SECURITY AGREEMENT
Exhibit 10-1
SECURITY
AGREEMENT (this “Agreement”), dated as
of May 7, 2008, by and between Cellceutix Corporation, a Nevada corporation
(“Company”),
and Cellceutix Pharma, Inc., a Delaware corporation (“Cellceutix Delaware”
and, together with the Company, the “Debtors”), and the
secured party signatory hereto (the “Secured
Party”).
W I T N E
S S E T H:
WHEREAS,
the Company has agreed to issue to the Secured Party and the Secured Party has
agreed to purchase from Company a Convertible Promissory Note due on the first
day of the nineteenth month from the date of issue (the “Note”), which is
convertible into shares of Company’s Common Stock, par value $0.001 per share
(the “Common
Stock”); and
WHEREAS,
Cellceutix Delaware has agreed to guarantee the Company’s obligations under the
Note pursuant to the Guaranty (the “Guaranty”) delivered to the Secured Party on
the date hereof; and
WHEREAS,
in order to induce the Secured Party to purchase the Notes, Debtors have agreed
to execute and deliver to the Secured Party this Agreement for the benefit of
the Secured Party and to grant to it a first priority security interest in
certain property of Debtors to secure the prompt payment, performance and
discharge in full of all of Company’s obligations under the Note and Cellceutix
Delaware’s obligations under the Guaranty.
NOW,
THEREFORE, in consideration of the agreements herein contained and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Certain Definitions.
As used in this Agreement, the following terms shall have the meanings set
forth in this Section 1. Terms used but not otherwise defined in this
Agreement that are defined in Article 9 of the UCC (such as “general intangibles”
and “proceeds”)
shall have the respective meanings given such terms in Article 9 of the
UCC.
(a) “Collateral” means the
collateral in which the Secured Party is granted a security interest by this
Agreement and which shall include the following, whether presently owned or
existing or hereafter acquired or coming into existence, wherever situated, and
all additions and accessions thereto and all substitutions and replacements
thereof, and all proceeds, products and accounts thereof, including, without
limitation, all proceeds from the sale or transfer of the Collateral and of
insurance covering the same and of any tort claims in connection
therewith:
(i) All goods of the Debtors,
including, without limitations, all machinery, equipment, computers, motor
vehicles, trucks, tanks, boats, ships, appliances, furniture, special and
general tools, fixtures, test and quality control devices and other equipment of
every kind and nature and wherever situated, together with all documents of
title and documents representing the same, all additions and accessions thereto,
replacements therefor, all parts therefor, and all substitutes for any of the
foregoing and all other items used and useful in connection with the Debtor’s
businesses and all improvements thereto (collectively, the “Equipment”);
and
(ii) All
Inventory of the Debtors, including all materials, work in process and finished
goods; and
(iii) All
of the Debtors’ contract rights and other general intangibles, including,
without limitation, all Intellectual Property, all partnership interests,
membership interests, stock or other securities, licenses, distribution and
other agreements, computer software, computer software development rights,
leases, franchises, customer lists, quality control procedures, grants and
rights, goodwill, trademarks, service marks, trade styles, trade names, patents,
patent applications, copyrights, deposit accounts, and income tax refunds
(collectively, the “General
Intangibles”); and
(iv) All
Receivables of the Debtors including all insurance proceeds, and rights to
refunds or indemnification whatsoever owing, together with all instruments, all
documents of title representing any of the foregoing, all rights in any
merchandising, goods, equipment, motor vehicles and trucks which any of the same
may represent, and all right, title, security and guaranties with respect to
each Receivable, including any right of stoppage in transit; and
(v) All
of the Debtors’s documents, instruments and chattel paper, files, records, books
of account, business papers, computer programs, investment property and the
products and proceeds of all of the foregoing Collateral set forth in clauses
(i)-(iv) above.
(b) “Company” shall mean,
collectively, Company and all of the subsidiaries of Company.
(c) “Intellectual
Property” means the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including, without
limitation, (i) all copyrights arising under the laws of the United States, any
other country or any political subdivision thereof, whether registered or
unregistered and whether published or unpublished, all registrations and
recordings thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in the United
States Copyright Office, (ii) all letters patent of the United States, any other
country or any political subdivision thereof, all reissues and extensions
thereof, and all applications for letters patent of the United States or any
other country and all divisions, continuations and continuations-in-part
thereof, (iii) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade dress, service marks, logos,
domain names and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, and all common law
rights related thereto, (iv) all trade secrets arising under the laws of the
United States, any other country or any political subdivision thereof, (v) all
rights to obtain any reissues, renewals or extensions of the foregoing, (vi) all
licenses for any of the foregoing, and (vii) all causes of action for
infringement of the foregoing.
