Exhibit 10-33
 
 
AMENDED AND RESTATED GUARANTY

AMENDED AND RESTATED GUARANTY (this "Guaranty"), dated as of January 1, 2011, by
Cellceutix Pharma, Inc., a Delaware corporation with an address of 100 Cummings
Center, Suite 151-B, Beverly, MA  01915 (the "Guarantor"), in favor of White
Star, LLC (the "Secured Party").

WHEREAS, the Guarantor is a subsidiary or affiliate of Cellceutix Corporation
(the "Borrower"); and

WHEREAS, in accordance with a certain Second Amended and Restated Convertible
Promissory Note, dated as of the date hereof (the "Amended Note"), executed by
the Borrower, and certain related agreements between the Borrower and the
Secured Party (collectively, as amended, restated, or extended from time to
time, the "Loan Documents"), the Secured Party has agreed to continue to loan to
the Borrower Two Hundred and Twenty Two Thousand, Five Hundred Eighty Nine
dollars and 61/100 ($222,589.61)  (the "Loan"); and

WHEREAS, the Secured Party's willingness to extend and continue the Loan is
conditioned upon the Guarantor executing and delivering this Guaranty; and

WHEREAS, the aforesaid Loan will be beneficial to the Guarantor inasmuch as the
proceeds of the Loan to the Borrower will indirectly benefit the Guarantor;

NOW, THEREFORE, in order to induce the Secured Party to make the Loan to the
Borrower pursuant to the Loan Documents, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged by
the Guarantor, the Guarantor hereby agrees as follows:

1.  
Guaranty of Payment and Performance. The Guarantor hereby guarantees to the
Secured Party the full and punctual payment when due (whether at maturity, by
acceleration or otherwise), and the performance, of all liabilities, agreements
and other obligations of the Borrower to the Secured Party, whether direct or
indirect, absolute or contingent, due or to become due, secured or unsecured,
now existing or hereafter arising or acquired (whether by way of discount,
letter of credit, lease, loan, overdraft or otherwise), including without
limitation all obligations under the Amended Note and the other Loan Documents
(collectively, the "Obligations"). This Guaranty is an absolute, unconditional
and continuing guaranty of the full and punctual payment and performance of the
Obligations and not of their collectability only and is in no way conditioned
upon any requirement that the Secured Party first attempt to collect any of the
Obligations from the Borrower or resort to any security or other means of
obtaining their payment. Should the Borrower default in the payment or
performance of any of the Obligations, the obligations of the Guarantor
hereunder shall become immediately due and payable to the Secured Party, without
demand or notice of any nature, all of which are expressly waived by the
Guarantor. Payments by the Guarantor hereunder may be required by the Secured
Party on any number of occasions.

2.  
Guarantor's Agreement to Pay. The Guarantor further agrees, as the principal
obligor and not as a guarantor only, to pay to the Secured Party, on demand, all
reasonable costs and expenses (including court costs and reasonable legal
expenses) incurred or expended by the Secured Party in connection with
enforcement of this Guaranty, together with interest on amounts recoverable
under this Guaranty from the time such amounts become due under this Guaranty
until payment, at the rate per annum equal to the default rate set forth in the
Amended Note; provided that if such interest exceeds the maximum amount
permitted to be paid under applicable law, then such interest shall be reduced
to such maximum permitted amount.

 
3.  
Unlimited Guaranty. The liability of the Guarantor hereunder shall be unlimited
to the extent of the Obligations and the other obligations of the Guarantor
hereunder (including, without limitation, under Section 2 above).

