Document:

Option Agreement

 Exhibit 10.2 
 OPTION AGREEMENT 
 THIS OPTION AGREEMENT (this “Option Agreement”) is made and
entered into as of May 9, 2008, by and between BIOVEST INTERNATIONAL, INC., a Delaware corporation (the “Company”), and Ronald E. Osman (the “Purchaser”). 
 RECITALS 
 WHEREAS, the Company has
entered into a transaction with the Purchaser whereby Purchaser has loaned the sum of $1,000,000 to the Company and the Company has issued to the Purchaser a Convertible Promissory Note in the aggregate principal amount of One Million Dollars
($1,000,000); and 
 WHEREAS the Company wishes to issue to the Purchaser an option to enter into an additional Promissory Note to loan up to
an additional $1,000,000 upon the same Note terms (the “Option”); and 
 WHEREAS, the Purchaser desires to obtain the
Option on the terms and conditions set forth herein. 
 AGREEMENT 
 NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises, representations, warranties and covenants hereinafter set
forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 
 1. OPTION TO INCREASE INVESTMENT: At any time prior to the Maturity Date of the Note, as defined therein, and prior to the Company providing written notice to Purchaser of the receipt of a Term Sheet for a
financing transaction resulting in net proceeds of at least $15 million to the Company which will trigger, at Purchaser’s election, payment of the outstanding sums due under this Note, Purchaser may elect to provide an additional loan of
up to an additional $1,000,000 to the Company (the “Additional Loan”), and Company hereby agrees to accept the Additional Loan, upon the following terms: 
 a. Purchaser may elect to advance to the Company an Additional Loan of up to the full amount of the original Note, in increments of
$100,000; 
 b. All terms and conditions of the Additional Loan shall be the same as those reflected in the original Note
(i.e. interest rate of 10% per annum, maturity of the earlier of 12 months from date of the note or, at the election of Purchaser, the date of a financing resulting in net proceeds of at least $15 million to the Company, convertible into
Company Common Stock at a conversion price of $0.50 per share, issuance of warrants to purchase 2 shares of the Company’s Common Stock for each dollar of the Additional Loan with those warrants having an exercise price of $0.50 per share and a
term of seven years); 

 c. In order to facilitate Purchaser’s evaluation of this Option, Company hereby
agrees to provide information to Purchaser with respect to each of the following occurrences, at Purchaser’s discretion, to allow Purchaser to be able to access the status of the following Milestone Events: 
  

	 	(i)	Milestone Event—Cephalon meeting is being scheduled for May 2008. Cephalon has conducted due diligence regarding BiovaxID and has requested a meeting with Biovest based
on the DMC press release to discuss a business/license agreement for BiovaxID. 

  

	 	(ii)	Milestone Event—FDA meeting being scheduled for May 2008 regarding unblinding and pathway to approval for BiovaxID. 

  

	 	(iii)	Milestone Event—Millipore meeting being scheduled for May 2008. Millipore has conducted due diligence regarding AutovaxID and has requested a meeting with Biovest to
discuss a business/license agreement for AutovaxID. 

  

	 	(iv)	Milestone Event— Unblinding of interim Phase 3 trial results scheduled for mid-June 2008. 

  

	 	(v)	Milestone Event—EMEA meeting to discuss process for approval being scheduled for June 2008. 

  

	 	(vi)	Milestone Event—Final unblinded results and P-value anticipated for August 2008. 

  

	 	(vii)	Milestone Event—Meeting with FDA re: submission for accelerated approval anticipated for September 2008. 

  

	 	(viii)	Milestone Event-Meeting with EMEA regarding Named Patient Basis approval anticipated for September 2008. 

 Notwithstanding the foregoing, neither the Company nor any of its Subsidiaries will provide any material, non-public information to the Purchaser unless
the Purchaser signs a confidentiality agreement and otherwise complies with Regulation FD, under the federal securities laws. 
 2. Purchaser
shall provide written notice to the Company of Purchaser’s election to make the Additional Loan, which notice shall specify the amount of the Additional Loan and shall designate a closing date of not earlier than three days and not later than 7
days after the date of the notice. 
 3. All notices required or permitted hereunder shall be in writing and shall be deemed effectively
given: 
  

	 	(i)	upon personal delivery to the party to be notified; 

  

	 	(ii)	when sent by confirmed facsimile if sent during normal business hours of the recipient, if not, then on the next business day; 

  

	 	(iii)	three (3) business days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or 

	 	(iv)	one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. 

  

	 	(v)	All communications shall be sent as follows: 

  

					
	 If to the Company,
 to:
	 	 Biovest International, Inc.
 324 South Hyde Park
Avenue, Suite 350
 Tampa, Florida 33606
 Attention: Chief
Financial Officer
 Facsimile: 813-258-6912
	 	
			
		 	with a copy to:	 	
			
		 	 Samuel Duffey, Esq.
 324 South Hyde Park Avenue,
Suite 350
 Tampa, Florida 33606
 Facsimile:
813-258-6912
	 	
			
	 If to the Purchaser,
 to:
	 	 Attn: Ronald E. Osman
 1602 W. Kimmel
St.
 P. O. Box 939
 Marion, IL 62959
 Facsimile: 618-997-4983
	 	
			
		 	with a copy to:	 	
			
		 	  
	 	
			
		 	  
	 	
			
		 	  
	 	
			
		 	  
	 	

 or at such other address as the Company or the Purchaser may designate by written notice to the other parties
hereto given in accordance herewith. 
 4. This Option Agreement may be executed by facsimile signatures and in any number of counterparts,
each of which shall be an original, but all of which together shall constitute one agreement. 
 [SIGNATURE PAGE TO FOLLOW] 

 IN WITNESS WHEREOF, the parties hereto have executed the OPTION AGREEMENT as of the date set forth in the
first paragraph hereof. 
  