(d)
“Obligations”
means all of the Debtor’s obligations under this Agreement, the Note and the
Guarantee, in each case, whether now or hereafter existing, voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from the Secured Party as a preference, fraudulent transfer or
otherwise as such obligations may be amended, supplemented, converted, extended
or modified from time to time. Without limiting the generality of the
foregoing, the term “Obligations” shall include, without limitation: (i)
principal of, and interest on, the Note and the loans extended pursuant thereto;
(ii) any and all other fees, indemnities, costs, obligations and liabilities of
the Debtor from time to time under or in connection with this Agreement, the
Note, the Guaranty and any other instruments, agreements or other documents
executed and/or delivered in connection herewith or therewith; and (iii) all
amounts (including but not limited to post-petition interest) in respect of the
foregoing that would be payable but for the fact that the obligations to pay
such amounts are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving the
Debtors.
(e) “UCC” means the
Uniform Commercial Code, as currently in effect in the State of New
York.
2. Grant of Security
Interest. As an inducement for the Secured Party to purchase the
Notes and to secure the complete and timely payment, performance and discharge
in full, as the case may be, of all of the Obligations, the Debtors hereby,
unconditionally and irrevocably, pledges, grants and hypothecates to the Secured
Party, a continuing security interest in, a continuing first lien upon, an
unqualified right to possession and disposition of and a right of set-off
against, in each case to the fullest extent permitted by law, all of the
Debtor’s right, title and interest of whatsoever kind and nature in and to the
Collateral (the “Security
Interest”).
3. Representations, Warranties,
Covenants and Agreements of the Debtors. Each Debtor represents and
warrants to, and covenants and agrees with, the Secured Party as
follows:
(a) The
Debtor has the requisite corporate power and authority to enter into this
Agreement and otherwise to carry out its obligations thereunder. The
execution, delivery and performance by the Debtor of this Agreement and the
filings contemplated therein have been duly authorized by all necessary action
on the part of the Debtor and no further action is required by the Debtor.
This Agreement has been duly executed by the Debtor. This
Agreement constitutes a legal, valid and binding obligation of the Debtor
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditor’s rights generally.
(b) The
Debtor is the sole owner of the Collateral (except for non-exclusive licenses
granted by the Debtor in the ordinary course of business), free and clear of any
liens, security interests, encumbrances, rights or claims, and is fully
authorized to grant the Security Interest in and to pledge the Collateral,
except as set forth on Schedule B.
There is not on file in any governmental or regulatory authority, agency
or recording office an effective financing statement, security agreement,
license or transfer or any notice of any of the foregoing (other than those that
have been filed in favor of the Secured Party pursuant to this Agreement)
covering or affecting any of the Collateral, except as set forth on Schedule B. So
long as this Agreement shall be in effect, the Debtor shall not execute and
shall not knowingly permit to be on file in any such office or agency any such
financing statement or other document or instrument (except to the extent filed
or recorded in favor of the Secured Party pursuant to the terms of this
Agreement), except as set forth on Schedule
B
(c) No
part of the Collateral has been judged invalid or unenforceable. No
written claim has been received that any Collateral or the Debtor’s use of any
Collateral violates the rights of any third party. There has been no adverse
decision to the Debtor’s claim of ownership rights in or exclusive rights to use
the Collateral in any jurisdiction or to the Debtor’s right to keep and maintain
such Collateral in full force and effect, and there is no proceeding involving
said rights pending or, to the best knowledge of the Debtor, threatened before
any court, judicial body, administrative or regulatory agency, arbitrator or
other governmental authority.
(d) The
Debtor shall at all times maintain its books of account and records relating to
the Collateral at its principal place of business and may not relocate such
books of account and records or tangible Collateral unless it delivers to the
Secured Party at least ten (10) days prior to such relocation (i) written notice
of such relocation and the new location thereof (which must be within the United
States) and (ii) evidence that appropriate financing statements and other
necessary documents have been filed and recorded and other steps have been taken
to perfect the Security Interest to create in favor of the Secured Party valid,
perfected and continuing first priority liens in the Collateral.