4.  
Waivers by Guarantor; Secured Party's Freedom to Act. The Guarantor agrees and
warrants that the Obligations will be paid and performed strictly in accordance
with their respective terms regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Secured Party with respect thereto. The Guarantor waives
presentment, demand, protest, notice of acceptance, notice of Obligations
incurred and all other notices of any kind, all defenses which may be available
to Borrower by virtue of any valuation, stay, moratorium law or other similar
law now or hereafter in effect, any right to require the marshalling of assets
of the Borrower, and all suretyship defenses generally. Without limiting the
generality of the foregoing, the Guarantor agrees to the provisions of any
instrument evidencing, securing or otherwise executed in connection with any
Obligation and agrees that the obligations of the Guarantor hereunder shall not
be released or discharged, in whole or in part, or otherwise affected by (i) the
failure of the Secured Party to assert any claim or demand or to enforce any
right or remedy against the Borrower; (ii) any extensions or renewals of any
Obligation; (iii) any rescissions, waivers, amendments or modifications of any
of the terms or provisions of any agreement evidencing, securing or otherwise
executed in connection with any Obligation (provided, that, the obligations of
the Guarantor hereunder shall be appropriately modified to reflect any amendment
or modification of the Obligations); (iv) the substitution or release of any
entity primarily or secondarily liable for any Obligation; (v) the adequacy of
any rights the Secured Party may have against any collateral or other means of
obtaining repayment of the Obligations; (vi) the impairment of any collateral
securing the Obligations, including without limitation the failure to perfect or
preserve any rights the Secured Party might have in such collateral or the
substitution, exchange, surrender, release, loss or destruction of any such
collateral; or (vii) any other act or omission which might in any manner or to
any extent vary the risk of the Guarantor or otherwise operate as a release or
discharge of any other guarantor, all of which may be done without notice to the
Guarantor.

5.  
Unenforceability of Obligations Against Borrower. If for any reason the Borrower
has no legal existence or is under no legal obligation to discharge any of the
Obligations, or if any of the Obligations have become irrecoverable from the
Borrower by operation of law or for any other reason, this Guaranty shall
nevertheless be binding on the Guarantor to the same extent as if the Guarantor
at all times had been the principal obligor on all such Obligations. In the
event that acceleration of the time for payment of the Obligations is stayed
upon the insolvency, bankruptcy or reorganization of the Borrower, or for any
other reason, all such amounts otherwise subject to acceleration under the terms
of any agreement evidencing, securing or otherwise executed in connection with
any Obligation shall be immediately due and payable by the Guarantor.

6.  
Subrogation; Subordination. Until the payment and performance in full of all
Obligations, the Guarantor shall not exercise any rights against the Borrower
arising as a result of payment by any Guarantor hereunder, by way of subrogation
or otherwise, and will not prove any claim in competition with the Secured Party
or its affiliates in respect of any payment hereunder in bankruptcy or
insolvency proceedings of any nature; the Guarantor will not claim any set-off
or counterclaim against the Borrower in respect of any liability of the
Guarantor to the Borrower; and the Guarantor waives any benefit of and any right
to participate in any collateral which may be held by the Secured Party. The
payment of any amounts due with respect to any indebtedness of the Borrower now
or hereafter held by the Guarantor is hereby subordinated to the prior payment
in full of the Obligations. The Guarantor agrees that after the occurrence of
any default in the payment or performance of the Obligations, after the
expiration of any applicable cure period, it will not demand, sue for or
otherwise attempt to collect after such time any such indebtedness of the
Borrower to the Guarantor until the Obligations shall have been paid in full.
If, notwithstanding the foregoing sentence, the Guarantor shall collect, enforce
or receive any amounts in respect of such indebtedness, such amounts shall be
collected, enforced and received by the Guarantor as trustee for the Secured
Party and be paid over to the Secured Party on account of the Obligations
without affecting in any manner the liability of the Guarantor under the other
provisions of this Guaranty.

7.  
Further Assurances. The Guarantor agrees to do all such things and execute all
such documents, as the Secured Party may consider reasonably necessary or
desirable to give full effect to this Guaranty and to perfect and preserve the
rights and powers of the Secured Party hereunder.

8.  
Termination; Reinstatement. This Guaranty shall remain in full force and effect
until the Obligations (other than contingent indemnity obligations) are paid in
full or otherwise satisfied (including by the conversion in full of the Amended
Note) and not subject to any recapture or preference in bankruptcy or similar
proceedings, and the Secured Party has no further commitment to extend credit to
the Borrower. This Guaranty shall continue to be effective or be reinstated,
notwithstanding any notice or termination, if at any time any payment made or
value received with respect to an Obligation is rescinded or must otherwise be
returned by the Secured Party upon the insolvency, bankruptcy or reorganization
of the Borrower, or otherwise, all as though such payment had not been made or
value received.

