recordation thereof by the Agent pursuant to
Section 24(b) and receipt by the Agent of a copy of the agreement or instrument
pursuant to which such assignment is made (each such agreement or instrument, an
“Assignment Agreement”), any such assignee shall succeed to all of such Lender’s
rights with respect thereto; provided that no Lender shall be permitted to
effect any such assignment to a direct competitor of Biovest unless an Event of
Default has occurred and is continuing and such Lender has given Biovest no less
than fifteen (15) Business Days prior notice of such assignment. Each Lender may
from time to time sell or otherwise grant participations in any of the
Obligations and the holder of any such participation shall, subject to the terms
of any agreement between such Lender and such holder, be entitled to the same
benefits as such Lender with respect to any security for the Obligations in
which such holder is a participant. Biovest agrees that each such holder may
exercise any and all rights of banker’s lien, set-off and counterclaim with
respect to its participation in the Obligations as fully as though Biovest were
directly indebted to such holder in the amount of such participation. Biovest
may not assign any of its rights or obligations hereunder without the prior
written consent of the Agent. All of the terms, conditions, promises, covenants,
provisions and warranties of this Agreement shall inure to the benefit of each
of the undersigned, and shall bind the representatives, successors and permitted
assigns of Biovest and the Creditor Parties.

(b)      The Agent shall maintain, or cause to be maintained, for this purpose
only as agent for each Lender, (i) a copy of each Assignment Agreement delivered
to it and (ii) a book entry system, within the meaning of U.S. Treasury
Regulation Sections 5f.103-1(c) and 1.871-14(c) (the “Register”), in which it
will register the name and address of each Lender and the

 

28

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name and address of each assignee of each Lender under this Agreement, and the
principal amount of, and stated interest on, the BVTI Term Loans owing to each
such Lender and assignee pursuant to the terms hereof and each Assignment
Agreement. The right, title and interest of the Lenders and their assignees in
and to such BVTI Term Loans shall be transferable only upon notation of such
transfer in the Register, and no assignment thereof shall be effective until
recorded therein. Biovest and each Creditor Party shall treat each Person whose
name is recorded in the Register as a Lender pursuant to the terms hereof as a
Lender and owner of an interest in the Obligations hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary or any notation of
ownership or other writing or any BVTI Term Note. The Register shall be
available for inspection by Biovest or Lender, at any reasonable time and from
time to time, upon reasonable prior notice.

25.      No Waiver; Cumulative Remedies.  Failure by any Creditor Party to
exercise any right, remedy or option under this Agreement, any Ancillary
Agreement or any supplement hereto or thereto or any other agreement between or
among Biovest and such Creditor Party, will not operate as a waiver; no waiver
by any Creditor Party will be effective unless it is in writing and then only to
the extent specifically stated. The Creditor Parties’ rights and remedies under
this Agreement and the Ancillary Agreements will be cumulative and not exclusive
of any other right or remedy which any of the Creditor Parties may have.

26.      Application of Payments.  Except as otherwise provided in this
Agreement or in any Ancillary Agreement, Biovest irrevocably waives the right to
direct the application of any and all payments at any time or times hereafter
received by the Agent from or on Biovest’s behalf and Biovest hereby irrevocably
agrees that the Agent shall have the continuing exclusive right to apply and
reapply any and all payments received at any time or times hereafter against the
Obligations hereunder in such manner as the Agent may reasonably deem advisable
notwithstanding any entry by the Agent upon any of the Agent’s books and
records.

27.      Indemnity.  Biovest hereby indemnifies and holds each Creditor Party,
and its respective affiliates, employees, attorneys and agents (each, an
“Indemnified Person”), harmless from and against any and all suits, actions,
proceedings, claims, damages, losses, liabilities and expenses of any kind or
nature whatsoever (including reasonable attorneys’ fees and disbursements and
other costs of investigation or defense, including those incurred upon any
appeal) which may be instituted or asserted against or incurred by any such
Indemnified Person as the result of credit having been extended, suspended or
terminated under this Agreement or any of the Ancillary Agreements or with
respect to the execution, delivery, enforcement, performance and administration
of, or in any other way arising out of or relating to, this Agreement, the
Ancillary Agreements or any other documents or transactions contemplated by or
referred to herein or therein and any actions or failures to act with respect to
any of the foregoing, except to the extent that any such indemnified liability
is finally determined by a court of competent jurisdiction to have resulted
primarily from such Indemnified Person’s gross negligence, bad faith or willful
misconduct. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO BIOVEST OR
TO ANY OTHER PARTY OR TO ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OR
ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT,
PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF
CREDIT HAVING BEEN EXTENDED, SUSPENDED OR

 

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TERMINATED UNDER THIS AGREEMENT OR ANY ANCILLARY AGREEMENT OR AS A RESULT OF ANY
OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.

28.      Revival.  Biovest further agrees that to the extent it makes a payment
or payments to any Creditor Party, which payment or payments or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy act, state or federal law, common law or equitable cause,
then, to the extent of such payment or repayment, the obligation or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if said payment had not been made.

29.      Borrowing Agency Provisions.

(a)      Biovest shall make payment upon the maturity of the Obligations by
acceleration or otherwise, and such obligation and liability shall in no way be
affected by any extensions, renewals and forbearance granted by the Agent to
Biovest, failure of the Agent to give Biovest notice of borrowing or any other
notice, any failure of the Agent to pursue to preserve its rights against
Biovest, the release by the Agent of any Collateral now or thereafter acquired
from Biovest, and such agreement by Biovest to pay upon any notice issued
pursuant thereto is unconditional and unaffected by prior recourse by the Agent
to Biovest or any Collateral for Biovest’s Obligations or the lack thereof.

(b)      Biovest expressly waives any and all rights of subrogation,
reimbursement, indemnity, exoneration, contribution or any other claim which
Biovest may now or hereafter have against any other Person directly or
contingently liable for the Obligations, or against or with respect to any
other’s property (including, without limitation, any property which is
Collateral for the Obligations), arising from the existence or performance of
this Agreement, until all Obligations have been indefeasibly paid in full and
this Agreement has been irrevocably terminated.

30.      Notices.  Any notice or request hereunder may be given to Biovest or
the Agent and the Lenders at the respective addresses set forth below or as may
hereafter be specified in a notice designated as a change of address under this
Section. Any notice or request hereunder shall be given by registered or
certified mail, return receipt requested, hand delivery, overnight mail or
facsimile transmission (confirmed by mail). Notices and requests shall be, in
the case of those by hand delivery, deemed to have been given when delivered to
any officer of the party to whom it is addressed, in the case of those by
registered or certified mail or overnight mail, deemed to have been given three
(3) Business Days after the date when deposited in the mail or with the
overnight mail carrier, and, in the case of a facsimile transmission, when
confirmed.

Notices shall be provided as follows:

 

30

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  If to the Agent or the Lenders:     LV Administrative Services, Inc.     875
Third Avenue, 3rd Floor     New York, New York 10022     Attention: Portfolio
Services     Telephone:  (212) 541-5800     Facsimile:    (212) 581-5037   With
a copy to:   Cole, Schotz, Meisel, Forman & Leonard, P.A.     25 Main Street,
Court Plaza North     Hackensack, New Jersey 07601     Attention: Stuart
Komrower, Esq. & Marc P. Press, Esq.     Telephone:  (201) 525-6331    
Facsimile:    (201) 678-6331   If to Biovest:   Biovest International, Inc.    
324 South Hyde Park Avenue, Suite 350     Tampa, Florida 33606     Attention:
David Moser, Secretary     Telephone:  (813) 864-2554     Facsimile:    (813)
258-6912   With a copy to:   Stichter, Riedel, Blain & Prosser, P.A.     110
East Madison Street, Suite 200     Tampa, Florida 33602     Attention: Charles
A. Postler, Esq.     Telephone:  (813) 229-0144     Facsimile:    (813) 229-1811
                and     Foley & Lardner LLP     100 North Tampa Street, Suite
2700     Tampa, Florida 33602     Attention: Curt P. Creely, Esq.    
Telephone:  (813) 229-2300     Facsimile:    (813) 221-4210

or such other address as may be designated in writing hereafter in accordance
with this Section 30 by such Person.