(e) This
Agreement creates in favor of the Secured Party a valid security interest in the
Collateral securing the payment and performance of the Obligations and, upon
making the filings described in the immediately following sentence, a perfected
first priority security interest in such Collateral. Except for the filing
of financing statements on Form-1 under the UCC with the jurisdictions indicated
on Schedule B,
attached hereto, no authorization or approval of or filing with or notice to any
governmental authority or regulatory body is required either for the grant
by the Debtor of, or the effectiveness of, the Security Interest granted hereby
or for the execution, delivery and performance of this Agreement by the Debtor
or for the perfection of or exercise by the Secured Party of its rights
and remedies hereunder.
(f) The
Debtors authorize the Secured Party to make any and all financing statement
filings deemed reasonably necessary by the Secured Party. The Secured
Party is authorized to describe the Collateral in such financing statements as
“all assets”..
(g) The
execution, delivery and performance of this Agreement does not conflict with or
cause a breach or default, or an event that with or without the passage of time
or notice, shall constitute a breach or default (with or without notice, lapse
of time or both), under its organizational documents, applicable law or any
agreement to which the Debtor is a party or by which the Debtor is bound.
No consent (including, without limitation, from stock holders or creditors
of the Debtor) is required for the Debtor to enter into and perform its
obligations hereunder.
(h) The
Debtor shall at all times maintain the liens and Security Interest provided for
hereunder as valid and perfected first priority liens and security interests in
the Collateral in favor of the Secured Party until this Agreement and the
Security Interest hereunder shall terminate pursuant to Section 11. The
Debtor hereby agrees to defend the same against any and all persons. The
Debtor shall safeguard and protect all Collateral for the account of the Secured
Party. At the request of the Secured Party, the Debtor will sign and
deliver to the Secured Party at any time or from time to time one or more
financing statements pursuant to the UCC (or any other applicable statute) in
form reasonably satisfactory to the Secured Party and will pay the cost of
filing the same in all public offices wherever filing is, or is deemed by the
Secured Party to be, necessary or desirable to effect the rights and obligations
provided for herein. Without limiting the generality of the foregoing, the
Debtor shall pay all fees, taxes and other amounts necessary to maintain the
Collateral and the Security Interest hereunder, and the Debtor shall obtain and
furnish to the Secured Party from time to time, upon demand, such releases
and/or subordinations of claims and liens which may be required to maintain the
priority of the Security Interest hereunder.
(i) The
Debtor will not transfer, pledge, hypothecate, encumber, license (except for
non-exclusive licenses granted and sales of inventory made by the Debtor in the
ordinary course of business), sell or otherwise dispose of any of the Collateral
without the prior written consent of the Secured Party.
(j) The
Debtor shall keep and preserve its Equipment, Inventory and other tangible
Collateral in good condition, repair and order and shall not operate or locate
any such Collateral (or cause to be operated or located) in any area excluded
from insurance coverage.
(k) The
Debtor shall, within ten (10) days of obtaining knowledge thereof, advise the
Secured Party promptly, in sufficient detail, of any substantial change in the
Collateral, and of the occurrence of any event which would have a material
adverse effect on the value of the Collateral or on the Secured Party’s security
interest therein.
(l) The
Debtor shall promptly execute and deliver to the Secured Party such further
deeds, mortgages, assignments, security agreements, financing statements or
other instruments, documents, certificates and assurances and take such further
action as the Secured Party may from time to time request and may in its sole
discretion deem necessary to perfect, protect or enforce its security interest
in the Collateral including, without limitation, the execution and delivery of a
separate security agreement with respect to the Company’s intellectual property
(“Intellectual
Property Security Agreement”) in which the Secured Party has been granted
a security interest hereunder, substantially in a form acceptable to the Secured
Party, which Intellectual Property Security Agreement, other than as stated
therein, shall be subject to all of the terms and conditions
hereof.
.
(m) The
Debtor shall permit the Secured Party and its representatives and agents to
inspect the Collateral at any time, and to make copies of records pertaining to
the Collateral as may be requested by the Secured Party from time to
time.
(n) The
Debtor will take all steps reasonably necessary to diligently pursue and seek to
preserve, enforce and collect any rights, claims, causes of action and accounts
receivable in respect of the Collateral.
(o) The
Debtor shall promptly notify the Secured Party in sufficient detail upon
becoming aware of any attachment, garnishment, execution or other legal
process levied against any Collateral and of any other information received by
the Debtor that may materially affect the value of the Collateral, the Security
Interest or the rights and remedies of the Secured Party hereunder.
