Document:

Settlement Agreement dated February 13, 2006

 Exhibit 10.5 
  
 Sadis & Goldberg, LLC 
 551 Fifth
Avenue, 21st Floor 
 New
York, New York 10176 
 (212) 947-3793 
 DRH-4172 
 Attorneys for Plaintiff 
  
 And 
  
 Ellenoff Grossman & Schole LLP 
 370 Lexington Avenue, 19th Floor 
 New York, New York 10017 
 (212) 370-1300 
 AGIII-9950 
 Attorneys for Defendant 
  
 UNITED STATES DISTRICT COURT 
 SOUTHERN DISTRICT OF NEW YORK 
  
 DR. ROBERT D. PFEFFER, 
  

					
	 	 	 	 	05 CV 04019 (PKC)
	 	 	Plaintiff,	 	 
			
	-against-	 	 	 	 COMPROMISE AND
 SETTLEMENT
AGREEMENT

  
 BIOVEST INTERNATIONAL, INC., 
  

					
	 	 	Defendant.	 	 

  
 IT IS HEREBY
STIPULATED AND AGREED, by and between the undersigned counsel for plaintiff Dr. Robert D. Pfeffer (hereinafter “Pfeffer”) and defendant, Biovest International, Inc. (hereinafter “Biovest”), as follows: 

 
 WHEREAS, Pfeffer has asserted certain claims against Biovest and
Biovest has asserted certain counterclaims against Pfeffer in the above captioned action (hereinafter the “Action”); and 
  

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 WHEREAS, Pfeffer and Biovest wish to compromise and settle all of their disputes and claims among
themselves with respect to the Action and to discontinue the Action in accordance with the provisions of this Compromise and Settlement Agreement; 
  
 NOW, THEREFORE, in consideration of the mutual promises, covenants, and agreements contained herein, it is hereby stipulated and agreed as follows:

  
 1. Simultaneously with the execution of this Compromise and
Settlement Agreement, the attorneys for Pfeffer and Biovest shall execute a Stipulation of Discontinuance dismissing the above-captioned action with prejudice in the form annexed hereto as Exhibit No. 1. Such Stipulation shall be filed with the
Court by the attorneys for Biovest immediately following the execution of this Compromise and Settlement Agreement. 
  
 2. Biovest agrees to pay Pfeffer Two-Hundred Thousand ($200,000.00), plus interest of 4% computed from July 1, 2003 through February 28, 2006,
or a total of Two-Hundred Twenty One Thousand Nine Hundred Ninety-Nine ($221,999.99) Dollars (hereinafter the “Principal Amount”). Biovest shall pay the Principal Amount in sixteen (16) equal monthly installment payments of $13,874.99
that will commence on March 1, 2006 and end on June 1, 2007 (hereinafter the “Installment Payments”). All Installment Payments shall be delivered to Sadis & Goldberg LLC at 551 Fifth Avenue, 21st Floor, New York, NY 10176 and shall be paid by certified or bank check, wire transfer or ACH Transfer and made payable to
“Sadis & Goldberg LLC as Attorneys For Robert Pfeffer.” The wire transfer information for Sadis & Goldberg, LLC is as follows: 
  
 Citibank - Operating Account 
 Citibank, N.A. 
 120 Broadway 
 New York, NY 10271 
 ABA Routing #: 021000089 
 Acct#: 44768732 
  

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 For the Account of: Sadis & Goldberg LLC 
  
 Citibank – IOLA Account 
 Citibank, N.A. 
 120 Broadway 
 New York, NY 10271 
 ABA Routing #: 021000089 
 Acct#: 33427254 
 For the Account of: Sadis & Goldberg LLC, Attorney Trust Account

