Exhibit 10.25

SUBORDINATION AGREEMENT

THIS SUBORDINATION AGREEMENT (this “Agreement”) is entered into as of the 17th
day of November, 2010, by and between Corps Real, LLC, an Illinois limited
liability company (the “Senior Lender”), and LV Administrative Services, Inc., a
Delaware corporation, as administrative and collateral agent for the Lenders (as
defined in the Security Agreement referred to below) (the “Agent” and together
with the Lenders, the “Subordinated Lenders” and each, a “Subordinated Lender”),
and is acknowledged by Biovest International, Inc., a Delaware corporation
(“Biovest”). Unless otherwise defined herein, capitalized terms used herein
shall have the meaning ascribed to such terms in the Security Agreement.

RECITALS

WHEREAS, on November 10, 2008 (the “Petition Date”), Biovest commenced a
voluntary case for reorganization (the “Biovest Chapter 11 Case”) 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”);

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 satisfaction of the Prepetition Debt and for other consideration,
certain of the Prepetition Lenders have agreed to accept allowed secured claims
against Biovest in the Biovest Chapter 11 Case in the aggregate amounts of
$24,900,000.00 and $4,160,000.00, respectively, and other consideration, upon
the terms and conditions set forth in the Term Loan and Security Agreement by
and among Biovest and the Subordinated Lenders dated as of November 17, 2010
(the “Security Agreement”) and in the Confirmed Plan;

WHEREAS, in the Biovest Chapter 11 Case, the Senior Lender, pursuant to various
interim orders entered by the Bankruptcy Court, has provided
debtor-in-possession financing to Biovest (the “DIP Financing”);

WHEREAS, pursuant to the Confirmed Plan, the Senior Lender has agreed to
restructure and extend the maturity date of the DIP Financing (the “Restructured
DIP Loan”), and Biovest is issuing to the Senior Lender its promissory note in
the original principal amount of $3,169,223.44 (the “Senior Term Note”), which
represents the outstanding principal amount of the DIP Financing in the amount
of $2,140,000.00 as of

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the Effective Date of the Confirmed Plan, plus up to an additional amount of
$860,000.00 (the “Additional Advance Amount”) that the Senior Lender may advance
to Biovest pursuant to the Senior Term Note plus accrued and unpaid interest in
the amount of $169,223.44 under the DIP Financing as of the Effective Date of
the Confirmed Plan;

WHEREAS, pursuant to the Confirmed Plan, the Senior Term Note is to be secured
by a first Lien (as defined below) to the extent of the Maximum Senior
Obligation Amount on all of the assets of Biovest pursuant to various security
documentation (with the Senior Term Note, the “Senior Lender Documents”);

WHEREAS, it is a condition to the Senior Lender agreeing to the Restructured DIP
Loan that the Agent enter into this Agreement on behalf of the Subordinated
Lenders; and

NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the Agent, on behalf
of the Subordinated Lenders, and the Senior Lender agree as follows:

Section 1.        Definitions.

1.1        Defined Terms.   The following terms when used in this Agreement,
including its preamble and recitals, shall have the following meanings:

“Accentia” shall mean Accentia Biopharmaceuticals, Inc., a Florida corporation.

“Accentia Advance” shall have the meaning set forth in Section 4 hereto.

“Additional Advance Amount” shall have the meaning set forth in the Recitals
hereto.

“Agent” shall have the meaning set forth in the preamble hereto.

“Agreement” shall mean this Subordination Agreement, as the same may be amended,
modified or supplemented from time to time in accordance with its terms.

“Bankruptcy Code” shall mean Title 11 of the United States Code entitled
“Bankruptcy,” as now and hereafter in effect, or any successor statute.

“Bankruptcy Court” shall have the meaning set forth in the Recitals hereto.

“Biovest” shall have the meaning set forth in the Recitals hereto.

“Biovest Bankruptcy Cases” shall have the meaning set forth in the Recitals
hereto.

 

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“Biovest Chapter 11 Case” shall have the meaning set forth in the Recitals
hereto.

“Collateral” shall mean all property (whether real, personal, movable or
immovable) with respect to which any Liens have been granted (or purported to be
granted) by Biovest pursuant to any Senior Lender Document or Subordinated
Lenders Document.