(p) All
information heretofore, herein or hereafter supplied to the Secured Party by or
on behalf of the Debtor with respect to the Collateral is accurate and complete
in all material respects as of the date furnished.
(q) The
Debtor shall at all times preserve and keep in full force and effect its valid
existence and good standing and any rights and franchises material to its
businesses.
(r) The
Debtor was organized and remains organized solely under the laws of the state or
other jurisdiction set forth next to the Debtor’s name in Schedule C attached
hereto, which Schedule
C sets forth the Debtor’s organizational identification number or, if the
Debtor does not have one, states that one does not exist. The Debtor
further represents: (i) the actual name of the Debtor is the name set forth in
Schedule D
attached hereto; (ii) the Debtor has no trade names except as set forth on
Schedule E attached hereto; (iii) the Debtor has not used any name other than
that stated in the preamble hereto or as set forth on Schedule E for the
preceding five years; and (iv) no entity has merged into the Debtor or been
acquired by the Debtor within the past five years except as set forth on Schedule
E.
(s) The
Debtor will from time to time, at the sole expense of the Debtor, promptly
execute and deliver all such further instruments and documents, and take all
such further action as may be necessary or desirable, or as the Secured Party
may reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Secured Party to
exercise and enforce its rights and remedies hereunder and with respect to any
Collateral or to otherwise carry out the purposes of this
Agreement.
4. Defaults. The
following events shall be “Events of
Default”:
(a) The
occurrence of an Event of Default (as defined in the Note) under the
Note;
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(b)
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The
breach of Cellceutix Delaware’s obligations under the
Guaranty;
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(c) Any
representation or warranty of the Debtor herein shall prove to have been
incorrect in any material respect when made; or
(d) The
failure by the Debtor to observe or perform any of its obligations hereunder for
five (5) days after delivery to the Debtor of notice of such failure by or on
behalf of the Secured Party unless such default is capable of cure but cannot be
cured within such time frame and the Debtor is using best efforts to cure same
in a timely fashion; or
(e) If
any provision of this Agreement shall at any time for any reason be declared to
be null and void, or the validity or enforceability thereof shall be contested
by any Debtor, or a proceeding shall be commenced by the Debtor, or by any
governmental authority having jurisdiction over the Debtor, seeking to establish
the invalidity or unenforceability thereof, or the Debtor shall deny that it has
any liability or obligation purported to be created under this
Agreement.
5. Duty To Hold In
Trust. Upon the occurrence of any Event of Default and at any time
thereafter, the Debtors shall, upon receipt by them of any revenue, income or
other sums subject to the Security Interest, whether payable pursuant to the
Note or otherwise, or of any check, draft, note, trade acceptance or other
instrument evidencing an obligation to pay any such sum, hold the same in trust
for the Secured Party and shall forthwith endorse and transfer any such sums or
instruments, or both, to the Secured Party for application to the satisfaction
of the Obligations. If the Debtor shall become entitled to receive or
shall receive any securities or other property, the Debtor agrees to (i) accept
the same as the agent of the Secured Party; (ii) hold the same in trust on
behalf of and for the benefit of the Secured Party; and (iii) deliver any and
all certificates or instruments evidencing the same to the Secured Party on or
before the close of business on the fifth business day following the receipt
thereof by the Debtor, in the exact form received together with any necessary
endorsements, to be held by the Secured Party subject to the terms of this
Agreement as Collateral.
6. Rights and Remedies Upon
Default. Upon occurrence of any Event of Default and at any time
thereafter, the Secured Party shall have the right to exercise all of the
remedies conferred hereunder and under the Note, and the Secured Party shall
have all the rights and remedies of a secured party under the UCC and/or any
other applicable law (including the Uniform Commercial Code of any jurisdiction
in which any Collateral is then located). Without limitation, the Secured
Party shall have the right:
(i)
Subject to the provisions of the UCC and applicable state laws, to take
possession of the Collateral and, for that purpose, enter, with the aid and
assistance of any person, any premises where the Collateral, or any part
thereof, is or may be placed and remove the same, and the Debtors shall assemble
the Collateral and make it available to the Secured Party at places which the
Secured Party shall reasonably select, whether at the Company’s premises or
elsewhere, and make available to the Secured Party, without rent, all of the
Debtors’ respective premises and facilities for the purpose of the Secured Party
taking possession of, removing or putting the Collateral in saleable or
disposable form.