9.  
Successors and Assigns. This Guaranty shall be jointly and severally binding
upon the Guarantor, its successors and assigns, and shall inure to the benefit
of and be enforceable by the Secured Party and their successors, transferees and
assigns. Without limiting the generality of the foregoing sentence, the Secured
Party may assign or otherwise transfer any agreement or any note held by it
evidencing, securing or otherwise executed in connection with the Obligations,
or sell participations in any interest therein, to any other person or entity,
and such other person or entity shall thereupon become vested, to the extent set
forth in the agreement evidencing such assignment, transfer or participation,
with all the rights in respect thereof granted to the Secured Party herein.

10.  
Amendments and Waivers. No amendment or waiver of any provision of this Guaranty
nor consent to any departure by the Guarantor therefrom shall be effective
unless the same shall be in writing and signed by the Secured Party. No failure
on the part of the Secured Party to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right.

11.  
Notices. All notices and other communications called for hereunder shall be made
in writing and, unless otherwise specifically provided herein, shall be deemed
to have been duly made or given when delivered to the addresses, and in
accordance with the procedure, set forth in the Amended and Restated Security
Agreement (the “Security Agreement”) executed by the undersigned as of the date
hereof.

12.  
Governing Law; Consent to Jurisdiction. This Guaranty shall be governed by, and
construed in accordance with, the laws of the State of New York without
reference to its conflicts of laws provisions. The Guarantor agrees that any
suit for the enforcement of this Guaranty may be brought in the courts of the
State of New York or any federal court sitting therein and consents to the
non-exclusive jurisdiction of such court and to service of process in any such
suit being made upon the Guarantor by mail at the address specified in Section
11 hereof. The Guarantor hereby waives any objection that it may now or
hereafter have to the venue of any such suit or any such court or that such suit
was brought in an inconvenient court. Any enforcement action relating to this
Guarantee may be brought by motion for summary judgment in lieu of a complaint
pursuant to Section 3213 of the New York Civil Practice Law and Rules.

13.  
WAIVER OF JURY TRIAL. THE GUARANTOR AND, BY THEIR ACCEPTANCE OF THIS GUARANTY,
THE SECURED PARTY, HEREBY WAIVES TRIAL BY JURY IN ANY LITIGATION IN ANY COURT
WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF: (A) THIS GUARANTY OR ANY
OTHER INSTRUMENT OR DOCUMENT DELIVERED IN CONNECTION WITH THE OBLIGATIONS; (B)
THE VALIDITY, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF; OR (C) ANY
OTHER CLAIM OR DISPUTE HOWEVER ARISING BETWEEN THE GUARANTOR AND THE SECURED
PARTY.

14.  
Certain References. All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine, neuter, singular or plural, as the identity of
the person, persons, entity or entities may require. The terms "herein",
"hereof' or "hereunder" or similar terms used in this Guaranty refer to this
entire Guaranty and not only to the particular provision in which the term is
used.

15.  
Miscellaneous. This Guaranty, together with the Security Agreement and the
Amended Note, constitutes the entire agreement of the Guarantor with respect to
the matters set forth herein. The rights and remedies herein provided are
cumulative and not exclusive of any remedies provided by law or any other
agreement, and this Guaranty shall be in addition to any other guaranty of the
Obligations. The invalidity or unenforceability of anyone or more sections of
this Guaranty shall not affect the validity or enforceability of its remaining
provisions. Captions are for the ease of reference only and shall not affect the
meaning of the relevant provisions. The meanings of all defined terms used in
this Guaranty shall be equally applicable to the singular and plural, masculine,
feminine and generic forms of the terms defined.

IN WITNESS WHEREOF, the Guarantor has caused this Amended and Restated Guaranty
to be executed and delivered as of the date appearing in the introductory
paragraph of this Amended and Restated Guaranty.

CELLCEUTIX PHARMA INC.

By:           ______________________________
Name:           Leo Ehrlich
Title:           Chief Financial Officer and
acting Chief Executive Officer

 
 

--------------------------------------------------------------------------------

 

SECOND AMENDED AND RESTATED CONVERTIBLE PROMISSORY NOTE
 

 

 
$222,589.61
Date:  January 1, 2011

 
FOR VALUE RECEIVED, the undersigned, Cellceutix Corporation, a Nevada
corporation (the "Maker") with offices at 100 Cummings Center, Suite 151-B,
Beverly, MA  01915, promises to pay to the order of White Star LLC, having an
address at 15 Manor Lane, Lawrence, New York, NY 11559, (the “Holder”), or its
successor or assigns, in lawful money of the United States of America, the
principal sum of Two Hundred and Twenty Two Thousand, Five Hundred Eighty Nine
dollars and 61/100 ($222,589.61) and will be payable pursuant to the following
terms:
 

