Exhibit 10.226

LAURUS MASTER FUND, LTD.

VALENS OFFSHORE SPV I, LTD.

VALENS OFFSHORE SPV II, CORP.

VALENS U.S. SPV I, LLC

c/o Laurus Capital Management, LLC

and Valens Capital Management, LLC

335 Madison Avenue, 10th Floor

New York, New York 10017

December 10, 2007

Biovest International, Inc.

377 Plantation Street

Worcester, Massachusetts 01605

Attention: Chief Financial Officer

 

  Re: Prepayment of Principal and Interest

Ladies and Gentlemen:

Reference is hereby made to:

1. that certain Note and Warrant Purchase Agreement, dated as of March 31, 2006
(as amended, modified or supplemented from time to time, the “March Purchase
Agreement”), by and between Biovest International, Inc., a Delaware corporation
(the “Company”), and Laurus Master Fund, Ltd. (“Laurus”), Valens U.S. SPV I, LLC
(as an assignee of Laurus) (“Valens US”) and Valens Offshore SPV I, Ltd. (as an
assignee of Laurus) (“Valens Ltd” and together with Valens US, the “March 2006
Purchasers”);

2. that certain Secured Promissory Note in the aggregate principal amount of
$7,799,000, dated as of March 31, 2006 (as amended, modified or supplemental
from time to time, the “March 2006 Note”), made by the Company in favor of
Laurus, Valens US (as an assignee of Laurus) and Valens Ltd (as an assignee of
Laurus);

3. that certain Note Purchase Agreement, dated as of October 30, 2007 (as
amended, modified or supplemented from time to time, the “October 2007 Valens US
Purchase Agreement”), by and between the Company and Valens US;

4. that certain Secured Promissory Note in the aggregate principal amount of
$245,000, dated as of October 30, 2007 (as amended, modified or supplemented
from time to time, the “October 2007 Valens US Note”), made by the Company in
favor of Valens US;

5. that certain Note Purchase Agreement, dated as of October 30, 2007 (as
amended, modified or supplemented from time to time, the “October 2007 Valens
Offshore Purchase Agreement”), by and between the Company and Valens Offshore
SPV II, Corp. (“Valens Offshore” and collectively with the March 2007 Purchasers
and Valens US, the “Purchasers” and each a “Purchaser”);

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

6. that certain Secured Promissory Note in the aggregate principal amount of
$255,000, dated as of October 30, 2007 (as amended, modified or supplemented
from time to time, the “October Valens Offshore Note”), made by the Company in
favor of Valens Offshore;

7. that certain Note Purchase Agreement, dated as of the date hereof (as
amended, modified or supplemented from time to time, the “December Valens US
Purchase Agreement”), by and between the Company and Valens US;

8. that certain Secured Promissory Note in the aggregate principal amount of
$4,900,000, dated as of the date hereof (as amended, modified or supplemental
from time to time, the “December 2007 Valens US Note”), made by the Company in
favor of Valens US;

9. that certain Note Purchase Agreement, dated as of the date hereof (as
amended, modified or supplemental from time to time, the “December Valens 2007
Offshore Purchase Agreement” and collectively with the March 2006 Purchase
Agreement, the October 2007 Valens US Purchase Agreement, the October 2007
Valens Offshore Purchase Agreement and the December 2007 Valens US Purchase
Agreement, the “Purchase Agreements” and each a “Purchase Agreement”), by and
between the Company and Valens Offshore; and

10. that certain Secured Promissory Note in the aggregate principal amount of
$3,600,000, dated as of the date hereof (as amended, modified or supplemental
from time to time, the “December 2007 Valens Offshore Note” and collectively
with the March 2006 Note, October 2007 Valens US Note, October 2007 Valens
Offshore Note and the December 2007 Valens US Note, the “Notes”), made by the
Company in favor of Valens Offshore.

Capitalized terms not otherwise defined herein shall have the meaning assigned
to such terms in the Purchase Agreements, as applicable.