  
 Simultaneously with the execution of this Stipulation of Settlement, Biovest
shall execute a Promissory Note in the amount of The Principal Amount in the form annexed hereto as Exhibit No. 2. Biovest shall secure the promissory note by its execution of an affidavit of confession of judgment in the form annexed hereto as
Exhibit No. 3. As is set forth in the annexed Promissory Note, if Biovest receives a loan of any type in excess of $10,000,000, including a credit facility, or raises in excess of Ten Million ($10,000,000.00) Dollars through the sale of equity
or licensing rights that results in net proceeds in excess of Ten Million ($10,000,000.00) Dollars (hereinafter the “Accelerated Funding”), then Biovest will be obligated to pay Pfeffer the entire unpaid Principal Amount
(hereinafter the “Outstanding Balance”) left due Pfeffer at that time within thirty (30) days of Biovest’s closing on such financing. Biovest shall not be obligated to pay Pfeffer the Outstanding Balance on an accelerated basis
if the terms of the Accelerated Funding do not permit the payment of the Outstanding Balance or if the Accelerated Funding is based on a government subsidy, guarantee, or credit, such as a new market tax credit or program where low income areas or
designated growth areas are the essential and primary basis for the Accelerated Funding. 
  
 3. Simultaneously with the execution of this Compromise and Settlement Agreement, Pfeffer and Biovest shall execute and deliver general releases in the form annexed hereto as Exhibit No. 4. Such releases shall be
held in escrow by the attorneys for Biovest pending Biovest’s payment of all of the Installment Payments under the Promissory Note. 
  

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 4. Upon the execution of this Compromise and Settlement Agreement, Biovest will process Pfeffer’s or
his duly authorized broker-dealer’s request to remove the restrictive legend from the shares of common stock that Pfeffer presently owns in accordance with the provisions of Rule 144 of the SEC Act of 1933. 
  
 5. The parties hereto acknowledge and expressly understand that:
(a) this Compromise and Settlement Agreement is entered into solely for the purpose of avoiding possible future expenses, burdens or distractions of litigation; and (b) this Compromise and Settlement Agreement in no way constitutes an
admission by any party hereto of any liability of any kind to any other party or of any wrongdoing on the part of Pfeffer or Biovest and their respective officers, directors, shareholders, parent or subsidiary corporations, directors, partners,
divisions, employees, attorneys, associates, agents, successors, predecessors, assigns, heirs, administrators and anyone affiliated with or acting on behalf of any of them. Biovest specifically denies any and all liability in connection with any
claims made by Pfeffer that have been made or may be made, or which are the subject matter of, arise out of, or are connected with or related to, in any way, the Action. 
  
 6. The parties herein acknowledge that they have been represented by counsel in all aspects of the negotiation and
conclusion of the settlement memorialized in this Compromise and Settlement Agreement and its exhibits, that they have been afforded an opportunity to consider the terms of this Compromise and Settlement Agreement and its exhibits for a reasonable
time prior to its execution, that they carefully have reviewed and read in their entirety this Compromise and Settlement Agreement and its exhibits, fully understand and consent to the 

  

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terms and conditions herein and in the exhibits, that they have signed this agreement and the exhibits voluntarily and of their own free will; and that they
intend to abide by their provisions without exception. 
  
 7. The
parties understand that Biovest has previously disclosed the Action to the United States Securities and Exchange Commission (hereinafter “SEC”) and that Biovest must disclose the contents of this Compromise and Settlement Agreement to the
SEC in its future filings. Other as than required by applicable SEC regulations, the parties herein agree to hold the terms and provisions of this Compromise and Settlement Agreement as confidential information and agree not to disclose such terms
or provisions or to use the facts or circumstances underlying this Compromise and Settlement Agreement, in any communication, whether verbal or in writing, to the print or television media, or except to the extent that such disclosure: 

 
 (a) is required to comply with the terms of this Compromise and
Settlement Agreement; 
  
 (b) is required by the disclosure
requirements of the federal securities laws or by any other federal, state or local government; 
  
 (c) must be reported on any income tax returns; 
  
 (d) is required by a validly issued subpoena; or 
  
 (e) to the extent necessary to consult with their respective accountants or attorneys. The parties agree that in the event a request is made by any person
or entity (including, but not limited to, any government agency) for a disclosure of the confidential information (including when the request is made by issuance of a court order and/or subpoena), they will make no such disclosure prior to the
return date of any such order or subpoena and (ii) promptly upon receipt of such a disclosure request they will provide the other party an opportunity to quash, by providing written notice by Federal Express for overnight delivery. 