(ii) Upon
written notice to the Debtor by the Secured Party, all rights of the Debtor to
exercise the voting and other consensual rights which it would otherwise be
entitled to exercise and all rights of the Debtor to receive the dividends and
interest which it would otherwise be authorized to receive and retain, shall
cease. Upon such notice, the Secured Party shall have the right to
receive any interest, cash dividends or other payments on the Collateral and, at
the option of the Secured Party, to exercise in the Secured Party’s discretion
all voting rights pertaining thereto. Without limiting the generality
of the foregoing, the Secured Party shall have the right (but not the
obligation) to exercise all rights with respect to the Collateral as if it were
the sole and absolute owner thereof, including, without limitation, to vote
and/or to exchange, at its sole discretion, any or all of the Collateral in
connection with a merger, reorganization, consolidation, recapitalization or
other readjustment concerning or involving the Collateral or the Debtor or any
of its direct or indirect subsidiaries.
(iii) The
Secured Party shall have the right to operate the business of the Debtor using
the Collateral and shall have the right to assign, sell, lease or otherwise
dispose of and deliver all or any part of the Collateral, at public or private
sale or otherwise, either with or without special conditions or stipulations,
for cash or on credit or for future delivery, in such parcel or parcels and at
such time or times and at such place or places, and upon commercially reasonable
terms and conditions Upon each such sale, lease, assignment or other
transfer of Collateral, the Secured Party, may, unless prohibited by applicable
law which cannot be waived, purchase all or any part of the Collateral being
sold, free from and discharged of all trusts, claims, right of redemption and
equities of the Debtor, which are hereby waived and released.
(iv) The
Secured Party shall have the right (but not the obligation) to notify any
account debtors and any obligors under instruments or accounts to make payments
directly to the Secured Party, and to enforce the Debtor’s rights against such
account debtors and obligors.
(v) The
Secured Party, may (but is not obligated to) direct any financial intermediary
or any other person or entity holding any investment property to transfer the
same to the Secured Party, or its designee.
(vi) The
Secured Party may (but is not obligated to) transfer any or all Intellectual
Property registered in the name of the Debtor at the United States Patent and
Trademark Office and/or Copyright Office into the name of the Secured Party or
any designee or any purchaser of any Collateral.
7. Applications of
Proceeds. The proceeds of any such sale, lease or other disposition
of the Collateral hereunder shall be applied first, to the expenses of retaking,
holding, storing, processing and preparing for sale, selling, and the like
(including, without limitation, any taxes, fees and other costs incurred in
connection therewith) of the Collateral, to the reasonable attorneys’ fees and
expenses incurred by the Secured Party in enforcing its rights hereunder and in
connection with collecting, storing and disposing of the Collateral, and then to
satisfaction of the Obligations, and to the payment of any other amounts
required by applicable law, after which the Secured Party shall pay to the
Debtors any surplus proceeds. If, upon the sale, license or other
disposition of the Collateral, the proceeds thereof are insufficient to pay all
amounts to which the Secured Party is legally entitled, the Debtors will be
liable for the deficiency, together with interest thereon, at the rate of 15%
per annum (the “Default Rate”), and
the reasonable fees of any attorneys employed by the Secured Party to collect
such deficiency. To the extent permitted by applicable law, the Debtors
waive all claims, damages and demands against the Secured Party arising out of
the repossession, removal, retention or sale of the Collateral, unless due to
the gross negligence or willful misconduct of the Secured Party.
8. Costs and
Expenses. The Debtors agree to pay all out-of-pocket fees, costs and
expenses incurred in connection with any filing required hereunder, including
without limitation, any financing statements, continuation statements, partial
releases and/or termination statements related thereto or any expenses of any
searches reasonably required by the Secured Party. The Debtors shall also
pay all other claims and charges which in the reasonable opinion of the Secured
Party might prejudice, imperil or otherwise affect the Collateral or the
Security Interest therein. The Debtors will also, upon demand, pay to the
Secured Party the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents, which
the Secured Party may incur in connection with the enforcement of this
Agreement, the custody or preservation of, or the sale of, collection from, or
other realization upon, any of the Collateral, or the exercise or enforcement of
any of the rights of the Secured Party under the Note. Until so paid, any
fees payable hereunder shall be added to the principal amount of the Note and
shall bear interest at the Default Rate.