 
WHEREAS, on May 07, 2008, the parties hereto entered into a Convertible
Promissory Note in the amount of One Hundred Seventy-Seven Thousand, Seven
Hundred and Seventy-Seven dollars and 78/100 ($177,777.78) (the "Original Note")
pursuant to which as of the Maturity Date of the Original Note the sum of zero
dollars ($0) of the principal has been paid to the Holder, and Twenty-Five
Thousand, Three Hundred and Eighty dollars and 82/100 ($25,380.82) of interest
has accrued (the “Accrued Interest – Original Note”).
 

 
WHEREAS, on December 31, 2009, an additional amount of One Thousand, Fifty-Two
dollars and 05/100 ($1,052.05) of interest has accrued after the Maturity Date
of the Original Note (the “Accrued Interest – Post Maturity Date Original
Note”).
 

 
WHEREAS, on January 1, 2010, the parties hereto entered into an Amended and
Restated Convertible Promissory Note (the “Amended Note”) in the amount of Two
Hundred and Four Thousand, Two Hundred and Ten dollars and 65/100 ($204,210.65).
 

 
WHEREAS, $18,378.96 of additional interest has accrued on the Amended Note as of
the end of business on December 31, 2010.
 

 
WHEREAS, the parties hereto wish to extend the maturity date of the loan
represented by the Amended Note by executing this Second Amended and Restated
Convertible Promissory Note (this “Note”), with a new maturity date and a new
Guaranty and Security Agreement dated as of the date of this Note.
 

 
This Note replaces and supersedes in its entirety the Original Note, the Accrued
Interest – Original Note, the Accrued Interest – Post Maturity Date Original
Note and the Amended Note by the Maker to the Holder , which Original Note,
Accrued Interest – Original Note, Accrued Interest – Post Maturity Date Original
Note, and Amended Note shall be deemed and are hereby cancelled.
 

 
1.           Payment.  The face amount of this Note and interest thereon at the
rate of nine percent (9%) per annum,  shall be due and payable in full  at the
offices of the Holder by 12 a.m. Eastern Standard Time, December 31, 2011 (the
“Due Date”) unless an extension is mutually agreed to by the parties in
writing.  If any amount payable under this Note is not paid in full when due,
the outstanding principal and interest owed hereunder shall be due and payable
in full together with interest thereon from the date of such default at the rate
of fifteen percent (15%) per annum or the highest rate permitted by applicable
law, if lower.
 

 
2.           Waiver of Presentment, Etc. The Maker of this Note hereby waives
presentment of payment, demand, notice of non-payment and dishonor, protest and
notice of protest; and waives trial by jury in any action or proceeding arising
on, out of, under or by reason of this Note.  The rights and remedies of the
Holder under this Note shall be deemed cumulative, and the Holder’s exercise of
any right or remedy hereunder shall not be regarded as barring any other right
or remedy that the Holder may have in law or in equity. The institution of any
action or recovery of any portion of the indebtedness evidenced by this Note
shall not be deemed a waiver of any other right of the Holder hereto.
 

 
3.           Conversion.
 

 
A.           Conversion.  At any time and at the Holder’s sole discretion, the
Holder may convert all or any portion of the outstanding principal and interest
due under this Note to be paid at maturity into a number of shares of the
Maker’s common stock, par value $0.001 (the “Common Stock”) equal to such unpaid
principal and interest divided by the price of $0.50 per share of Common Stock
(the “Conversion Price”).
 

 
B.           Manner of Conversion.  Holder shall give Maker five (5) days prior
written notice of its election to convert (the “Notice of Conversion”) any
portion of principal due under this Note into shares of the maker’s Common Stock
(the “Convertible Shares”).  In the Notice of Conversion, the Holder shall
specify the amount of principal and interest sought to be converted together
with the number and denomination of certificates, if more than one, to be
prepared and delivered representing the Convertible Shares. The Maker shall,
within five (5) business days of its receipt of the Notice of Conversion, issue
the Convertible Shares and cause its transfer agent to transfer and deliver to
the Holder such certificate or certificates.
 

