Exhibit 10.17

 

SECURED PROMISSORY NOTE

 

$

DATE:

 

FOR VALUE RECEIVED, the undersigned, CALLISTO PHARMACEUTICALS, INC. 
(“Borrower”), promises to pay to                      (“Lender”), the principal
sum of                                                       
($                  ); with interest at the annual rate of 11% on the unpaid
principal amount from the date hereof until the said principal amount has been
paid in full, whether at the Maturity Date (as hereinafter defined) or
otherwise, all as more fully set forth herein.

 

This Note is given by Borrower to Lender pursuant to and is entitled to the
benefits of the Securities Purchase Agreement between the parties hereto of even
date herewith (the “Agreement”) and Security Agreement of even date herewith
(together with the Agreement, the “Loan Documents”), to which reference is
hereby made for a more complete statement of the terms and conditions under
which the Loan evidenced hereby is made and is to be repaid.  Capitalized terms
not defined herein shall have the meaning set forth in the Loan Documents.  
This Note is secured by a security interest in certain of Borrower’s assets
granted by Borrower to Lender, more fully described in the Security Agreement
and is one of several Notes of like tenor aggregating $[500,000].

 

No reference herein to the Agreement and no provision of the Note or the
Agreement shall alter or impair the obligation of the Borrower, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the place, at the time and in the currency herein prescribed.

 

Interest for the full term of this Note from the date of issuance to the
Maturity Date shall be due on the Maturity Date.  In the Event of Default,
interest shall be 15% of the outstanding principal of the Note.

 

The “Maturity Date” shall be the date that is the earlier of April 15, 2010, or
the date that the entire principal amount and interest on this Note shall become
due and payable by reason of acceleration due to the occurrence of an Event of
Default (as hereinafter defined) or otherwise.

 

EVENTS OF DEFAULT.     Each of the following specified events hereby constitutes
and is herein referred to individually as an “Event of Default”:

 

(a)           Borrower’s failure to make or cause to be made any payments to
Lender under this Note when the same are due; or

 

(b)           Default in the due and timely observance or performance of the
covenants, conditions or agreements of Borrower contained in this Note or in any
other of the Loan Documents relating to the Pledged Securities; or

 

(c)           If any financial statement or representation or warranty made by
Borrower in connection with this transaction or in any document in connection
with the instruments, documents and assignments to be executed by Borrower
hereunder or pursuant hereto shall be untrue in any material respect on the date
made; or

 

(d)           Default of any party thereto in the observance or performance by
such party of any

 

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material term, covenant, condition, warranty or representation made or agreed to
in any of the Loan Documents; or

 

(e)           If any warrant of attachment, execution of other writ shall be
issued or levied upon the proceeds or amounts payable pursuant to the Loan
Agreement and such attachment, execution or other writ shall not be either
discharged or stayed for a period in excess of thirty (30) days; or

 

(f)            If Borrower should become insolvent;  or should be unable to pay
its debts as they mature (including failure to pay the Note); or should make an
assignment for the benefit of creditors or to an agent authorized to liquidate
any substantial amount of its properties or assets; or should file a voluntary
petition in bankruptcy or to effect a plan or other arrangement with creditors;
or should file an answer admitting the jurisdiction of any court and the
material allegations of an involuntary petition filed pursuant to any
legislation or governmental regulation relating to bankruptcy; or should join in
any petition for an adjudication or for another arrangement; or should become or
be adjudicated a bankrupt; or should apply for a consent to the appointment of
or consent that an order be made appointing any receiver or trustee for itself
or for any of its properties, assets or business; or if an order should be
entered pursuant to any legislation or governmental rule relating to bankruptcy
or reorganization; or if a receiver or a trustee should be appointed otherwise
than upon its own application or consent for all or a substantial part of its
properties, assets or business and any such receiver or trustee so appointed is
not discharged within thirty (30) days after the date of such appointment.