31.      Governing Law, Jurisdiction and Waiver of Jury Trial.

 (a)      THIS AGREEMENT AND THE ANCILLARY AGREEMENTS SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.

 

31

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(b)      BIOVEST HEREBY CONSENTS AND AGREES THAT THE STATE AND/OR FEDERAL COURTS
LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BIOVEST, ON
THE ONE HAND, AND ANY CREDITOR PARTY, ON THE OTHER HAND, PERTAINING TO THIS
AGREEMENT OR ANY OF THE ANCILLARY AGREEMENTS OR TO ANY MATTER ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR ANY OF THE ANCILLARY AGREEMENTS; PROVIDED, THAT
EACH CREDITOR PARTY AND BIOVEST ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS
MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE
OF NEW YORK; AND FURTHER PROVIDED, THAT NOTHING IN THIS AGREEMENT SHALL BE
DEEMED OR OPERATE TO PRECLUDE ANY CREDITOR PARTY FROM BRINGING SUIT OR TAKING
OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO
REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF ANY CREDITOR PARTY. BIOVEST
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
SUIT COMMENCED IN ANY SUCH COURT, AND BIOVEST HEREBY WAIVES ANY OBJECTION THAT
IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
NON CONVENIENS. BIOVEST HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT
AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF
SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED TO BIOVEST AT THE ADDRESS SET FORTH IN SECTION 30 AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF BIOVEST’S ACTUAL
RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE PREPAID.

(c)      THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING
SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS
OF THE JUDICIAL SYSTEM AND/OR OF ARBITRATION, THE PARTIES HERETO WAIVE ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE
ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN ANY
CREDITOR PARTY AND/OR BIOVEST ARISING OUT OF, CONNECTED WITH, RELATED OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS
AGREEMENT, ANY ANCILLARY AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR
THERETO.

32.      Limitation of Liability.  Biovest acknowledges and understands that in
order to assure repayment of the Obligations hereunder the Creditor Parties may
be required to exercise any and all of the Creditor Parties’ rights and remedies
hereunder and agrees that, except as limited by applicable law, neither the
Creditor Parties nor any of their respective agents shall be liable for acts
taken or omissions made in connection herewith or therewith except to the extent
such acts or omissions result from or constitute bad faith, gross negligence or
willful misconduct of the Creditor Parties or any of the Creditor Parties’
agents.

 

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33.      Entire Understanding; Maximum Interest.  This Agreement and the
Ancillary Agreements (together with any provisions of the Confirmed Plan
relevant to the subject matter hereof) contain the entire understanding among
Biovest, the Lenders and the Agent as to the subject matter hereof and thereof
and any promises, representations, warranties or guarantees not herein contained
shall have no force and effect unless in writing, signed by Biovest and the
Agent. Neither this Agreement, the Ancillary Agreements, nor any portion or
provisions thereof may be changed, modified, amended, waived, supplemented,
discharged, cancelled or terminated orally or by any course of dealing, or in
any manner other than by an agreement in writing, signed by the party to be
charged. Nothing contained in this Agreement, any Ancillary Agreement or in any
document referred to herein or delivered in connection herewith shall be deemed
to establish or require the payment of a rate of interest or other charges in
excess of the Maximum Legal Rate. In the event that the rate of interest or
dividends required to be paid or other charges hereunder exceed the Maximum
Legal Rate, any payments in excess of such Maximum Legal Rate shall be credited
against amounts owed by Biovest to the Creditor Parties and thus refunded to
Biovest.

34.      Severability.  Wherever possible, each provision of this Agreement or
the Ancillary Agreements shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Agreement or the
Ancillary Agreements shall be prohibited by or invalid under applicable law such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
thereof.

35.      Survival.  The representations, warranties, covenants and agreements
made herein shall survive any investigation made by any Creditor Party and the
Closing of the transactions contemplated hereby; provided, however, the
representations and warranties that relate solely to a specific date by their
express terms shall only be deemed to have been made as of such date and are
hereby represented and warranted to have been true and correct when made. All
statements as to factual matters contained in any certificate or other
instrument delivered by or on behalf of Biovest pursuant hereto in connection
with the transactions contemplated hereby shall be deemed to be representations
and warranties by Biovest hereunder solely as of the date of such certificate or
instrument. All indemnities set forth herein shall survive the execution,
delivery and termination of this Agreement and the Ancillary Agreements and the
making and repaying of the Obligations.

36.      Captions.  All captions are and shall be without substantive meaning or
content of any kind whatsoever.

37.      Counterparts; Signatures.  This Agreement may be executed in one or
more counterparts, each of which shall constitute an original and all of which
taken together shall constitute one and the same agreement. Any signature
delivered by a party via facsimile or electronic transmission shall be deemed to
be an original signature hereto.

38.      Construction.  The parties acknowledge that each party and its counsel
have reviewed this Agreement and that the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.

 

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39.      Publicity.  Biovest hereby authorizes each Creditor Party to make
appropriate announcements of the financial arrangement entered into by and among
Biovest and each Creditor Party, including, without limitation, announcements
which are commonly known as tombstones, in such publications and to such
selected parties as the Agent shall in its sole and absolute discretion deem
appropriate, or as required by applicable law.

40.      Joinder.  It is understood and agreed that any Person that desires to
become a party hereunder, or is required to execute a counterpart of this
Agreement after the date hereof pursuant to the requirements of this Agreement
or any Ancillary Agreement, shall become a party hereunder by (a) executing a
Joinder Agreement in form and substance satisfactory to the Agent,
(b) delivering supplements to such exhibits and annexes to this Agreement and
the Ancillary Agreements as the Agent shall reasonably request and (c) taking
all actions as specified in this Agreement as would have been taken by such
party had it been an original party to this Agreement, in each case with all
documents required above to be delivered to the Agent and with all documents and
actions required above to be taken to the reasonable satisfaction of the Agent.

41.      Legends.  The BVTI Term Notes and the Closing Shares shall bear legends
as follows:

(a)      The BVTI Term Notes shall bear substantially the following legend:

“THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAWS. THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION
OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE OR SUCH
COMMON STOCK UNDER SUCH SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR
(B) AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS. THIS NOTE IS ISSUED IN
REGISTERED FORM. UNLESS THIS NOTE IS PRESENTED BY THE HOLDER (AS DEFINED BELOW)
FOR REGISTRATION OF TRANSFER, EXCHANGE, CONVERSION OR PAYMENT, ANY TRANSFER,
EXCHANGE OR OTHER USE SHALL BE VOID AND PAYMENT SHALL NOT BE MADE. TRANSFER OF
ALL OR ANY PORTION OF THIS NOTE IS PERMITTED SUBJECT TO THE PROVISIONS SET FORTH
IN THE SECURITY AGREEMENT (AS DEFINED BELOW).”

(b)      The Closing Shares shall bear a legend which shall be in substantially
the following form until the Closing Shares are covered by an effective
registration statement filed with the SEC:

 

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“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS.
THESE SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS OR (B) AN EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS.”

42.      Agency.  Each Lender has, pursuant to an Administrative and Collateral
Agency Agreement, hereby designated and appointed the Agent as the
administrative and collateral agent of such Lender under this Agreement and the
Ancillary Agreements.