9. Responsibility for
Collateral. The Debtors assume all liabilities and responsibility
in connection with all Collateral, and the obligations of the Debtors hereunder
or under the Note shall in no way be affected or diminished by reason of the
loss, destruction, damage or theft of any of the Collateral or its
unavailability for any reason. Without limiting the generality
of the foregoing, (a) in no event shall the Secured Party (i) have any duty
(either before or after an Event of Default) to collect any amounts in respect
of the Collateral or to preserve any rights relating to the Collateral, or (ii)
have any obligation to clean-up or otherwise prepare the Collateral for sale,
and (b) the Debtor shall remain obligated and liable under each contract or
agreement included in the Collateral to be observed or performed by the Debtor
thereunder. The Secured Party shall not have any obligation or
liability under any such contract or agreement by reason of or arising out of
this Agreement or the receipt by the Secured Party of any payment relating to
any of the Collateral, nor shall the Secured Party be obligated in any manner to
perform any of the obligations of the Debtor under or pursuant to any such
contract or agreement, to make inquiry as to the nature or sufficiency of any
payment received by the Secured Party in respect of the Collateral or as to the
sufficiency of any performance by any party under any such contract or
agreement, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to the Secured Party or to which the Secured Party may be entitled at
any time or times.
10. Security Interest
Absolute. All rights of the Secured Party and all Obligations of
the Debtors hereunder, shall be absolute and unconditional, irrespective of:
(a) any lack of validity or enforceability of this Agreement, the Notes,
the Warrants or any agreement entered into in connection with the foregoing, or
any portion hereof or thereof; (b) any change in the time, manner or place
of payment or performance of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any departure
from the Notes, the Warrants or any other agreement entered into in connection
with the foregoing; (c) any exchange, release or nonperfection of any
of the Collateral, or any release or amendment or waiver of or consent to
departure from any other collateral for, or any guaranty, or any other security,
for all or any of the Obligations; (d) any action by the Secured Party to
obtain, adjust, settle and cancel in its sole discretion any insurance claims or
matters made or arising in connection with the Collateral; or (e) any other
circumstance which might otherwise constitute any legal or equitable defense
available to the Debtors, or a discharge of all or any part of the Security
Interest granted hereby. Until the Obligations shall have been paid and
performed in full, the rights of the Secured Party shall continue even if the
Obligations are barred for any reason, including, without limitation, the
running of the statute of limitations or bankruptcy. The Debtors expressly
waive presentment, protest, notice of protest, demand, notice of nonpayment and
demand for performance. In the event that at any time any transfer of any
Collateral or any payment received by the Secured Party hereunder shall be
deemed by final order of a court of competent jurisdiction to have been a
voidable preference or fraudulent conveyance under the bankruptcy or insolvency
laws of the United States, or shall be deemed to be otherwise due to any party
other than the Secured Party, then, in any such event, the Debtors’ obligations
hereunder shall survive cancellation of this Agreement, and shall not be
discharged or satisfied by any prior payment thereof and/or cancellation of this
Agreement, but shall remain a valid and binding obligation enforceable in
accordance with the terms and provisions hereof. The Debtors waive all
right to require the Secured Party to proceed against any other person or to
apply any Collateral which the Secured Party may hold at any time, or to marshal
assets, or to pursue any other remedy. The Debtors waive any defense
arising by reason of the application of the statute of limitations to any
obligation secured hereby.
11. Term of Agreement.
This Agreement and the Security Interest shall terminate on the date on
which all payments under the Note have been made in full and all other
Obligations have been paid or discharged. Upon such termination, the
Secured Party, at the request and at the expense of the Debtors, will join in
executing any termination statement with respect to any financing statement
executed and filed pursuant to this Agreement.
12. Power of Attorney; Further
Assurances.