 

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 8. The parties agree that this Compromise and Settlement Agreement may be modified only by a writing
executed by the parties and shall be binding upon and inure to the benefit of the parties hereto and their successors and assigns. Modification of this Compromise and Settlement Agreement does not have to be supported by additional consideration but
must express a specific intent to modify this Compromise and Settlement Agreement. 
  
 Except as set forth above, any written notice given shall be in writing and sent to the parties as follows: 
  

			
	    To:                        	 	Dr. Robert Pfeffer
	 	 	c/o Sadis & Goldberg, LLC
	 	 	551 Fifth Avenue, 21st Floor
	 	 	New York, New York 10176
	 	 	(212) 947-3793
	 	 	Attention: Douglas R. Hirsch, Esq.
		
	 	 	Biovest International, Inc.
	 	 	c/o Ellenoff Grossman & Schole LLP
	 	 	370 Lexington Avenue, 19th Floor
	 	 	New York, New York 10017
	 	 	(212) 370-1300
	 	 	Attention: Anthony Galano, III, Esq.

  
 All such notices shall
be sent by Federal Express or other nationally recognized overnight courier and shall be deemed delivered upon receipt or refusal. The attorneys for the parties are hereby authorized to sign and send any notice on behalf of their respective clients.

  
 9. Pfeffer and Biovest agree that the federal and state courts
located in New York County, New York State, shall have sole and exclusive jurisdiction over any dispute relating in any way to this Agreement, the Promissory Note, the Affidavit of Confession of Judgment or the Releases. Pfeffer and Biovest
irrevocably consent to the personal jurisdiction of the federal and state courts located in New York County solely for the purpose of enforcing this Agreement, the Promissory Note, the Affidavit of Confession of Judgment or the Releases. 

 

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 10. The parties further agree that Pfeffer will give Biovest one week prior written notice of any alleged
violations of the terms of this agreement. Biovest shall have five (5) business days to cure any alleged violation, in writing, after receipt of Pfeffer’s written notice concerning any alleged violations of this Compromise and Settlement
Agreement. 
  
 11. This Compromise and Settlement Agreement
contains the entire agreement between the parties and supersedes all prior arrangements and understandings with respect thereto, including whether in writing or oral agreements. The parties expressly warrant that, in entering this agreement, they
are not relying on any representations, either written or oral, made by any other party hereto that is not expressly contained herein. 
  
 12. Each party hereto shall bear its own attorneys’ fees and costs, including, without limitation, any attorneys’ fees and costs in connection
with the Action, excluding any action to enforce this Compromise and Settlement Agreement, the Promissory Note or the Affidavit of Confession of Judgment. 
  
 13. The Parties hereto shall deliver any and all other instruments and documents, and shall do, and cause to be done, all such additional acts and things,
required to be delivered or done pursuant to, or necessary or proper in order to give effect to, all of the terms and provisions of this Compromise and Settlement Agreement, the Promissory Note or the Affidavit of Confession of Judgment. 

 
 14. Each of the words, phrases, sentences, clauses, sections or
subsections contained in this Compromise and Settlement Agreement or any part hereof, is inserted conditionally on its being valid in law and, in the event that any one or more of the words, phrases, sentences, clauses, sections or subsections
contained in this Compromise and Settlement Agreement shall be declared invalid, this Compromise and Settlement Agreement shall 

  

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be construed as if such word or words, phrase or phrases, sentence or sentences, section or sections, or subsection or subsections, had not been inserted.

  
 15. This Compromise and Settlement Agreement shall be governed
by and construed in accordance with the internal laws of the State of New York without regard to conflict of laws principles thereunder. This Compromise and Settlement Agreement may be executed in counterparts and by facsimile. 
  
 16. EACH OF THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE SETTLEMENT DOCUMENTS, OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION
HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OR OMISSIONS OF ANY PARTY. 
  
 17. The undersigned officer of Biovest expressly represents and warrants that he has obtained any and all approvals to enter into this agreement on behalf
of Biovest and has full and complete authority to enter into this agreement. 
  