[remainder of page intentionally left blank]

 

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

 

BIOVEST INTERNATIONAL, INC.

By:  

    /s/ David Moser

Name:   David Moser

Title:   Secretary LV ADMINISTRATIVE SERVICES, INC.

By:  

/s/ Patrick Regan

Name:   Patrick Regan

Title:   Authorized Signatory

PSOURCE STRUCTURED DEBT

LIMITED By: PSource Capital Ltd, Its

Investment Consultant

By:  

    /s/ Charles Lews

Name:   Charles Lews

Title:   Authorized Signatory VALENS U.S. SPV I, LLC

By:  

Valens Capital Management, LLC,

its investment manager

By:  

/s/ Patrick Regan

Name:   Patrick Regan

Title:   Authorized Signatory VALENS OFFSHORE SPV I, LTD.

By:  

Valens Capital Management, LLC,

its investment manager

By:  

/s/ Patrick Regan

Name:   Patrick Regan

Title:   Authorized Signatory VALENS OFFSHORE SPV II, CORP.

By:  

Valens Capital Management, LLC,

its investment manager

By:  

/s/ Patrick Regan

Name:   Patrick Regan

Title:   Authorized Signatory

 

36

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LAURUS MASTER FUND LTD. (In Liquidation)

By:  

    /s/ Russell Smith

Name:   Russell Smith

Title:  

Joint Official Liquidator (with no

personal liability)

ERATO CORP. By:  

By:  

/s/ Patrick Regan

Name:   Patrick Regan

Title:   Authorized Signatory

 

37

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Annex A - Definitions

“Accentia” means Accentia Biopharmaceuticals, Inc., a Florida corporation, and
its successors and assigns.

“Accentia Companies” means Accentia and its subsidiaries, other than Biovest,
Biovax, Inc., AutovaxID, Inc., Biolender, LLC and Biolender II, LLC.

“Accentia Limited Guaranty” means the Limited Guaranty, dated the Closing Date,
from Accentia in favor of the Agent, as it may be amended, modified or
supplemented.

“Accentia Pledge Agreement” means the Stock Pledge Agreement, dated the Closing
Date, by and between Accentia and the Agent with respect to the pledge in favor
of the Agent of certain of the shares of Biovest Common Stock held by Accentia,
as it may be amended, modified or supplemented.

“Accentia Royalty Termination Agreement” means the Royalty Termination
Agreement, dated the Closing Date, by and between Biovest and Accentia, and
acknowledged by certain of the Prepetition Lenders and the Agent, providing for
the termination of any and all rights granted to Accentia, prior to the Petition
Date, to receive royalties from the Biovest Biologic Products.

“Accentia Security Agreement” means the Term Loan and Security Agreement, dated
the Closing Date, by and among the Agent, the lenders party thereto and
Accentia, as it may be amended, modified or supplemented.

“Accentia Subordination Agreement” means the Subordination Agreement, dated the
Closing Date, by and between the Agent and Accentia, as it may be amended,
modified or supplemented.

“Accentia Term Notes” means the Secured Term Notes of Accentia, dated the
Closing Date, in an aggregate principal amount of $8,800,000 issued to the
lenders party to the Accentia Security Agreement.

“Account Debtor” means any Person who is or may be obligated with respect to, or
on account of, an Account.

“Accountants” has the meaning given to such term in Section 11(a).

“Accounts” means all “accounts,” as such term is defined in the UCC, now owned
or hereafter acquired by any Person, including: (a) all accounts receivable,
other receivables, book debts and other forms of obligations (other than forms
of obligations evidenced by Chattel Paper or Instruments) (including any such
obligations that may be characterized as an account or contract right under the
UCC); (b) all of such Person’s rights in, to and under all purchase orders or
receipts for goods or services; (c) all of such Person’s rights to any Goods
represented by any of the foregoing (including unpaid sellers’ rights of
rescission, replevin, reclamation and stoppage in transit and rights to
returned, reclaimed or repossessed goods); (d) all rights to payment due to such
Person for Goods or other property sold, leased, licensed, assigned or otherwise
disposed of, for a policy of insurance issued or to be issued, for a secondary
obligation

 

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incurred or to be incurred, for energy provided or to be provided, for the use
or hire of a vessel under a charter or other contract, arising out of the use of
a credit card or charge card, or for services rendered or to be rendered by such
Person or in connection with any other transaction (whether or not yet earned by
performance on the part of such Person); and (e) all collateral security of any
kind given by any Account Debtor or any other Person with respect to any of the
foregoing.

“Administrative and Collateral Agency Agreement” means the Administrative and
Collateral Agency Agreement among the Agent, the Lenders and such other parties
thereto from time to time, as amended, modified, supplemented and restated from
time to time.

“Affiliate” means, with respect to any Person, (a) any other Person (other than
a Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with such Person, (b) any other Person that, directly
or indirectly, owns or controls, whether beneficially, or as trustee, guardian
or other fiduciary, twenty-five percent (25.0%) or more of the Equity Interests
having ordinary voting power in the election of directors of such Person,
(c) any other Person who is a director, officer, joint venturer or partner
(i) of such Person, (ii) of any Subsidiary of such Person or (iii) of any Person
described in clause (a) above or (d) in the case of Biovest, the immediate
family members, spouses and lineal descendants of individuals who are Affiliates
of Biovest. For the purposes of this definition, control of a Person shall mean
the power (direct or indirect) to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise;
provided however, that the term “Affiliate” shall specifically exclude any
Creditor Party.

“Agent” has the meaning given such term in the preamble.

“Agreement” has the meaning given such term in the preamble.

“Analytica” means Analytica International, Inc., a Florida corporation, and its
successors and assigns.

“Analytica Guaranty” means the Guaranty, dated the Closing Date, from Analytica
in favor of the Agent, as it may be amended, modified or supplemented.

“Analytica Security Agreement” means the Security Agreement, dated the Closing
Date, from Analytica in favor of the Agent, as it may be amended, modified or
supplemented.

“Ancillary Agreements” means the BVTI Term Notes, the Accentia Limited Guaranty,
the Security Documents, the Closing Shares Lock-Up Agreement, and all other
agreements, instruments, documents, mortgages, pledges, powers of attorney,
consents, assignments, contracts, notices, security agreements, trust agreements
and guarantees whether heretofore or concurrently executed by or on behalf of
Biovest, any of its Affiliates or any other Person or delivered to any of the
Creditor Parties, relating to this Agreement or to the transactions contemplated
by this Agreement, as each of the same may be amended, supplemented, restated or
otherwise modified from time to time.

“Assignment Agreement” has the meaning given such term in Section 24(a).

 

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“AutovaxID Royalty Termination Agreement” means the Termination Agreement, dated
the Closing Date, by and between Biovest, on the one hand, and the Prepetition
Lenders and the Agent, on the other hand, providing for the termination of any
and all rights of the Prepetition Lenders and the Agent to receive royalties for
the sale of the automated cell and biologic production instrument known as
AutovaxIDTM manufactured by Biovest, as it may be amended, modified or
supplemented.

“Bankruptcy Cases” has the meaning given such term in the Background.

“Bankruptcy Code” has the meaning given such term in the Background.

“Bankruptcy Court” has the meaning given such term in the Background.

“BiovaxID®” means the patient-specific anti-cancer vaccine being developed by
Biovest that is focused primarily on treating follicular non-Hodgkins lymphoma.

“Biovest” has the meaning given such term in the preamble.

“Biovest Amendments to Organizational Documents” means the amendments to, or the
amendments and restatements of, Biovest’s Certificate of Incorporation and
Bylaws, including with respect to the right of the Agent to appoint under
certain circumstances one-third (1/3) of the members of the Board of Directors
of Biovest.

