EXHIBIT 2
AMENDMENT TO INVESTMENT AGREEMENT
BETWEEN ACCENTIA, INC. AND BIOVEST INTERNATIONAL, INC.
This document dated June 16, 2003 (the "Amendment"), sets forth the terms of an
Amendment to the Investment Agreement by and between Accentia, Inc. and Biovest
International, Inc., dated April 10, 2003 (the "Agreement"). Except where
modified or augmented hereby (and by the terms of that certain escrow agreement
dated an even date herewith (the "Escrow Agreement"), the terms of the
Investment Agreement shall remain in full force and effect. This Amendment is
entered into for good and valuable consideration in hand received and together
with the Agreement (and the Escrow Agreement which terms are hereby incorporated
herein) constitutes the entire understanding of the parties.
1. (I) PURCHASE PAYMENT TERMS: Section 1.01 of the Agreement is hereby
amended to provide that the purchase price of $20,000,000 shall be
paid as follows: (i) cash at closing of $2,500,000.00, less $530,000
sums advanced to or on behalf of Biovest by Accentia (pursuant to that
certain Secured Note dated April 10, 2003 which is hereby satisfied
and executed in full) prior to the Closing; (ii) $2,500,000.00 in the
form of a Promissory Note (the "Second Closing Note") due on the 90
day anniversary of the date hereof bearing interest at a rate of 3%
per annum.
and (iii) delivery of a non-interest bearing note for $15,000,000 having the
terms as provided in the Agreement (and the certificates evidencing shares of
Biovest Common
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Stock and Preferred Stock issuable to Accentia in respect of the subscription
price therefor) which shall be held in escrow pursuant to and in accordance with
the terms of the Escrow Agreement.
(II) CLOSING DATE: The date of Closing shall be on the date hereof, or such
other date as shall be mutually agreed upon by the parties.
(III) SHARES TRANSFERRED: Section 1.01 is further amended to reflect that both
Accentia and Biovest recognize that there are currently insufficient authorized,
unissued shares of Biovest Common Stock to allow Biovest to transfer to Accentia
the 81% stock ownership contemplated by the Investment Agreement. The parties
hereby agree that in order to bring Accentia's equity ownership of Biovest up to
the level of 81% as set forth in the Investment Agreement, Biovest shall,
subject to the terms of the Escrow Agreement, issue to Accentia at Closing
sufficient shares of Convertible Preferred Stock of Biovest to bring Accentia's
total number of shares, post conversion, to the 81% level. These Preferred
shares shall provide all rights held by common shares together with the right to
be converted to Common Stock of Biovest on a 2-for-1 basis as soon as additional
shares of Common Stock are authorized by Biovest's Shareholders at an annual (or
special) Shareholder's Meeting or through such other mechanism as may be
available.
(IV) XXXXX XXXXXX AND XXXXXX XXXXXXXXXXX WORKING CAPITAL LOANS. Section 1.01 is
further amended to reflect that at Closing the principal and
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interest of the working capital loans in the approximate principal amount of
$460,000 made by Xxxxx Xxxxxx and $250,000 made by Xxxxxx Xxxxxxxxxxx to Biovest
shall be converted into Convertible Notes having the following terms: (i) all
principal and interest shall be paid in one installment on the third anniversary
of Closing, subject to prepayment by Biovest upon thirty days written notice,
(ii) the convertible notes shall earn interest at 7% per annum, (iii) the
convertible notes, shall at the discretion of the Holder, be convertible into
shares of Accentia common stock in accordance with Section 1.01 of the Agreement
with the value per Accentia share being adjusted by a twenty percent (20%)
discount from Accentia share value as established in accordance with Section
1.01 of the Agreement or, in the alternative, the convertible notes may be
converted into shares of Biovest common stock in accordance with Section 1.01 of
the Agreement with the price per Biovest share adjusted from $0.50 to $0.25 per
share. In addition, Biovest shall adjust the exercise price on 200,000 Warrants
issued to Xxxxx Xxxxxx in connection with these loans from $0.50 to $0.25 per
share, and shall adjust the exercise price on 100,000 Warrants issued to Xxxxxx
Xxxxxxxxxxx in connection with this loan from $0.50 to $0.25 per share.
(V) Satisfaction of Closing Conditions. Accentia hereby acknowledges the
satisfaction by Biovest of all its closing conditions.
(VI) Expenses. Following closing a current employee of Accentia, Xxxxxx
Xxxxxxxx, will serve as a full time employee of Biovest and, at Accentia's
discretion, his compensation as set forth in his agreement as amended from time
to time with Accentia shall either be
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paid directly by Biovest to the employee or reimbursed to Accentia should
Accentia elect to directly compensate the employee. Appropriate reimbursement
shall be made by Biovest for any additional employees of Accentia that devote
full or significant time to the services for Biovest. Additionally, fees and
expenses in the approximate amount of $50,000 for the legal services of Xxxxxx
Xxxxxx, Esq. incurred by Accentia in connection with this Agreement and the
Closing shall be reimbursed by Biovest.