							
	Dated:	 	February     , 2006	 	 	 	 
	 	 	New York, New York	 	 	 	 
			
	Sadis & Goldberg, LLC	 	 	 	Ellenoff Grossman & Schole LLP
	Attorneys for Plaintiff	 	 	 	Attorneys for Biovest International, Inc.
	Dr. Robert D. Pfeffer	 	 	 	 

									
					
	By:	 	  

	 	 	 	By:	 	  

	 	 	Douglas R. Hirsch, Esq.	 	 	 	 	 	Anthony Galano, III, Esq.
	 	 	551 Fifth Avenue, 21st Floor	 	 	 	 	 	370 Lexington Avenue, 19th Floor
	 	 	New York, New York Suite 10176	 	 	 	 	 	New York, New York 10017
	 	 	(212) 947-3793	 	 	 	 	 	(212) 370-1300

  

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	Dr. Robert D. Pfeffer	 	 	 	Biovest International, Inc.
				
	  

	 	 	 	By:	 	  

	 	 	 	 	 	 	 	 	James McNulty,
	 	 	 	 	 	 	 	 	Chief Financial Officer
	So Ordered:	 	  

	 	 	 	 	 	 
	 	 	P. Kevin Castel, U.S.D.J., S.D.N.Y.	 	 	 	 	 	 

  

 9Promissory Note dated February 13, 2006

 Exhibit 10.6 
  
 PROMISSORY NOTE 
  

			
	$221,999.99	  	 New York, New York
 February     , 2006

  
 FOR VALUE RECEIVED,
the undersigned, Biovest International, Inc., having an address at Biotech Building 4, 377 Plantation Street, Worchester MA 01605 (the “Obligor”), promises to pay to the order of Dr. Robert Pfeffer, 1070 Park Avenue, New York,
NY 10128 (the “Payee”) or at such other place as may be designated in writing by the holder of this Note, the principal amount of Two-Hundred Twenty One Thousand Nine Hundred Ninety-Nine ($221,999.99) Dollars (the “Principal
Amount”), or as much thereof as may be outstanding from time to time hereunder, together with any accrued interest on the outstanding Principal Amount hereof, in the manner set forth herein. No interest will accrue on the outstanding balance of
the Principal Amount, unless otherwise provided for herein. This Promissory Note and Obligor’s obligations hereunder are absolute and unconditional. This Promissory Note may not be assigned without the written consent of Payee. 
  

	I.	Repayment 

  
 Obligor shall pay Payee the Principal Amount in sixteen (16) equal monthly payments of $13,874.99 that will commence on March 1, 2006 and
end on June 1, 2007 (hereinafter the “Installment Payments”). Such Installment Payments shall by made by certified or bank check, wire transfer or ACH Transfer and made payable to “Sadis & Goldberg, LLC, as attorneys for
Dr. Robert D. Pfeffer.” The wire transfer information for Sadis & Goldberg, LLC is as follows: 
  
 Citibank, N.A. 
 120 Broadway 
 New York, NY 10271 
 ABA Routing #: 021000089 
 Acct#: 44768732 
 For the Account of: Sadis & Goldberg LLC 
  
 Citibank – IOLA Account 
  
 Citibank, N.A. 
 120 Broadway 
 New York, NY 10271 
 ABA Routing #: 021000089 
 Acct#: 33427254 
 For the Account of: Sadis & Goldberg LLC, Attorney Trust Account 
  
 Obligor will deliver such Installment Payments to Sadis & Goldberg, LLC, at its offices located at 551 Fifth Avenue, 21st Floor, New York, New York 10176: attn.: Douglas R. Hirsch, Esq. If the 

  

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Obligor receives a loan in excess of Ten Million ($10,000,000.00) Dollars, including a credit facility, or receives in excess of Ten Million ($10,000,000.00)
Dollars as a result of a sale of equity or licensing fees that results in unrestricted net proceeds in excess of $10,000.000.00 (hereinafter the “Accelerated Funding”) then Obligor will be obligated to pay Payee the entire unpaid
Principal Amount (hereinafter the “Outstanding Balance”) left due Payee at that time within thirty (30) days of Obligor’s closing on such financing. Obligor shall not be obligated to pay Payee the Outstanding Balance on an
accelerated basis if the Accelerated Funding is based on a balance sheet financing such as government subsidies, government guarantees, or government tax credits since such funding would not result in an actual cash infusion into Obligor and will
not be considered an acceleration trigger for purposes of paying the Outstanding Balance. 
  