 

Upon the occurrence of an Event of Default, the entire principal sum and accrued
interest shall, upon written notice Lender to Borrower, thereupon become due and
payable at the option of the Lender.  Such election may be withdrawn Failure to
exercise this option shall not constitute a waiver of the right to exercise the
same in the event of any subsequent default.  If a declaration is made in
accordance with this paragraph, then and in every such case, the holder or
holders of at least 70% in aggregate principal amount of outstanding Notes may,
by an instrument delivered to the Borrower, annul such declaration and the
consequences thereof, provided that at the time such declaration is annulled:

 

(i)          no judgment or decree has been entered for the payment of any
monies due on the Notes;

 

(ii)         all arrears of interest on the Notes and all other sums payable on
the Notes (except any principal of or interest or premium on the Notes which has
become due and payable by reason of such declaration) shall have been duly paid;
and

 

(iii)        every other Event of Default shall have been duly waived or
otherwise made good or cured;

 

provided, however, that no such annulment shall extend to or affect any
subsequent Event of Default or impair any right consequent thereon.

 

Nothing herein will be deemed to limit or restrict any of Lender’s rights under
the Loan Documents in the event of a default by Borrower thereunder, including,
without limitation, Lender’s rights to deal with or realize upon the Pledged
Securities as specified herein or therein.

 

All payments of principal and interest in respect of this Note shall be made in
lawful money of the United States of America by, at the option of the Borrower,
wire to the bank account of Lender or in same day funds at the office of Lender
at the office set forth in the Loan Documents, or at such place as

 

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shall be designated by Lender in writing pursuant to the Loan Agreement for such
purpose.  Until notified in writing of the transfer of this Note, Borrower shall
be entitled to deem Lender or such person who has been so identified by the
transferor in writing to Borrower as the holder of this Note as the owner and
holder of this Note. Each of Lender and any subsequent holder of this Note
agrees that before disposing of this Note or any part hereof it will make a
notation hereon of all principal and interest payments made hereunder.

 

Borrower may prepay this Note in whole or in part at any time without penalty.

 

All notices and other communications given hereunder shall be given as set forth
in the Loan Documents.

 

Borrower consents to any extension of time of payment hereof, release of all or
any part of the security, or release of any party liable for this obligation. 
Any such extension or release may be made without notice to Borrower and without
discharging its liability.

 

All parties to this Note, whether Borrower, principal, surety, guarantor or
endorser, hereby waive presentment for payment, demand, protest, notice of
protest, notice of dishonor and all other notices in connection with this Note,
except Borrower does not waive notice as to any prejudgment attachment.

 

Borrower promises to pay all costs and expenses, including reasonable attorney’s
fees, incurred in the collection and enforcement of this Note.  Borrower and
endorsers of this Note hereby consent to renewals and extensions of time at or
after the Maturity Date hereof, without notice, and hereby waive diligence,
presentment, protest, demand and notice of every kind and, to the full extend
permitted by law, the right to plead any statute of limitations as a defense to
any demand hereunder.

 

No provision of this Note may be waived, modified, supplemented or amended
except in a written instrument signed, in the case of an amendment, by the
Borrower and the Lenders holding at least 70% of the principal amount
outstanding of the Notes.  No waiver of any default with respect to any
provision, condition or requirement of this Note shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right.

 

This Note is being delivered and is intended to be performed in the State of New
York and is governed by the laws of the State of New York excluding any laws
relating to the conflict or choice of laws.

 

All agreements between the Borrower and the Lender are hereby expressly limited
so that in no contingency or event whatsoever, whether by reason of acceleration
of maturity of the indebtedness or otherwise, shall the amount paid or agreed to
be paid to the holder hereof for the use, forbearance or detention of the
indebtedness evidenced hereby exceed the maximum permissible amount paid or
agreed to be paid to the Lender hereof under applicable law.  If, for any
circumstances whatsoever, fulfillment of any provision hereof, at the time
performance of such provision shall be due, shall involve transcending the limit
of validity prescribed by law, then ipso facto the obligation to be fulfilled
shall be reduced to the limit of such validity, and if from any circumstance the
holder hereof should ever receive as interest an amount which would exceed the
highest lawful rate, such amount which would be excessive interest shall be
applied to the reduction of the payment of interest.  As used herein, the term

 

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“applicable law” shall mean the law in effect as of the date hereof, provided,
however, that in the event there is a change in the law which results in a
higher permissible rate of interest, then this Note shall be governed by such
new law as of its effective date.

 

IN WITNESS WHEREOF, Borrower has caused this Note to be executed and delivered
as of the day and year and the place above written.

 

 

 

CALLISTO PHARMACEUTICALS, INC.

 

 

 

 

 

By:

 

 

 

Gary S. Jacob, CEO

 

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