(a) The
Debtors authorize the Secured Party, and does hereby make, constitute and
appoint it, and its respective officers, agents, successors or assigns with full
power of substitution, as the Debtors’ true and lawful attorney-in-fact, with
power, in its own name or in the name of the Debtors, to, after the occurrence
and during the continuance of an Event of Default, endorse any notes,
checks, drafts, money orders, or other instruments of payment (including
payments payable under or in respect of any policy of insurance) in respect of
the Collateral that may come into possession of the Secured Party; to sign
and endorse any UCC financing statement or any invoice, freight or express xxxx,
xxxx of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with accounts, and other
documents relating to the Collateral; to pay or discharge taxes, liens,
security interests or other encumbrances at any time levied or placed on or
threatened against the Collateral; to demand, collect, receipt for,
compromise, settle and xxx for monies due in respect of the Collateral; and
generally, to do, at the option of the Secured Party, and at the Debtors’
expense, at any time, or from time to time, all acts and things which the
Secured Party deems necessary to protect, preserve and realize upon the
Collateral and the Security Interest granted therein in order to effect the
intent of this Agreement, the Note and the, all as fully and effectually as the
Debtors might or could do; and the Debtors hereby ratify all that said attorney
shall lawfully do or cause to be done by virtue hereof. This power of
attorney is coupled with an interest and shall be irrevocable for the term of
this Agreement and thereafter as long as any of the Obligations shall be
outstanding.
(b) On
a continuing basis, the Debtors will make, execute, acknowledge, deliver, file
and record, as the case may be, in the proper filing and recording places in any
jurisdiction, including, without limitation, the jurisdictions indicated on
Schedule B,
attached hereto, all such instruments, and take all such action as may
reasonably be deemed necessary or advisable, or as reasonably requested by the
Secured Party, to perfect the Security Interest granted hereunder and otherwise
to carry out the intent and purposes of this Agreement, or for assuring and
confirming to the Secured Party the grant or perfection of a security interest
in all the Collateral.
(c) The
Debtors hereby irrevocably appoint the Secured Party as the Debtors’
attorney-in-fact, with full authority in the place and stead of the Debtors and
in the name of the Debtors, from time to time in the Secured Party’s discretion,
to take any action and to execute any instrument which the Secured Party may
deem necessary or advisable to accomplish the purposes of this Agreement,
including the filing, in its sole discretion, of one or more financing or
continuation statements and amendments thereto, relative to any of the
Collateral without the signature of the Debtors where permitted by
law.
13. Notices. All
notices, requests, demands and other communications hereunder shall be in
writing, with copies to all the other parties hereto, and shall be deemed to
have been duly given when if delivered by hand, upon receipt, if sent by
facsimile, upon receipt of proof of sending thereof, if sent by nationally
recognized overnight delivery service (receipt requested), the next business day
or if mailed by first-class registered or certified mail, return receipt
requested, postage prepaid, four days after posting in the U.S. mails, in each
case if delivered to the following addresses:
|
If
to the Company:
|
Cellceutix
Corporation
000
Xxxxxxx Xxxx Xxxxxx, Xxxxx X000
Xxxxxxxxxx,
Xxxxxxxxxxxxx 00000
Telephone:
(000) 000-0000
Facsimile:
( )
With a
copy to:
Xxxxxx,
Xxxxxxx & Xxxxxx, LLP
Xxx Xxxx,
XX 00000
Attention: Xxxxx
Xxxxxxxxxxx, Esq.
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
If to the
Secured Party:
Attention:
Facsimile:
With a
copy to:
Xxxxx
Xxxxxxxx & Xxxxxxx, PLC
00 Xxxx
Xxxxxx
Xxxxxxxxxx,
Xxxxxxx 00000
Attn:
Xxxxx XxXxxxxxx, Esq.
Tel:
(000) 000-0000
Fax:
(000) 000-0000
14. Other
Security. To the extent that the Obligations are now or
hereafter secured by property other than the Collateral or by the guarantee,
endorsement or property of any other person, firm, corporation or other entity,
then the Secured Party shall have the right, in its sole discretion, to pursue,
relinquish, subordinate, modify or take any other action with respect thereto,
without in any way modifying or affecting any of the Secured Party’s rights and
remedies hereunder.
15. Miscellaneous.
(a) No
course of dealing between the Debtors and the Secured Party, nor any failure to
exercise, nor any delay in exercising, on the part of the Secured Party, any
right, power or privilege hereunder or under the Note shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.
(b) All
of the rights and remedies of the Secured Party with respect to the Collateral,
whether established hereby or by the Note or by any other agreements,
instruments or documents or by law shall be cumulative and may be exercised
singly or concurrently.
(c) This
Agreement (together with the related agreements contemplated hereby) constitutes
the entire agreement of the parties with respect to the subject matter hereof
and is intended to supersede all prior negotiations, understandings and
agreements with respect thereto. No provision of this Agreement may be
modified or amended except by a written agreement specifically referring to this
Agreement and signed by the parties hereto.