“Biovest Bankruptcy Cases” means, collectively, the jointly administered cases
previously pending before the Bankruptcy Court under Chapter 11 of the
Bankruptcy Code, which cases were commenced by Biovest, Biovax, Inc., AutovaxID,
Inc., Biolender, LLC and Biolender II, LLC on the Petition Date, bearing Case
Nos. 8:08-bk-17796-KRM (Biovest International, Inc.), 8:08-bk-17803-KRM (Biovax,
Inc.), 8:08-bk-17804-KRM (AutovaxID, Inc.), 8:08-bk-17805-KRM (Biolender, LLC),
and 8:08-bk-17806-KRM (Biolender II, LLC). Pursuant to the Confirmation Order,
the Biovest Bankruptcy Cases have been substantively consolidated under Case
No. 8:08-bk-17796-KRM.

“Biovest Biologic Products” means all biopharmaceutical products, including but
not limited to monoclonal antibodies, peptides, infectious disease and cancer
vaccines, including but not limited to BiovaxID®, autologous cancer vaccines
such as for non-Hodgkins lymphoma and renal cell carcinoma, cell-based
therapies, stem cells, cytokines, and viruses produced by mouse-human
heterohybridoma cell culture techniques, which are currently owned, licensed or
being developed by Biovest or its Affiliates or which may be subsequently
acquired or developed by Biovest or its Affiliates during the term of the
Biovest Contingent Payment Agreement. Notwithstanding the foregoing, Biovest
Biologic Products shall not include (i) any vaccines for respiratory viruses,
such as influenza, (ii) any biopharmaceutical products produced under contract
for third parties, (iii) any biopharmaceutical products being developed by
Biovest or its Affiliates for third parties or (iv) any products owned,
licensed, or developed by the Accentia Companies; provided that in the cases of
clauses (i), (ii) and (iii), no such vaccine for a respiratory virus or
biopharmaceutical product shall be based upon or related to the BiovaxID
vaccine, Biovest’s Intellectual Property (as of the date hereof) or shall be
based on an autologous production process or shall be produced using mouse-human
heterohybridoma cell culture techniques.

 

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“Biovest Common Stock” means the common stock, par value $.01 per share, of
Biovest.

“Biovest Contingent Payment Agreement” means the Contingent Payment Agreements,
dated the Closing Date, by and between Biovest and Erato Corp., Valens Offshore
SPV I, Ltd., Valens Offshore SPV II, Corp., Valens U.S. SPV I, LLC, and PSource
Structured Debt Limited, as each agreement may be amended, modified or
supplemented.

“Biovest Royalty” has the meaning given such term in the Background.

“Biovest Warrants” has the meaning given such term in the Background.

“Books and Records” means all books, records, board minutes, contracts,
licenses, insurance policies, environmental audits, business plans, files,
computer files, computer discs and other data and software storage and media
devices, accounting books and records, financial statements (actual and pro
forma), filings with Governmental Authorities and any and all records and
instruments relating to the Collateral or otherwise necessary or helpful in the
collection thereof or the realization thereupon.

“Business Day” means a day that is not a Saturday, a Sunday or other day on
which banks are required or permitted to be closed in the State of New York.

“BVTI Term Loans” means, collectively, Indebtedness of Biovest evidenced by the
BVTI Term Notes and all other extensions of credit to Biovest under this
Agreement and under any Ancillary Agreement.

“BVTI Term Notes” has the meaning given such term in Section 2(a)(i).

“Capital Lease” means, with respect to any Person, any lease of, or other
arrangement conveying the right to use, any property (whether real, personal or
mixed) by such Person as lessee that has been or should be accounted for as a
capital lease on a balance sheet of such Person prepared in accordance with
GAAP.

“Capitalized Lease Obligations” means, at any time, with respect to any Capital
Lease, any lease entered into as part of any sale/leaseback transaction of any
Person or any synthetic lease, the amount of all obligations of such Person that
is (or that would be, if such synthetic lease or other lease were accounted for
as a Capital Lease) capitalized on a balance sheet of such Person prepared in
accordance with GAAP.

“Charter” means the Certificate of Incorporation of Biovest as it may be amended
or amended and restated.

“Chattel Paper” means all “chattel paper,” as such term is defined in the UCC,
including electronic chattel paper, now owned or hereafter acquired by any
Person.

“Closing” has the meaning given such term in Section 14(a).

“Closing Date” has the meaning given such term in Section 14(a).

 

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“Closing Shares” means the shares of Biovest Common Stock to be issued to the
Lenders at the Closing as provided in Section 2(b).

“Closing Shares Lock-Up Agreement” means the Closing Shares Lock-Up Agreement,
dated the Closing Date, by and among Biovest and the Lenders with respect to
limitations on a Lender’s sale of any of the Closing Shares, as it may be
amended, modified or supplemented.

“Code” has the meaning given such term in Section 16(h).

“Collateral” means all of Biovest’s property and assets, whether real or
personal, tangible or intangible, and whether now owned or hereafter acquired,
or in which it now has or at any time in the future may acquire any right, title
or interests including all of the following property in which it now has or at
any time in the future may acquire any right, title or interest:

 

  (a) all Inventory;

 

  (b) all Equipment;

 

  (c) all Fixtures;

 

  (d) all Goods;

 

  (e) all General Intangibles;

 

  (f) all Accounts;

 

  (g) all Deposit Accounts, other bank accounts and all funds on deposit
therein;

 

  (h) all Investment Property;

 

  (i) all Equity Interests;

 

  (j) all Chattel Paper;

 

  (k) all Letter-of-Credit Rights;

 

  (l) all Instruments;

 

  (m) all Commercial Tort Claims;

 

  (n) all Books and Records;

 

  (o) all Intellectual Property;

 

  (p) all Documents;

(q)       all Supporting Obligations including letters of credit and guarantees
issued in support of Accounts, Chattel Paper, General Intangibles and Investment
Property;

 

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(r)      (i)      all money, cash and cash equivalents and (ii) all cash held as
cash collateral and all other cash or property at any time on deposit with or
held by the Agent for the account of Biovest (whether for safekeeping, custody,
pledge, transmission or otherwise); and

(s)      all products and Proceeds of all or any of the foregoing, tort claims
and all claims and other rights to payment including (i) insurance claims
against third parties for loss of, damage to, or destruction of, the foregoing
Collateral and (ii) payments due or to become due under leases, licenses,
rentals and hires of any or all of the foregoing and Proceeds payable under, or
unearned premiums with respect to, policies of insurance in whatever form.

“Commercial Tort Claims” means all “commercial tort claims,” as such term is
defined in the UCC, now owned or hereafter acquired by any Person.

“Compromise Order” means the Order Granting Debtors’ Motion for Approval of
Settlement Between the Debtors and Laurus Master Fund, Ltd. (in Liquidation) and
its Affiliates and Assignees, Pursuant to 11 U.S.C. § 105(a) and Rule 9019(a) of
the Federal Rules of Bankruptcy Procedure dated June 8, 2010, entered in the
Bankruptcy Cases, as such order may be amended, modified or supplemented.

“Confirmation Order” means the Order Confirming First Amended Joint Plan of
Reorganization of Biovest International, Inc. Biovax, Inc., AutovaxID, Inc.,
Biolender, LLC and Biolender II, LLC under Chapter 11 of Title 11, United States
Code Dated as of August 16, 2010, as Modified, Pursuant to 11 U.S.C. § 1129
dated November 2, 2010, entered in the Bankruptcy Cases, as such order may be
amended, modified or supplemented.

“Confirmed Plan” means the Joint Plan as confirmed by the Confirmation Order.

“Contract Rate” has the meaning given such term in the BVTI Term Notes.