(VII) Convertible Notes. The terms of the election options available to the
convertible noteholders shall be adjusted as follows:
A. Option 1 shall be to simply hold their existing Note, "as is" and be
paid in accordance with its terms upon maturity. These notes shall
remain unsecured;
B. Option 2 shall be to elect to accept the extended term as set forth in
the current from of "Unsecured Exchange Note", except that these Notes
shall become SECURED as set forth in the current version of the
"Secured Exchange Note" contained in our original package. In
addition, these notes will retain their original issuance date and
face amounts, so as to allow the holders to comply with the "holding
period" requirements in SEC regulations in the event of conversion of
this debt to equity. The Holders of these notes shall retain any
Warrant holdings they obtained in connection with these Notes, or any
previous extension thereof.
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C. Xxxxxx Xxxxxxxxx Wise shall be offered a repricing of the Warrants
issued to them in connection with obtaining this Bridge Loan financing
to a price of $0.50 on Warrants currently priced at $1.50 and $0.25 on
Warrants currently priced at $1.25,so long as at least 60% of the
Convertible Noteholders decide to accept Option 2. This repricing will
be disclosed in the form of the new Note to be drafted for those
electing Option 2.
VIII. Certain Accrued Compensation. At the Closing, Xxxxx Xxxxxxxxx shall tender
his resignation as Director of Biovest, and shall further tender his resignation
as President/COO of the Biovest.
At the Closing, Xx. Xxxxxxxxxx shall tender his resignation as Chief
Executive Officer and as Chairman of the Board of Directors of Biovest, but
shall retain his position as a member and Vice-Chairman of the Board of
Directors.
At the Closing, Xx. Xxxxx XxXxxx shall tender his resignation as Director
of Biovest.
At the Closing, Xx. Xxxxxx Xxxxxxx shall tender his resignation as Chief
Financial Officer of Biovest.
Accrued executive compensation through June 30, 2003 for Xx. Xxxxxxxxx and Xx.
Xxxxxxxxxx ($855,000 for each of them) shall be paid as follows:
B. A. By Convertible Secured Promissory Note in the amount of $655,000 to each,
with a maturity date of four (4) years from the date of Closing and the
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same security and conversion terms as are contained in the Amended Notes being
offered to the Convertible Noteholders; the remaining $200,000 due to each shall
be paid in two equal installments of $100,000, the first installment paid at
Closing and the second installment paid 90 days from the date of Closing.
All outstanding Options to Xx. Xxxxxxxxx or Xx. Xxxxxxxxxx shall be converted to
Warrants, exercisable six months from issuance and with a five-year term;
One-half of the Warrants to each shall be priced at $0.25 per share; One-half of
the Warrants to each shall be priced at $0.50 per share;
Biovest shall continue to maintain or pay the current level of Health Insurance
for both Xx. Xxxxxxxxx and Xx. Xxxxxxxxxx through and including December 31,
2003;
Xx. Xxxxxxxxx and Xx. Xxxxxxxxxx shall have a period of 45 days from the date of
Closing to submit requests for reimbursement of all ordinary and customary
reimbursable expenses on appropriate Expense Reimbursement Vouchers, which shall
be reviewed and paid in the ordinary course in accordance with Biovest's
existing expense reimbursement procedures.
Accrued compensation due to Xx. Xxxxx XxXxxx shall be paid within 120 days
of the date of Closing, at the discretion of the Chief Financial Officer of
Biovest, in a single lump payment or in installments.
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Severance in the amount of one month's salary shall be paid to Xx. Xxxxxxx,
and Biovest shall continue to provide health insurance benefits for Xx. Xxxxxxx
for a period of six months after the Closing.
All options previously issued to Xx. XxXxxx (375,000) and Xx. Xxxxxxx
(100,000) shall be cancelled at the time of Closing, and Biovest shall issue to
Xx. XxXxxx 375,000 Warrants with an exercise price of $0.50 per share, and shall
issue to Xx. Xxxxxxx 100,000 Warrants with an exercise price of $0.50 per share,
all being exercisable beginning six months after the date of issuance and having
a five year term.
Xxxxx Xxxxx, Director of Legal Affairs of Biovest, shall receive a performance
bonus in the amount of $10,000.00, payable at Closing, and shall be issued
100,000 Options to purchase Biovest Common Stock priced at $0.50 per share.
Options previously issued to Xx. Xxxxx X. Xxxxxx Xx. on or about March 6, 2003,
shall be priced as follows: 500,000 Options shall be priced at $.0.50 per share,
and 500,000 Options shall be priced at $0.25 per share.
VIII. Accentia represents that it is engaged in various aspects of developing,
commercializing and distributing biopharmaceutical products and that its
subsidiaries, both directly and through subcontractor and vendor relationships,
provide an array of product development and commercialization services,
including, but not limited to, sales, marketing, specialty pharmacy distribution
support, pharmaco-economic services, regulatory services and other development
and commercialization services. Biovest
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acknowledges that it needs and would benefit from these types of
commercialization services and would desire to utilize such services to the
extent such services were provided to it on terms no less favorable than the
best that could be available in an arms length transaction with unrelated third
parties.
X. Escrow Agreement. Reference is made to the Escrow Agreement and the documents
contemplated thereby which are hereby incorporated by reference as if set forth
in full herein.
The undersigned hereby agree to the modified and additional terms set forth
hereinabove on the date first set forth above.
Biovest International, Inc. Accentia, Inc.
By: By:
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Xx. Xxxxxxxxxxx Xxxxxxxxxx, Chairman Xx. Xxxxx X'Xxxxxxx, CEO
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