 
C.           Reservation of Common stock.  The Maker shall take or has taken all
steps necessary to reserve a sufficient number of its authorized but unissued
shares of Common Stock for issuance of the Convertible Shares upon conversion of
this Note.
 

 
D.           Adjustment of Conversion Rate.  The rate at which each Convertible
Share may be converted into common stock of the Maker (hereinafter called the
“Conversion Rate”) shall be subject to the following adjustments:
 

 
(i)  Any dividend to holders of Common Stock in shares of Common Stock shall be
considered a subdivision of the outstanding shares of common stock and an
adjustment in the Conversion Rate shall be made with respect to the subdivision
of outstanding shares of common stock; and
 

 
(ii)  In case the Maker shall be reorganized or recapitalized or shall be
consolidated with or merged into another Maker, or shall sell or transfer its
property and assets as, or substantially as, an entirety, proper provisions
shall be made as part of the terms of such reorganization, recapitalization,
consolidation, merger, sale or transfer whereby the holder of any Convertible
Shares outstanding immediately prior to such event shall thereafter be entitled
to such conversion rights with respect to securities of the Maker resulting from
such reorganization, recapitalization, consolidation or merger, or to which such
sale or transfer shall be made, as shall be substantially equivalent to the
conversion rights provided for herein with respect to such Convertible Shares;
 

 
E.           Limitation on Conversions.
 

 
(i)           Notwithstanding anything to the contrary set forth in this Note,
at no time may the Holder convert all or a portion of this Note if the number of
shares of Common Stock to be issued pursuant to such conversion would exceed,
when aggregated with all other shares of Common Stock owned by the Holder at
such time, the number of shares of Common Stock which would result in the Holder
beneficially owning (as determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules
thereunder) more than 4.99% of all of the Common Stock outstanding at such time;
provided, however, that upon the Holder providing the Maker with sixty-one (61)
days advance written notice (the “Waiver Notice”) that the Holder would like to
waive this Section 3(E)(i) with regard to any or all shares of Common Stock
issuable upon conversion of this Note, this Section 3(E)(i) will be of no force
or effect with regard to all or a portion of the Note referenced in the Waiver
Notice.
 

 
(b)           Notwithstanding anything to the contrary set forth in this Note,
at no time may the Holder convert all or a portion of this Note if the number of
shares of Common Stock to be issued pursuant to such conversion, when aggregated
with all other shares of Common Stock owned by the Holder at such time, would
result in the Holder beneficially owning (as determined in accordance with
Section 13(d) of the Exchange Act and the rules thereunder) in excess of 9.99%
of the then issued and outstanding shares of Common Stock outstanding at such
time; provided, however, that upon the Holder providing the Maker with a Waiver
Notice, sixty-one (61) days in advance, that the Holder would like to waive
Section 3(E)(ii) of this Note with regard to any or all shares of Common Stock
issuable upon conversion of this Note, this Section 3(E)(ii) shall be of no
force or effect with regard to all or a portion of the Note referenced in the
Waiver Notice.
 

 
4.  Events of Default.   If one or more of the following events shall occur:
 

 
                      A.            The Maker shall fail to pay any installment
of principal or interest due under this Note; or
 

 
B.           Any Change of Control of the Maker.  “Change of Control” shall mean
(a) the acquisition (in one transaction or a series of related transactions) of
ownership or voting control of shares of the Maker’s capital stock representing
more than 50% of the aggregate voting power represented by all of the issued and
outstanding shares of the Maker’s capital stock by any Person or Group (within
the meaning of Rule 13d-3 promulgated under the Exchange Act), other than any
existing holders of the Maker’s capital stock or any entity in which one or more
of such holders hold, directly or indirectly, at least 50% of the aggregate
voting power; or (b) the sale of all or substantially all of the assets of the
Maker to any entity not controlled by, controlling, or under common control
with, the Maker; or
 

 
C.           The making of a general assignment for the benefit of creditors by
the Maker, Cellceutix Delaware or any guarantor; or
 

 
D.           The filing of any petition or the commencement of any proceeding by
or against the Maker, Cellceutix Delaware or any other guarantor for any relief
under any bankruptcy, or insolvency laws or any laws related to the relief of
debtors, readjustment of indebtedness, reorganizations, compositions or
extensions; or
 

 
E.           The appointment of a receiver of or the issuance of or making of a
writ or order of attachment or garnishment against, a majority of the property
or assets of the Maker, Cellceutix Delaware or any guarantor; or
 