“Contractual Obligation” means, with respect to any Person, any provision of any
indenture, mortgage, deed of trust, contract, undertaking, agreement or other
instrument to which such Person is a party or by which it or any of its property
is bound or to which any of its property is subject.

“Conversion Shares” means any shares of Biovest Common Stock issued upon
conversion in whole or in part of the BVTI Term Notes.

“Creditor Parties” has the meaning given such term in the preamble.

“Default” means any act or event which, with the giving of notice or passage of
time or both, would constitute an Event of Default.

“Deposit Accounts” means all “deposit accounts,” as such term is defined in the
UCC, now or hereafter held in the name of any Person.

“Disclosure Controls” has the meaning given such term in Section 12(f)(i).

 

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“Documents” means all “documents,” as such term is defined in the UCC, now owned
or hereafter acquired by any Person, wherever located, including all bills of
lading, dock warrants, dock receipts, warehouse receipts, and other documents of
title, whether negotiable or non-negotiable.

“Effective Date” means the Effective Date as defined in the Confirmed Plan.

“Equipment” means all “equipment,” as such term is defined in the UCC, now owned
or hereafter acquired by any Person, wherever located, including any and all
machinery, apparatus, equipment, fittings, furniture, Fixtures, motor vehicles
and other tangible personal property (other than Inventory) of every kind and
description that may be now or hereafter used in such Person’s operations or
that are owned by such Person or in which such Person may have an interest, and
all parts, accessories and accessions thereto and substitutions and replacements
therefor.

“Equity Interests” shall mean, with respect to any Person, any and all shares,
rights to purchase, options, warrants, general, limited or limited liability
partnership interests, member interests, units, participations or other
equivalents of or interest in (regardless of how designated) equity of such
Person, whether voting or nonvoting, including common stock, preferred stock,
convertible securities or any other “equity security” (as such term is defined
in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC (or
any successor thereto) under the Exchange Act).

“Event of Default” means the occurrence of any of the events set forth in
Section 20.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Exchange Act Filings” means Biovest’s filings under the Exchange Act made prior
to the date of this Agreement.

“Excluded Taxes” means, with respect to any Creditor Party, taxes imposed on or
measured by its overall net income and franchise taxes imposed on it in lieu of
net income taxes, by the jurisdiction (or any political subdivision thereof)
under the laws of which such Creditor Party is incorporated or organized or by
the jurisdiction (or any political subdivision thereof) in which the principal
place of management or applicable lending office of such Creditor Party is
located.

“Exit Lender” means Corps Real, LLC, an Illinois limited liability company.

“Exit Lender Credit Facility” means the debtor in possession financing facility
between Biovest and the Exit Lender as approved by orders of the Bankruptcy
Court, pursuant to which the Exit Lender has made, and may continue to make,
extensions of credit available to Biovest in the maximum amount of $3,000,000.

“Exit Lender Subordination Agreement” means the Subordination Agreement, dated
the Closing Date, by and between the Agent and the Exit Lender, as it may be
amended, modified or supplemented.

 

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“Final Order” means (a) an order, judgment, ruling or other decree (or any
revision, modification or amendment thereto) issued and entered by the
Bankruptcy Court or by any state or other federal court as may have jurisdiction
over any proceeding in connection with the Bankruptcy Cases for the purpose of
such proceeding, which order, judgment, ruling or other decree has not been
reversed, vacated, stayed, modified or amended and as to which (i) no appeal,
petition for review, reargument, rehearing, reconsideration or certiorari has
been taken and is pending and the time for the filing of such appeal, petition
for review, reargument, rehearing, reconsideration or certiorari has expired, or
(ii) such appeal or petition has been heard and dismissed or resolved and the
time to further appeal or petition has expired with no further appeal or
petition pending; or (b) a stipulation or other agreement entered into which has
the effect of any such aforesaid order, judgment, ruling or other decree with
like finality.

“Financial Reporting Controls” has the meaning given such term in
Section 12(f)(ii).

“FINRA” has the meaning given such term in Section 13(b).

“Fixtures” means all “fixtures,” as such term is defined in the UCC, now owned
or hereafter acquired by any Person.

“GAAP” means generally accepted accounting principles in effect from time to
time in the United States of America.

“General Intangibles” means all “general intangibles,” as such term is defined
in the UCC, now owned or hereafter acquired by any Person and in any event shall
include all right, title and interest that such Person may now or hereafter have
in or under any contract, all Payment Intangibles, customer lists, Intellectual
Property, interests in partnerships, joint ventures and other business
associations, permits, proprietary or confidential information, inventions
(whether or not patented or patentable), technical information, procedures,
designs, knowledge, know-how, Software, data bases, data, skill, expertise,
experience, processes, models, drawings, materials, Books and Records, Goodwill
(including the Goodwill associated with any Intellectual Property), all rights
and claims in or under insurance policies (including insurance for fire, damage,
loss, and casualty, whether covering personal property, real property, tangible
rights or intangible rights, all liability, life, key-person, and business
interruption insurance, and all unearned premiums), uncertificated securities,
choses in action, deposit accounts, rights to receive tax refunds and other
payments, rights to receive dividends, distributions, cash, Instruments and
other property in respect of or in exchange for pledged Equity Interests and
Investment Property, and rights of indemnification.

“Goods” means all “goods,” as such term is defined in the UCC, now owned or
hereafter acquired by any Person, wherever located, including embedded software
to the extent included in “goods” as defined in the UCC, manufactured homes,
fixtures, standing timber that is cut and removed for sale and unborn young of
animals.

“Goodwill” means all goodwill, trade secrets, proprietary or confidential
information, technical information, procedures, formulae, quality control
standards, designs, operating and training manuals, customer lists, and
distribution agreements now owned or hereafter acquired by any Person.

 

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“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.

“Guaranty Obligation” means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of such Person for any Indebtedness, lease,
dividend or other obligation (the “primary obligation”) of another Person (the
“primary obligor”), if the purpose or intent of such Person in incurring such
liability, or the economic effect thereof, is to guarantee such primary
obligation or provide support, assurance or comfort to the holder of such
primary obligation or to protect or indemnify such holder against loss with
respect to such primary obligation, including (a) the direct or indirect
guaranty, endorsement (other than for collection or deposit in the ordinary
course of business), co-making, discounting with recourse or sale with recourse
by such Person of any primary obligation, (b) the incurrence of reimbursement
obligations with respect to any letter of credit or bank guarantee in support of
any primary obligation, (c) the existence of any Lien, or any right, contingent
or otherwise, to receive a Lien, on the property of such Person securing any
part of any primary obligation and (d) any liability of such Person for a
primary obligation through any Contractual Obligation (contingent or otherwise)
or other arrangement (i) to purchase, repurchase or otherwise acquire such
primary obligation or any security therefor or to provide funds for the payment
or discharge of such primary obligation (whether in the form of a loan, advance,
stock purchase, capital contribution or otherwise), (ii) to maintain the
solvency, working capital, equity capital or any balance sheet item, level of
income or cash flow, liquidity or financial condition of any primary obligor,
(iii) to make take-or-pay or similar payments, if required, regardless of
non-performance by any other party to any Contractual Obligation, (iv) to
purchase, sell or lease (as lessor or lessee) any property, or to purchase or
sell services, primarily for the purpose of enabling the primary obligor to
satisfy such primary obligation or to protect the holder of such primary
obligation against loss or (v) to supply funds to or in any other manner invest
in, such primary obligor (including to pay for property or services irrespective
of whether such property is received or such services are rendered); provided,
however, that “Guaranty Obligations” shall not include (x) endorsements for
collection or deposit in the ordinary course of business and (y) product
warranties given in the ordinary course of business. The outstanding amount of
any Guaranty Obligation shall equal the outstanding amount of the primary
obligation so guaranteed or otherwise supported or, if lower, the stated maximum
amount for which such Person may be liable under such Guaranty Obligation.