									
	COMPANY:	 		 	PURCHASER:
			
	BIOVEST INTERNATIONAL, INC.	 		 	RONALD E. OSMAN
					
	By:	 	 /s/ Steven Arikian
	 		 	By:	 	 /s/ Ronald E. Osman

	Name:	 	Steven Arikian, M.D.	 		 		 	
	Title:	 	Chairman and CEOConvertible Promissory Note

 Exhibit 10.3 
 CONVERTIBLE PROMISSORY NOTE 
 THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAW OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. 
  

			
	$1,000,000.00	 	Dated: May 9, 2008

 FOR VALUE RECEIVED, Biovest International, Inc., a Delaware corporation
(“Borrower”) promises to pay to the order of Ronald E. Osman (“Lender”), the principal sum of One Million Dollars ($1,000,000.00), together with interest as provided herein. This Convertible Promissory Note
is created on account of the loan by Lender in the sum of $1,000,000.00 to be used for general working capital purposes by Borrower. 
 INTEREST: Commencing on May 9, 2008, the unpaid principal shall bear simple interest at the rate equal to ten percent (10%) per annum. Interest shall be paid in arrears on the first day of each month commencing on
June 1, 2008 through the date of maturity, at which time all accrued but unpaid interest shall be due and payable. Interest shall be paid in shares of fully paid and non-assessable Common Stock of the Company, which is restricted as to transfer
under state and federal securities laws, at the rate of $0.50 per share of Company Common Stock. 
 MATURITY: The entire principal
balance of this Note shall be due and payable in full twelve (12) months from the date hereof (the “Maturity Date”). There shall be no penalty for early repayment of all or any part of the principal. On the date Borrower signs
a term sheet or letter of intent (or in the absence of a term sheet or letter of intent, the date on which Borrower signs a definitive agreement) for a financing resulting in net proceeds of at least $15 million (the “Financing”),
Borrower shall provide written notice to Lender and Lender shall have three days to elect in writing to require Borrower to repay the loan from the proceeds of the financing. Upon such notice from Lender, Borrower shall repay all principal under
this note in full at the closing of the Financing. Upon failure of Lender to so elect in writing, this note shall continue to the Maturity Date. 
 OPTION TO CONVERT TO EQUITY: At any time prior to the Maturity Date, or prior to payment of the outstanding sums due under this Note, Lender may elect to convert the outstanding balance due, including accrued and unpaid interest,
into Common Stock of the Company, which is restricted as to transfer under state and federal securities laws, at the rate of $0.50 per share of Company Common Stock. The number of shares of Company Common Stock issuable upon conversion of this Note
and the above conversion price shall be subject to adjustment as follows: In case the Company shall (A) pay a dividend in Company Common Stock or make a distribution in Company Common Stock, (B) subdivide its outstanding 

  

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Company Common Stock, (C) combine its outstanding Company Common Stock into a smaller number of shares of Company Common Stock, or (D) issue by
reclassification of Company Common Stock other securities of the Company, then the conversion price and the number of shares of Company Common Stock issuable open conversion of this Note immediately prior thereto shall be proportionately adjusted so
that the Holder shall be entitled to receive the kind and number of shares or other securities of the Company which it would have owned or would have been entitled to receive immediately after the happening of any of the events described above had
this Note been converted at the conversion price in effect immediately prior to the happening of such event or any record date with respect thereto and where adjustment made pursuant to this provision shall become effective immediately after the
effective date of such event retroactive to the record date, if any, for such event. For the purpose of this provision, the term “Company Common Stock” shall mean (i) the class of stock designated as the Common Stock of the
Company at the date of this Note, or (ii) any other class of stock resulting from successive changes or reclassifications of such Common Stock consisting solely of changes in par value, or from par value to no par value, or from no par value to
par value 
 DEFAULT: The Borrower shall be in Default of this Note on the occurrence of any of the following events: (i) the
Borrower shall fail to meet its obligation to make the required principal or interest payments hereunder; (ii) the Borrower shall be dissolved or liquidated; (iii) the Borrower shall make an assignment for the benefit of creditors or shall
be unable to, or shall admit in writing their inability to pay their debts as they become due; (iv) the Borrower shall commence any case, proceeding, or other action under any existing or future law of any jurisdiction relating to bankruptcy,
insolvency, reorganization or relief of debtors, or any such action shall be commenced against the undersigned; (v) the Borrower shall suffer a receiver to be appointed for it or for any of its property or shall suffer a garnishment,
attachment, levy or execution. 
 REMEDIES: Upon default of this Note, Lender may declare the entire amount due and owing hereunder to
be immediately due and payable. Lender may also use all remedies in law and in equity to enforce and collect the amount owed under this Note. 
 MISCELLANEOUS: Notwithstanding any provision herein or in any documents or instrument now or hereafter securing this Note, the total liability for payments in the nature of interest shall not exceed the limits now or at any time in
the future imposed by the applicable laws of the State of Delaware. 
 This Note shall be governed by, and construed in accordance with, the laws of the
State of Delaware, notwithstanding the application of choice of law principles. Borrower hereby waives demand, presentment, notice of dishonor, diligence in collecting, grace and notice of protest. 
 [SIGNATURE PAGE TO FOLLOW] 
  

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	BORROWER:
	
	BIOVEST INTERNATIONAL, INC.
		
	By:	 	 /s/ Steven Arikian, M.D.

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

  

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