	II.	Default 

  
 In the event of Obligor’s failure to timely pay any of the Installment Payments due under this Note, Payee shall send Obligor written notice of its
default and Obligor shall have five (5) business days to cure such default by sending such Installment Payment to Payee. After this five (5) day cure period has passed and Obligor has failed to cure in that time period, Payee will be
entitled to the entire Outstanding Balance left due Payee at that time, plus accrued interest at a rate equal to fifteen percent (15%) per annum on the Outstanding Balance from the date of Default and shall be entitled to enter judgment against
Obligor in accordance with the Affidavit of Confession of Judgment annexed hereto as Exhibit No. 3. In no event shall interest payable hereunder exceed the maximum permissible under applicable law. 
  

	III.	Notices 

  
 All notices hereunder shall be in writing and shall be sent by Federal Express or other nationally recognized overnight courier and shall be deemed
delivered upon receipt or refusal. The attorneys for the parties are hereby authorized to sign and send any notice on behalf of their respective clients. Any written notice shall be sent to the parties as follows: 
  

			
	    To:                        	 	Dr. Robert Pfeffer
	 	 	c/o Sadis & Goldberg, LLC
	 	 	551 Fifth Avenue, 21st Floor
	 	 	New York, New York 10176
	 	 	(212) 947-3793
	 	 	Attention: Douglas R. Hirsch, Esq.
		
	 	 	Biovest International, Inc.
	 	 	c/o Ellenoff Grossman & Schole LLP
	 	 	370 Lexington Avenue, 19th Floor
	 	 	New York, New York 10017
	 	 	(212) 370-1300
	 	 	Attention: Anthony Galano, III, Esq.

  

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	IV.	Waiver 

  
 THE OBLIGOR HEREBY WAIVES PRESENTMENT FOR PAYMENT, DEMAND, NOTICE OF DISHONOR AND PROTEST OF THIS NOTE. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. NONE OF THE TERMS OR PROVISIONS OF THIS NOTE MAY BE WAIVED, ALTERED, MODIFIED OR AMENDED EXCEPT AS THE PAYEE MAY CONSENT THERETO IN
WRITING. 
  

	V.	Amendments 

  
 Neither this Note nor any provision hereof may be amended, modified, waived, discharged or terminated except by a written instrument signed by the Payee
and, in the case of amendments or modifications, both the Obligor and the Payee. 
  

	VI.	Binding Effect of Note  

  
 This Note shall be binding upon and inure to the benefit of the Obligor and the Payee and their respective successors and assigns; provided that
neither the Obligor nor the Payee may assign or transfer its rights or obligations hereunder. 
  

	VII.	Partial Invalidity 

  
 The invalidity or unenforceability of any one or more phrases, clauses or sections of this Note shall not affect the validity or enforceability of the
remaining portions of this Note. 
  

	VIII.	Entire Agreement 

  
 This Note and the documents and any agreements executed in connection herewith constitute the final and complete agreement of the parties hereto regarding
the subject matter hereof and supersede any and all prior agreements or understandings, written or oral, with respect to the matters contained herein and therein. The undersigned officer of Biovest represents and warrants that he has full and
complete authority to enter into this Note and has received any and all necessary approvals from Biovest’s Board of Directors. 
  

	IX.	Attorneys’ Fees 

  
 The Obligor agrees to pay any and all costs and expenses incurred by Payee in enforcing this Note, including reasonable attorneys’ fees and expenses
at the rate of $375.00 per hour that Payee incurs or is billed for in connection with enforcing the terms of this Note, entering any Judgment, collecting upon said Judgment, and defending or prosecuting any appeals 
  

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 IN WITNESS WHEREOF, the Obligor has caused this instrument to be duly executed by an officer thereunto
duly authorized. 
  
 Dated: February
    , 2006 
  

			
	Biovest International, Inc.
		
	By:	 	  

	 	 	James McNulty, Chief Financial Officer

  

	
	  

	Notary Public

  

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