“Hedging Agreement” means any Interest Rate Contract, foreign exchange, swap,
option or forward contract, spot, cap, floor or collar transaction, any other
derivative instrument and any other similar speculative transaction and any
other similar agreement or arrangement designed to alter the risks of any Person
arising from fluctuations in any underlying variable.

“Indebtedness” of any Person means, without duplication, any of the following,
whether or not matured: (a) all indebtedness for borrowed money (including,
without limitation, all principal, interest, fees and charges relating thereto),
(b) all obligations evidenced by notes, bonds, debentures or similar
instruments, (c) all reimbursement and all obligations with respect to
(i) letters of credit, bank guarantees or bankers’ acceptances or (ii) surety,
customs, reclamation or performance bonds (in each case not related to judgments
or litigation) other than those entered into in the ordinary course of business,
(d) all obligations to pay the deferred

 

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purchase price of property or services, other than trade payables incurred in
the ordinary course of business, (e) all obligations created or arising under
any conditional sale or other title retention agreement, regardless of whether
the rights and remedies of the seller or lender under such agreement in the
event of default are limited to repossession or sale of such property, (f) all
Capitalized Lease Obligations, (g) all payments that would be required to be
made in respect of any Hedging Agreement in the event of a termination
(including an early termination) on the date of termination and (h) all Guaranty
Obligations for obligations of any other Person constituting Indebtedness of
such other Person; provided, however, that the items in each of clauses
(a) through (h) above shall constitute “Indebtedness” of such Person solely to
the extent, directly or indirectly, (x) such Person is liable for any part of
any such item, (y) any such item is secured by a Lien on such Person’s property
or (z) any other Person has a right, contingent or otherwise, to cause such
Person to become liable for any part of any such item or to grant such a Lien.

“Indemnified Person” has the meaning given such term in Section 27.

“Instruments” means all “instruments,” as such term is defined in the UCC, now
owned or hereafter acquired by any Person, wherever located, including all
certificated securities and all promissory notes and other evidences of
indebtedness, other than instruments that constitute, or are a part of a group
of writings that constitute, Chattel Paper.

“Intellectual Property” means any and all of the following, throughout the
world: patents, trademarks, trade names, corporate names, fictitious business
names, internet domain names, trade styles, service marks, logos, and other
source of business identifiers and the goodwill symbolized by and connected with
the use thereof; copyrights, mask works, designs, inventions, trade secrets,
information, databases, rights of publicity, software, and any other proprietary
rights and processes; any licenses to use any of the foregoing owned by a third
party; registrations, applications and recordings pertaining to any of the
foregoing; and rights to sue for past, present and future infringement,
dilution, misappropriation, or other violation of any of the foregoing.

“Intellectual Property Security Agreement” means the Grant of Security Interest
in Intellectual Property, dated the Closing Date, from Biovest and Analytica in
favor of the Agent, as each such agreement may be amended, modified or
supplemented.

“Interest Rate Contracts” means all interest rate swap agreements, interest rate
cap agreements, interest rate collar agreements and interest rate insurance.

“Inventory” means all “inventory,” as such term is defined in the UCC, now owned
or hereafter acquired by any Person, wherever located, including all inventory,
merchandise, goods and other personal property that are held by or on behalf of
such Person for sale or lease or are furnished or are to be furnished under a
contract of service or that constitute raw materials, work in process, finished
goods, returned goods, or materials or supplies of any kind, nature or
description used or consumed or to be used or consumed in such Person’s business
or in the processing, production, packaging, promotion, delivery or shipping of
the same, including all supplies and embedded software.

 

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“Investment Property” means all “investment property,” as such term is defined
in the UCC, now owned or hereafter acquired by any Person, wherever located.

“Investor DIP Lenders” means Empery Asset Master, Ltd., Hartz Capital
Investments, LLC, and the other parties listed on the Schedule of Buyers
attached to the Securities Purchase Agreement.

“Joint Plan” means the First Amended Joint Plan of Reorganization of Biovest
International, Inc., Biovax, Inc., AutovaxID, Inc., Biolender, LLC, and
Biolender II, LLC under Chapter 11 of Title 11, United States Code dated as of
August 16, 2010, as modified by the First Modification to First Amended Joint
Plan of Reorganization of Biovest International, Inc., Biovax, Inc., AutovaxID,
Inc., Biolender, LLC, and Biolender II, LLC under Chapter 11 of Title 11, United
States Code dated as of October 25, 2010, and all exhibits thereto, as the same
may be further amended, supplemented, modified or amended and restated from time
to time in accordance with the provisions of the Joint Plan and the Bankruptcy
Code.

“Lenders” has the meaning given such term in the preamble.

“Letter-of-Credit Rights” means “letter-of-credit rights,” as such term is
defined in the UCC, now owned or hereafter acquired by any Person, including
rights to payment or performance under a letter of credit, whether or not such
Person, as beneficiary, has demanded or is entitled to demand payment or
performance.

“Lien” means any mortgage, security deed, deed of trust, pledge, hypothecation,
assignment, security interest, lien (whether statutory or otherwise), charge,
claim or encumbrance, or preference, priority or other security agreement or
preferential arrangement held or asserted in respect of any asset of any kind or
nature whatsoever including any conditional sale or other title retention
agreement, any lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement
under the UCC or comparable law of any jurisdiction.

“Material Adverse Effect” means a material adverse effect on (a) the business,
assets, liabilities, condition (financial or otherwise), properties, operations
or prospects of Biovest (taken individually and as a whole), (b) Biovest’s
ability to pay or perform the Obligations in accordance with the terms hereof or
any Ancillary Agreement, (c) the value of the Collateral, the Agent’s Liens on
the Collateral or the priority of any such Liens, or (d) the practical
realization of the benefits of the Creditor Parties’ rights and remedies under
this Agreement and the Ancillary Agreements.

“Maximum Legal Rate” has the meaning given to such term in Section 5(a)(ii).

“Net Short Position” has the meaning given to such term in Section 16(i).

“Non-Excluded Taxes” means all Taxes other than (i) Excluded Taxes and
(ii) Other Taxes.

“Non-U.S. Lender” has the meaning given to such term in Section 5(a)(vii).

 

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“Obligations” means all advances, debts, liabilities, obligations, covenants and
duties owing by Biovest to any Creditor Party (or any corporation that directly
or indirectly controls or is controlled by or is under common control with any
of them) of every kind and description arising from or relating to the BVTI Term
Loans, this Agreement, and any Ancillary Agreement (whether or not evidenced by
any note or other instrument and whether or not for the payment of money or the
performance or non-performance of any act), direct or indirect, absolute or
contingent, due or to become due, contractual or tortious, liquidated or
unliquidated, whether existing by operation of law or otherwise, now existing or
hereafter arising including any debt, liability or obligation owing from Biovest
to others which any Creditor Party may have obtained by assignment or otherwise
and further including all interest (including interest accruing at the then
applicable rate provided in this Agreement after the maturity of the BVTI Term
Loans and interest accruing at the then applicable rate provided in this
Agreement after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, whether or not a claim for
post-filing or post-petition interest is allowed or allowable in such
proceeding), charges or any other payments that Biovest is required to make by
law or otherwise arising under or as a result of this Agreement or the Ancillary
Agreements, together with all reasonable expenses and reasonable attorneys’ fees
chargeable to Biovest’s accounts or incurred by any Creditor Party in connection
therewith.

“Other Taxes” means any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any
payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement or any Ancillary Agreement.