“Credit Parties” shall mean Biovest or any Person that guarantees any of the
Subordinated Obligations.

“DIP Financing” shall have the meaning set forth in the Recitals hereto.

“Lien” shall mean any mortgage, pledge, hypothecation, assignment, deposit
arrangement, security interest, encumbrance, charging lien (statutory or other),
charge, preference, priority or other security agreement of any kind or nature
whatsoever (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any financing or similar
statement or notice filed under the UCC or any similar recording or notice
statute or other law, and any lease having substantially the same effect as the
foregoing).

“Maximum Senior Obligation Amount” shall mean $3,169,223.44, as such amount may
be reduced pursuant to Section 4 hereof.

“Person” shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
or any government or political subdivision or any agency, department or
instrumentality thereof.

“Prepetition Debt” shall have the meaning set forth in the Recitals hereto.

“Prepetition Lenders” shall have the meaning set forth in the Recitals hereto.

“Restructured DIP Loan” shall have the meaning set forth in the Recitals hereto.

“Security Agreement” shall have the meaning set forth in the Recitals hereto.

“Senior Lender” shall have the meaning set forth in the preamble hereto.

“Senior Lender Documents” shall have the meaning set forth in the Recitals
hereto.

 

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“Senior Obligations” shall mean the obligations of every nature of Biovest, from
time to time owed to the Senior Lender under any of the Senior Lender Documents,
whether for principal, premium, interest (including interest accruing subsequent
to the filing of a petition in bankruptcy with respect to any Credit Party
and/or any of its Subsidiaries to the extent a claim is allowed against such
Credit Party and/or any of its Subsidiaries for such interest in the related
bankruptcy proceeding), fees, expenses, indemnification or otherwise; provided
that the maximum amount of the Senior Obligations for purposes of this Agreement
shall not exceed the Maximum Senior Obligation Amount.

“Senior Term Note” shall have the meaning set forth in the Recitals hereto.

“Subordination Lenders” shall have the meaning set forth in the preamble hereto.

“Subordinated Lenders Documents” shall mean the Security Agreement and the
Ancillary Agreements (as defined therein), as each may be amended, modified or
supplemented from time to time.

“Subordinated Obligations” shall mean the obligations of every nature of
Biovest, from time to time owed to the Subordinated Lenders under any of the
Subordinated Lenders Documents, whether for principal, premium, interest
(including interest accruing subsequent to the filing of a petition in
bankruptcy with respect to any Credit Party and/or any of its Subsidiaries to
the extent a claim is allowed against such Credit Party and/or any of its
Subsidiaries for such interest in the related bankruptcy proceeding), fees,
expenses, indemnification or otherwise.

“Subsidiary” shall mean, as to any Person, (i) any corporation more than 50% of
whose stock of any class or classes having by the terms thereof ordinary voting
power to elect a majority of the directors of such corporation (irrespective of
whether or not at the time stock of any class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency) is at the time owned by such Person and/or one or more Subsidiaries
of such Person and (ii) any partnership, limited liability company, association,
joint venture or other entity in which such Person and/or one or more
Subsidiaries of such Person has more than a 50% equity interest at the time.

“UCC” shall mean the Uniform Commercial Code as in effect from time to time in
the relevant jurisdiction.

“Unfunded Amount” shall have the meaning set forth in Section 4 hereto.

 

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Section 2.        Subordination of Claims.

(a)        Except as expressly otherwise provided in this Agreement or in the
Confirmed Plan, the payment by Biovest of the Subordinated Obligations shall be
subordinated in right of payment and priority to the payment in full of all
Senior Obligations. Furthermore, whether directly or indirectly, no payments or
other distributions whatsoever in respect of any Subordinated Obligations shall
be made by Biovest (whether at stated maturity, by acceleration or otherwise),
nor shall any property or assets of Biovest be applied to the purchase or other
acquisition or retirement of any Subordinated Obligations, until such time as
the Senior Obligations have been indefeasibly paid in full. Notwithstanding
anything to the contrary contained in this Agreement, the Subordinated Lenders
shall, pursuant to the terms of the BVTI Term Notes, be entitled (i) to receive
any Mandatory Prepayments (as such term is defined in the BVTI Term Notes) that
Biovest is required to make pursuant to Section 2.2 of the BVTI Term Notes and
(ii) to consent to the conversion of all or any portion of the Subordinated
Obligations under the BVTI Term Notes into shares of Biovest Common Stock.