(d) In
the event that any provision of this Agreement is held to be invalid, prohibited
or unenforceable in any jurisdiction for any reason, unless such provision is
narrowed by judicial construction, this Agreement shall, as to such
jurisdiction, be construed as if such invalid, prohibited or unenforceable
provision had been more narrowly drawn so as not to be invalid, prohibited or
unenforceable. If, notwithstanding the foregoing, any provision of this
Agreement is held to be invalid, prohibited or unenforceable in any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective to
the extent of such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other provisions of
this Agreement and without affecting the validity or enforceability of such
provision or the other provisions of this Agreement in any other
jurisdiction.
(e) No
waiver of any breach or default or any right under this Agreement shall be
considered valid unless in writing and signed by the party giving such waiver,
and no such waiver shall be deemed a waiver of any subsequent breach or default
or right, whether of the same or similar nature or otherwise.
(f) This
Agreement shall be binding upon and inure to the benefit of each party hereto
and its successors and assigns.
(g) Each
party shall take such further action and execute and deliver such further
documents as may be necessary or appropriate in order to carry out the
provisions and purposes of this Agreement.
(h) This
Agreement shall be construed in accordance with the laws of the State of New
York, except to the extent the validity, perfection or enforcement of a security
interest hereunder in respect of any particular Collateral which are governed by
a jurisdiction other than the State of New York in which case such law shall
govern. Each of the parties hereto irrevocably submit to the exclusive
jurisdiction of any New York State or United States Federal court sitting in
Manhattan county over any action or proceeding arising out of or relating to
this Agreement, and the parties hereto hereby irrevocably agree that all claims
in respect of such action or proceeding may be heard and determined in such New
York State or Federal court. The parties hereto agree that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. The parties hereto further waive any objection to venue
in the State of New York and any objection to an action or proceeding in the
State of New York on the basis of forum non conveniens.
(i) EACH
PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY DISPUTES THAT MAY
BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATER OF THIS AGREEMENT,
INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS
AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO
ACKNOWLEDGES THAT THIS WAIVED IS A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER
INTO A BUSINESS RELATIONSHIP, THAT EACH PARTY HAS ALREADY RELIED ON THIS WAIVER
IN ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL CONTINUE TO RELY ON
THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT
SUCH PARTY HAS KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHTS TO A JURY TRIAL
FOLLOWING SUCH CONSULTATION. THIS WAIVER IS IRREVOCABLE, MEANING
THAT, NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS AND SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. IN THE EVENT OF A LITIGATION, THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
(j) This
Agreement may be executed in any number of counterparts, each of which when so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof.
(k) The
Debtor shall indemnify, reimburse and hold harmless the Secured Party and its
partners, members, shareholders, officers, directors, employees and agents (and
any other persons with other titles that have similar functions) (collectively,
“Indemnitees”)
from and against any and all losses, claims, liabilities, damages, penalties,
suits, costs and expenses, of any kind or nature, (including fees relating to
the cost of investigating and defending any of the foregoing) imposed on,
incurred by or asserted against such Indemnitee in any way related to or arising
from or alleged to arise from this Agreement or the Collateral, except any such
losses, claims, liabilities, damages, penalties, suits, costs and expenses which
result from the gross negligence or willful misconduct of the Indemnitee as
determined by a final, nonappealable decision of a court of competent
jurisdiction. This indemnification provision is in addition to, and
not in limitation of, any other indemnification provision in the Note, the
Transaction Documents or any other agreement, instrument or other document
executed or delivered in connection herewith or therewith.
IN WITNESS WHEREOF, the parties hereto
have caused this Security Agreement to be duly executed on the day and year
first above written.
CELLCEUTIX
CORPORATION
By:
/s/ Xxxxxx X. Xxxxx
Xxxxxx
X. Xxxxx,
Chief
Executive Officer
CELLCEUTIX
PHARMA INC.
By: /s/
Xxxxxx X. Xxxxx
Xxxxxx
X. Xxxxx,
Chief
Executive Officer
SECURED
PARTIES
Xxxxxx
Partners
White
Star LLC
Xxxxxx
Xxxxxxxxx
_____________________________
SCHEDULE
B
None.
SCHEDULE
C
Entity: Jurisdiction:
Cellceutix
Corporation Nevada
Cellceutix
Pharma,
Inc. Delaware
SCHEDULE
D
CELLCEUTIX
CORPORATION
CELLCEUTIX
PHARMA, INC.
SCHEDULE
E
None.