“Payment Intangibles” means all “payment intangibles,” as such term is defined
in the UCC, now owned or hereafter acquired by any Person, including a General
Intangible under which the Account Debtor’s principal obligation is a monetary
obligation.

“Permitted Liens” means (a) Liens securing the Indebtedness of Biovest to the
Exit Lender pursuant to the Exit Lender Credit Facility; (b) Liens of carriers,
warehousemen, artisans, bailees, mechanics and materialmen incurred in the
ordinary course of business securing sums not overdue; (c) Liens incurred in the
ordinary course of business in connection with worker’s compensation,
unemployment insurance or other forms of governmental insurance or benefits,
relating to employees, securing sums (i) not overdue or (ii) being diligently
contested in good faith provided that adequate reserves with respect thereto are
maintained on the books of Biovest, in conformity with GAAP; (d) licenses of
Intellectual Property granted by Biovest prior to the date hereof, and licenses
of Intellectual Property granted in the ordinary course of business consistent
with past practices or consistent with Biovest’s business plan or strategy;
(e) Liens in favor of the Agent or the other Creditor Parties; (f) Liens for
Taxes (i) not yet due or (ii) being diligently contested in good faith by
appropriate proceedings, provided that adequate reserves with respect thereto
are maintained on the books of Biovest, in conformity with GAAP; and which have
no effect on the priority of the Liens in favor of the Agent or the other
Creditor Parties or the value of the Collateral in which the Agent and each
other Creditor Party has a Lien; (g) Purchase Money Liens securing Purchase
Money Indebtedness to the extent not prohibited by this Agreement; (h) Liens
contemplated by the Confirmed Plan; (i) Liens granted by orders of the
Bankruptcy Court entered in the Bankruptcy Cases; and (j) Liens granted to
(x) the landlord of Biovest’s Minnesota facility over assets and leasehold
improvements at such facility in

 

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consideration of leasehold improvements made by such landlord, and (y) the City
of Coon Rapids, Minnesota over the same assets and leasehold improvements in
exchange for a loan by such city to Biovest.

“Person” means any individual, sole proprietorship, partnership, limited
liability partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability company, institution, public benefit
corporation, entity or government (whether federal, state, county, city,
municipal or otherwise, including any instrumentality, division, agency, body or
department thereof), and shall include such Person’s successors and assigns.

“Petition Date” has the meaning given such term in the Background.

“Prepetition Debt” has the meaning given such term in the Background.

“Prepetition Lenders” has the meaning given such term in the Background.

“Principal Market” means any of the following markets or exchanges on which the
Accentia Common Stock is listed or quoted for trading on the date in question:
the New York Stock Exchange, the NYSE AMEX, the NASDAQ Capital Market, the
NASDAQ Global Market, the NASDAQ Global Select Market, the OTCQB Marketplace, or
the OTC Bulletin Board (or any successors to any of the foregoing).

“Proceeds” means “proceeds,” as such term is defined in the UCC and, in any
event, shall include: (a) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to Biovest or any other Person from time to time
with respect to any Collateral; (b) any and all payments (in any form
whatsoever) made or due and payable to Biovest from time to time in connection
with any requisition, confiscation, condemnation, seizure or forfeiture of any
Collateral by any governmental body, Governmental Authority, bureau or agency
(or any person acting under color of Governmental Authority); (c) any claim of
Biovest against third parties (i) for past, present or future infringement of
any Intellectual Property or (ii) for past, present or future infringement or
dilution of any trademark or trademark license or for injury to the goodwill
associated with any trademark, trademark registration or trademark licensed
under any trademark license; (d) any recoveries by Biovest against third parties
with respect to any litigation or dispute concerning any Collateral, including
claims arising out of the loss or nonconformity of, interference with the use
of, defects in, or infringement of rights in, or damage to, Collateral; (e) all
amounts collected on, or distributed on account of, other Collateral, including
dividends, interest, distributions and Instruments with respect to Investment
Property and pledged Equity Interests; (f) any and all other amounts, rights to
payment or other property acquired upon the sale, lease, license, exchange or
other disposition of Collateral and all rights arising out of Collateral; and
(g) proceeds of any purchase order.

“Purchase Money Indebtedness” means (a) any indebtedness incurred for the
payment of all or any part of the purchase price of any fixed asset, including
indebtedness under capitalized leases, (b) any indebtedness incurred for the
sole purpose of financing or refinancing all or any part of the purchase price
of any fixed asset, and (c) any renewals, extensions or refinancings thereof
(but not any increases in the principal amounts thereof outstanding at that
time).

 

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“Purchase Money Lien” means any Lien upon any fixed assets that secures the
Purchase Money Indebtedness related thereto but only if such Lien shall at all
times be confined solely to the asset the purchase price of which was financed
or refinanced through the incurrence of the Purchase Money Indebtedness secured
by such Lien and only if such Lien secures only such Purchase Money
Indebtedness.

“Register” has the meaning given such term in Section 24(b).

“Royalty Assignment Termination Agreement” means the Royalty Assignment
Termination Agreement, dated the Closing Date, by and between Accentia and
certain of the Prepetition Lenders and their assignees terminating the
assignment by Accentia to such parties of the right to receive royalties for the
sale of the Biovest Biologic Products.

“Royalty Termination Agreements” means the Royalty Termination Agreements, dated
the Closing Date, by and between Biovest, on the one hand, and certain of the
Prepetition Lenders and the Agent, on the other hand, providing for the
termination of any and all rights granted to the Prepetition Lenders and the
Agent, prior to the Petition Date, to receive royalties from the Biovest
Biologic Products.

“SEC” means the Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended.

“Securities Purchase Agreement” means the Securities Purchase Agreement dated as
of October 19, 2010, by and among Biovest and the Investor DIP Lenders.

“Security Documents” means all security agreements, mortgages, cash collateral
deposit letters, pledges and other agreements which are executed in connection
with this Agreement by Biovest or any of its Affiliates in favor of the Agent
for the ratable benefit of the Creditor Parties.

“Software” means all “software,” as such term is defined in the UCC, now owned
or hereafter acquired by any Person, including all computer programs and all
supporting information provided in connection with a transaction related to any
program.

“Stock Acquisition Limitation” has the meaning given such term in Section 16(h).

“Subsidiary” means, with respect to any Person, (a) any other Person whose
shares of stock or other ownership interests having ordinary voting power (other
than stock or other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the directors or other
governing body of such other Person, are owned, directly or indirectly, by such
Person or (b) any other Person in which such Person owns, directly or
indirectly, more than fifty percent (50%) of the Equity Interests at such time.

“Supporting Obligations” means all “supporting obligations,” as such term is
defined in the UCC.

 

14

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“Taxes” means any and all present or future taxes, duties, levies, imposts,
deductions, assessments, fees, withholdings or similar charges, and all
liabilities with respect thereto.

“Term A Notes” has the meaning given such term in Section 2(a)(i).

“Term B Notes” has the meaning given such term in Section 2(a)(i).

“Termination Date” has the meaning given such term in Section 14(d)(i).

“UCC” means the Uniform Commercial Code as the same may, from time to time, be
in effect in the State of New York; provided, that in the event that, by reason
of mandatory provisions of law, any or all of the perfection or priority of, or
remedies with respect to, the Agent’s Lien on any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the State of
New York, the term “UCC” shall mean the Uniform Commercial Code as in effect in
such other jurisdiction for purposes of the provisions of this Agreement
relating to such perfection, priority or remedies and for purposes of
definitions related to such provisions; provided further, that to the extent
that the UCC is used to define any term herein or in any Ancillary Agreement and
such term is defined differently in different Articles or Divisions of the UCC,
the definition of such term contained in Article 9 or Division 9 shall govern.