(b)        The Subordinated Lenders hereby subordinate all claims and security
interests they may have against, or with respect to, any of the Collateral, to
the security interests granted by Biovest to the Senior Lender, to the extent of
the Senior Obligations.

(c)        In the event of any dissolution, winding up, liquidation,
readjustment, reorganization or other similar proceedings relating to Biovest or
to its creditors, as such, or to its property (whether voluntary or involuntary,
partial or complete, and whether in bankruptcy, insolvency or receivership, or
upon an assignment for the benefit of creditors, or any other marshalling of the
assets and liabilities of Biovest, or any sale of all or substantially all of
the assets of Biovest, or otherwise), the Senior Obligations shall first be paid
in full before the Subordinated Lenders shall be entitled to receive and to
retain any payment, distribution, other rights or benefits in respect of any
Subordinated Obligations. In the event, prior to indefeasible payment in full of
the Senior Obligations, any Subordinated Lender shall receive any payment from
Biovest in respect of the Subordinated Obligations and/or in connection with the
enforcement of the Subordinated Lenders’ rights and remedies against Biovest,
then the Subordinated Lender shall forthwith deliver, or cause to be delivered,
the same to the Senior Lender in precisely the form held by the Subordinated
Lender (except for any necessary endorsement) and until so delivered the same
shall be held in trust by the Subordinated Lender as the property of the Senior
Lenders.

(d)        Notwithstanding anything to the contrary contained in the Senior
Lender Documents, Biovest agrees that it shall not request any additional loan
advances from the Senior Lender such that the outstanding principal amount and
all

 

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accrued and unpaid interest payable under the Senior Lender Documents shall
exceed $3,000,000 in the aggregate.

Section 3.        Assignment and Transfer.

3.1        The Senior Lender may, from time to time, without notice to the
Subordinated Lender, assign or transfer any or all of the Senior Obligations or
any interest in the Senior Obligations; and, notwithstanding any such assignment
or transfer or any subsequent assignment or transfer of the Senior Obligations,
such Senior Obligations shall be and remain Senior Obligations for the purposes
of this Agreement, and every immediate and successive assignee or transferee of
any of the Senior Obligations or of any interest in the Senior Obligations
shall, to the extent of the interest of such assignee or transferee in the
Senior Obligations, be entitled to the benefits of this Agreement to the same
extent as if such assignee or transferee were the Senior Lender, as applicable;
provided, however, that, unless the Senior Lender that is the assignor and/or
transferor shall otherwise consent in writing, such Senior Lender shall have an
unimpaired right, prior and superior to that of any such assignee or transferee,
to enforce this Agreement, for the benefit of such Senior Lender, as to those of
the Senior Obligations which such Senior Lender has not assigned or transferred.

3.2        The Subordinated Lenders may, from time to time, without notice to
the Senior Lender, assign or transfer any or all of the Subordinated Obligations
or any interest in the Subordinated Obligations; and, notwithstanding any such
assignment or transfer or any subsequent assignment or transfer of the
Subordinated Obligations, such Subordinated Obligations shall be and remain
Subordinated Obligations for the purposes of this Agreement, and every immediate
and successive assignee or transferee of any of the Subordinated Obligations or
of any interest in the Subordinated Obligations shall, to the extent of the
interest of such assignee or transferee in the Subordinated Obligations, be
entitled to the benefits of this Agreement to the same extent as if such
assignee or transferee were the Subordinated Lender, as applicable; provided,
however, that, unless the Subordinated Lender that is the assignor and/or
transferor shall otherwise consent in writing, such Subordinated Lender shall
have an unimpaired right, prior and superior to that of any such assignee or
transferee, to enforce this Agreement, for the benefit of such Subordinated
Lender, as to those of the Subordinated Obligations which such Subordinated
Lender has not assigned or transferred.