In consideration of the premises and for other good and valuable consideration,
the receipt of which is hereby acknowledged and in order to induce the
Purchasers to make, and to continue to make, certain financial accommodations to
the Company, the Company hereby agrees that, on the date hereof, it shall:

(a) prepay principal amounts due and owing under the March 2006 Note for the
months of December 2007 through and including May 2008 to the March 2006
Purchasers in the aggregate amount of $1,335,351.25 as follows:
(i) $1,202,485.70 to Laurus, (ii) $101,474.10 to Valens Ltd and (iii) $31,391.45
to Valens US;

(b) prepay interest that will accrue on the principal amount of the March 2006
Note (after giving effect to the principal prepayment described in subsection
(a) above) during the period commencing on December 1, 2007 through and
including May 31, 2008 (the “Interest Prepayment Period”) to the March 2006
Purchasers in the aggregate amount of $832,804.39 (the “March 2006 Prepaid
Interest Amount”) as follows: (i) $780,820.60 to Laurus, (ii) $39,702.05 to
Valens Ltd and (iii) $12,281.74 to Valens US;

(c) prepay interest that will accrue on the principal amount of the October 2007
Valens US Note during the Interest Prepayment Period to Valens US in the amount
of $13,903.74 (the “October 2007 Valens US Prepaid Interest Amount”);

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

(d) prepay interest that will accrue on the principal amount of the October 2007
Valens Offshore Note during the Interest Prepayment Period to Valens Offshore in
the amount of $14,471.24 (the “October 2007 Valens Offshore Prepaid Interest
Amount”);

(e) prepay interest that will accrue on the principal amount of the December
2007 Valens US Note during the Interest Prepayment Period to Valens US in the
amount of $235,336.11 (the “December 2007 Valens US Prepaid Interest Amount”);
and

(f) prepay interest that will accrue on the principal amount of the December
2007 Valens Offshore Note during the Interest Prepayment Period to Valens
Offshore in the amount of $172,900 (the “December 2007 Valens Offshore Prepaid
Interest Amount”) together with the March 2006 Prepaid Interest Amount, the
October 2007 Valens US Prepaid Interest Amount, the October 2007 Valens Offshore
Prepaid Interest Amount and the December 2007 Valens US Prepaid Interest Amount,
the “Prepaid Interest Amounts”).

Each Purchaser hereby agrees that in the event the Company prepays any
additional principal amounts due and owing under any of the Notes (the
“Principal Prepayment Amount”) prior to the expiration of the Interest
Prepayment Period, the applicable Purchasers shall reimburse the Company a
portion of the Prepaid Interest Amount paid to such Purchasers in an amount
equal to the interest that would have accrued on the Principal Prepayment Amount
from the date of such prepayment through the remainder of the Interest
Prepayment Period.

[Remainder of the page intentionally blank.]

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

This letter agreement may not be amended or waived except by an instrument in
writing signed by the Company and the Purchasers. This letter agreement may be
executed in any number of counterparts, each of which shall be an original and
all of which, when taken together, shall constitute one agreement. Delivery of
an executed signature page of this letter by facsimile or electronic
transmission shall be effective as delivery of a manually executed counterpart
hereof. This letter agreement shall be governed by, and construed in accordance
with, the laws of the State of New York. This letter agreement sets forth the
entire agreement between the parties hereto as to the matters set forth herein
and supersede all prior communications, written or oral, with respect to the
matters herein.

 

Very truly yours, LAURUS MASTER FUND, LTD. By:  

Laurus 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

[Additional Signature Page to Follow]

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

VALENS U.S. SPV I, LLC By:  

Valens Capital Management, LLC,

its investment manager

  By:  

/s/ Patrick Regan

  Name:   Patrick Regan   Title:   Authorized Signatory

 

Agreed and Accepted as of

the date first written above.

BIOVEST INTERNATIONAL, INC. By:  

/s/ Steven Arikian

Name:   Steven Arikian, M.D. Title:   Chairman & CEO