“Warrant Termination Agreements” means the Warrant Termination Agreements, dated
the Closing Date, by and between Biovest and Accentia, on the one hand, and
certain of the Prepetition Lenders, on the other hand, terminating the Biovest
Warrants.

 

15

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INDEX TO EXHIBITS

Exhibit A – Biovest Warrants

Exhibit B – BVTI Term Notes

Exhibit C – Accentia Limited Guaranty

Exhibit D – Accentia Subordination Agreement

Exhibit E – Exit Lender Subordination Agreement

Exhibit F – Accentia Pledge Agreement

Exhibit G – Analytica Security Agreement

Exhibit H – Analytica Guaranty

Exhibit I – Closing Shares Lock-Up Agreement

Exhibit J – Biovest Contingent Payment Agreement

Exhibit K – Intellectual Property Security Agreements

Exhibit L – Biovest Amendments to Organizational Documents

Exhibit M – Royalty Assignment Termination Agreement

Exhibit N – AutovaxID Royalty Termination Agreement

Exhibit O – Warrant Termination Agreements

Exhibit P – Royalty Termination Agreements

Exhibit Q – Accentia Royalty Termination Agreement

--------------------------------------------------------------------------------

Exhibit A

Biovest Warrants

 

 

Name

   Option
Date      Expiration
Date      Option
Price      Shares
Originally
Subject to
Warrant   Laurus Master Fund, Ltd.      3/31/2006        3/31/2021      $0.01
       18,087,889    Laurus Master Fund, Ltd.    10/31/2006      10/31/2013     
$0.01        10,000,000    Valens U.S. SPV I, LLC      9/22/2008     
  9/21/2013      $0.40          1,015,625   

--------------------------------------------------------------------------------

Exhibit B

BVTI Term Notes

See attached.

--------------------------------------------------------------------------------

Exhibit C

Accentia Limited Guaranty

See attached.

--------------------------------------------------------------------------------

Exhibit D

Accentia Subordination Agreement

See attached.

--------------------------------------------------------------------------------

Exhibit E

Exit Lender Subordination Agreement

See attached.

--------------------------------------------------------------------------------

Exhibit F

Accentia Pledge Agreement

See attached.

--------------------------------------------------------------------------------

Exhibit G

Analytica Security Agreement

See attached.

--------------------------------------------------------------------------------

Exhibit H

Analytica Guaranty

See attached.

--------------------------------------------------------------------------------

Exhibit I

Closing Shares Lock-Up Agreement

See attached.

--------------------------------------------------------------------------------

Exhibit J

Biovest Contingent Payment Agreement

See attached.

--------------------------------------------------------------------------------

Exhibit K

Intellectual Property Security Agreements

See attached.

--------------------------------------------------------------------------------

Exhibit L

Biovest Amendments to Organizational Documents

See attached.

--------------------------------------------------------------------------------

Exhibit M

Royalty Assignment Termination Agreement

See attached.

--------------------------------------------------------------------------------

Exhibit N

AutovaxID Royalty Termination Agreement

See attached.

--------------------------------------------------------------------------------

Exhibit O

Warrant Termination Agreements

See attached.

--------------------------------------------------------------------------------

Exhibit P

Royalty Termination Agreements

See attached.

--------------------------------------------------------------------------------

Exhibit Q

Accentia Royalty Termination Agreement

See attached.

--------------------------------------------------------------------------------

INDEX TO SCHEDULES

Schedule 2(a)(i) – Amount of BVTI Term Notes

Schedule 2(b) – Number and Allocation of Closing Shares

Schedule 7(c) – Intellectual Property Filings

Schedule 7(n) – Bank Accounts

Schedule 7(o) – Corporate Information

Schedule 12(b) – Subsidiaries

Schedule 12(c) – Capitalization; Voting Rights

Schedule 12(g) – Title to Properties and Assets; Liens

Schedule 12(h) – Registration Rights and Voting Rights

Schedule 12(n) – Name; Locations of Offices, Records and Collateral

--------------------------------------------------------------------------------

Schedule 2(a)(i)

Amount of BVTI Term Notes

 

Term A Notes (Total: $24,900,000)

  

Erato Corp.

   $ 1,333,334.00   

Valens Offshore SPV I, Ltd.

   $ 4,644,640.00   

Valens Offshore SPV II, Corp.

   $ 12,694,883.00   

Valens U.S. SPV I, LLC

   $ 3,216,338.00   

PSource Structured Debt Limited

   $ 3,010,805.00   

Term B Notes (Total: $4,160,000)

  

Laurus Master Fund Ltd. (In Liquidation)

   $ 500,000.00   

Valens Offshore SPV I, Ltd.

   $ 1,980,592.00   

Valens Offshore SPV II, Corp.

   $ 836,313.00   

Valens U.S. SPV I, LLC

   $ 155,175.00   

PSource Structured Debt Limited

   $ 687,920.00   

--------------------------------------------------------------------------------

Schedule (2)(b)

Number and Allocation of Closing Shares

 

Total Number of Closing Shares: 14,834,782

 

     Number of Shares      Percentage Allocation

Laurus Master Fund Ltd. (In Liquidation)

     1,877,510               13%

Valens Offshore SPV I, Ltd.

     7,320,877               49%

Valens Offshore SPV II, Corp.

     0                 0%

Valens U.S. SPV I, LLC

     1,036,468                 7%

PSource Structured Debt Limited

     4,599,927               31%

--------------------------------------------------------------------------------

Schedule 7(c)

 

Intellectual Property Filings

 

None

--------------------------------------------------------------------------------

Schedule 7(n)

Bank Accounts

 

 

1. Wachovia, NA

Jacksonville Beach, FL

Tel: 813/225-4307 (Lora Hernandez (Tampa))

Account No. 2000045051452

Account Name: Biovest International, Inc.

 

2. Wells Fargo Bank NA

Anoka Business Banking

PO Box B514

Minneapolis, MN 55479

Tel: 800/225-5935

Account No. 1000180093

Account Name: Biovest International, Inc.

--------------------------------------------------------------------------------

Schedule 7(o)

Corporate Information

 

 

Legal Name:      Biovest International, Inc.    Jurisdiction of Organization:
     Delaware    Organizational ID Number:      080602759    Corporate Offices:
     324 South Hyde Park Avenue         Suite 350         Tampa, Florida 33606
  

--------------------------------------------------------------------------------

Schedule 12(b)

Subsidiaries

 

Subsidiary Name

  

Percentage of Ownership by Biovest International, Inc.

1.    Biovax, Inc.*                100% 2.    AutovaxID, Inc.*   
            100% 3.    Biolender, LLC*                Sole Member 4.   
Biolender II, LLC*                Sole Member

* Each of these entities, pursuant to the Confirmed Plan, have been
substantively consolidated with Biovest and shall be dissolved promptly
following the Effective Date.

--------------------------------------------------------------------------------

Schedule 12(c)

Capitalization; Voting Rights

 

 

 

Warrants Outstanding (excludes Biovest Warrants)

     17,647,627   

Employee Incentive Stock Options Outstanding

     26,742,486   

--------------------------------------------------------------------------------

Schedule 12(g)

Title to Properties and Assets; Liens

None

--------------------------------------------------------------------------------

Schedule 12(h)

Registration Rights and Voting Rights

None

--------------------------------------------------------------------------------

Schedule 12(n)

Name; Locations of Offices, Records and Collateral

 

Legal Name:    Biovest International, Inc. Type of Entity:    Corporation
Jurisdiction of Organization:    Delaware Organizational ID Number:    3362955
Corporate Offices:    324 South Hyde Park Avenue    Suite 350    Tampa, Florida
33606 Manufacturing Facilities:    8500 Evergreen Boulevard, NW    Coon Rapids,
MN 55433