Section 4.        Effect of Advances by Accentia.   If the Senior Lender does
not fund any Additional Advance Amount (an “Unfunded Amount”) pursuant to the
Senior Term Note and Accentia advances such Unfunded Amount or any portion
thereof (an “Accentia Advance”) to Biovest, the Senior Lender agrees that the
amount of the Additional Advance Amount that it will fund under the Senior Term
Note and the Maximum Senior Obligation Amount will be reduced by the amount of
the Accentia Advance.

 

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Section 5.         No Prejudice to Senior Lender from Actions of the
Subordinated Lenders.  The Senior Lender shall not be prejudiced in its rights
under this Agreement by any act or failure to act of the Subordinated Lenders,
or any noncompliance of the Subordinated Lenders with any agreement or
obligation, regardless of any knowledge thereof which the Senior Lender may have
or with which the Senior Lender may be charged; and no action of the Senior
Lender permitted under this Agreement shall in any way affect or impair the
rights of the Senior Lender and the obligations of the Subordinated Lenders
under this Agreement.

Section 6.        Delay and Waiver.  No delay on the part of the Senior Lender
in the exercise of any right or remedy shall operate as a waiver of such right
or remedy, and no single or partial exercise by the Senior Lender of any right
or remedy shall preclude other or further exercise of such right or remedy or
the exercise of any other right or remedy; nor shall any modification or waiver
of any of the provisions of this Agreement be binding upon the Senior Lender
except as expressly set forth in a writing duly signed and delivered on behalf
of the Senior Lender. For the purposes of this Agreement, Senior Obligations
shall have the meaning set forth in Section 1.1 above, notwithstanding any right
or power of the Subordinated Lenders or anyone else to assert any claim or
defense as to the invalidity or unenforceability of any such Senior Obligations,
and no such claim or defense shall affect or impair the agreements and
obligations of the Subordinated Lenders under this Agreement.

Section 7.        Effect of Bankruptcy.  This Agreement shall continue in full
force and effect after the filing of any petition by or against Biovest under
the Bankruptcy Code and all converted or succeeding cases in respect thereof.
All references herein to Biovest shall be deemed to apply to Biovest as
debtor-in-possession and to a trustee for Biovest.

Section 8.        Successors and Assigns.  This Agreement shall be binding upon
the Subordinated Lenders and the Senior Lender and upon the successors and
assigns of the Subordinated Lenders and the successors and assigns of the Senior
Lender. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which together shall be deemed to
constitute one agreement. It is understood and agreed that if facsimile copies
of this Agreement bearing facsimile signatures are exchanged between the parties
hereto, such copies shall in all respects have the same weight, force and legal
effect and shall be fully as valid, binding, and enforceable as if such signed
facsimile copies were original documents bearing original signature.

Section 9.        Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED, INTERPRETED AND ENFORCED ACCORDING TO, THE LAWS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS PROVISIONS THEREOF.
ANY ACTION BROUGHT CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT

 

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SHALL BE BROUGHT ONLY IN THE STATE COURTS OF ILLINOIS OR IN THE FEDERAL COURTS
LOCATED IN THE STATE OF ILLINOIS; PROVIDED, HOWEVER, THAT THE SENIOR LENDER MAY
CHOOSE TO WAIVE THIS PROVISION AND BRING AN ACTION OUTSIDE THE STATE OF
ILLINOIS. The Senior Lender and the Subordinated Lenders agree to submit to the
jurisdiction of such courts and waive trial by jury. The prevailing party shall
be entitled to recover from the other party its reasonable attorneys’ fees and
costs. Wherever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under such 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 of this Agreement.

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IN WITNESS WHEREOF, this Subordination Agreement has been made and delivered as
of the date and year first written above.

 

CORPS REAL, LLC, an Illinois limited

liability company

By:  

/s/ Ronald E. Osman

  Name: Ronald E. Osman   Title: Manager

LV ADMINISTRATIVE SERVICES, INC.,

as Collateral and Administrative Agent for the

Subordinated Lenders

By:  

/s/ Patrick Regan

Name:   Patrick Regan

Title:   Authorized Signatory

 

Acknowledged and Agreed to: BIOVEST INTERNATIONAL, INC. By:  

/s/ David Moser

    Name: David Moser     Title: Secretary

 

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