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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.
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| $1,000,000.00 |
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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, inclu
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