 
F.           The filing of a tax lien or warrant or judgment in favor of the
United States of America or the State of Nevada in an amount in excess of Ten
Thousand ($10,000) Dollars where said lien or judgment is not satisfied and
discharged within ten (10) days from the date of such filing;
 

 
G.           The Maker or any guarantor shall have breached any of its
obligations under the Security Agreement (the “Security Agreement”), dated as of
the date hereof, among the Maker, Cellceutix Pharma, Inc., a Delaware
corporation (“Cellceutix Delaware”), and the Holder or Cellceutix Delaware shall
have breached its obligations under the Guaranty, dated as of the date hereof,
delivered to the Holder; or
 

 
H.           (i) The Maker or Cellceutix Delaware shall default on any of its
respective obligations under any mortgage, credit agreement, indenture, note or
other agreement under which there may be issued, or by which there may be
secured or evidenced, any indebtedness for borrowed money or money due under any
long term leasing or factoring arrangement that involves an obligation in excess
of Fifty Thousand Dollars ($50,000) or (ii) any monetary judgment, writ or
similar final process shall be entered or filed against the Maker or Cellceutix
Delaware or any of their respective properties or assets for more than Fifty
Thousand Dollars ($50,000), and such judgment, writ or similar final process
shall remain unvacated, unbonded or unstayed for a period of 20 calendar days.
 

 
then and in such event (an “Event of Default”), the Maker will be deemed to have
defaulted under this Note and the Holder may exercise any and all rights and
remedies granted hereunder and under law, including, without limitation, at the
Holder’s election, acceleration of all outstanding principal and interest due
hereunder.
 

 
5.           Holder’s Investment Intent. The Holder has been advised, and by the
acceptance of this Note, hereby agrees, accepts and acknowledges:
 

 
A.           That neither this Note nor any of the Convertible Shares to be
delivered hereunder shall have been registered under the Securities Act of 1933,
as amended (the “Securities Act”) or under state securities law, and that both
the Maker and its present management are relying upon an exemption from
registration based upon the investment and other representations of the Holder;
 

 
B.           The Holder, upon exercise of the conversion privileges of this
Note, will be acquiring the Convertible Shares for investment purposes and
without any view to the transfer or resale thereof and that such Convertible
Shares shall not be sold, transferred, assigned, pledged or hypothecated in any
violation of the Securities Act, or the applicable securities laws of any state;
 

 
C.           The Holder further covenants and agrees that the certificates
representing all of the Convertible Shares shall be the subject of a stop
transfer order on the books and records of the Maker or its transfer agent and
shall bear a restrictive legend in substantially the following form:
 

 
"The shares represented by this certificate have not been registered under the
Securities Act of 1933 as amended. They may not be sold, assigned or transferred
in the absence of an effective registration statement for the Shares under the
said Securities Act, receipt of a 'no action' letter from the Securities and
Exchange Commission or an opinion of counsel satisfactory to the Corporation
that registration is not required under said Securities Act."
 

 
6.           Notices.  Any notice required or contemplated by this Note shall be
deemed sufficiently given if delivered in person or sent by registered or
certified mail or priority overnight package delivery service to the address of
the Party entitled to notice set forth herein or at such other address as the
same may designate in a notice for that purpose.  All notices shall be deemed to
have been made upon receipt, in the case of mail or personal delivery, or on the
next business day, in the case of priority overnight package delivery service.
 

 
7.           Attorneys Fees. The Maker hereby agrees to pay the Holder’s
attorneys fees, disbursements and expenses incurred by the Holder in connection
with the enforcement of the Holder’s rights under this Note.
 
 
 
 
8.           Headings.  The headings in this Note are solely for convenience of
reference and shall not affect its interpretation.
 

 
9.           Laws of the State of New York.  This Note shall be deemed to be
made, executed and delivered in, governed by and interpreted under and construed
in all respects in accordance with the laws of the State of New York,
irrespective of the place of domicile or residence of the Maker. In the event of
controversy arising out of the interpretation, construction, performance or
breach of  this Note, the Parties hereby agree and consent to the jurisdiction
and venue of the Supreme Court of the State of New York, New York County; or the
United States District Court for the Southern District of New York, and further
agree and consent that personal service or process in any such action or
proceeding outside of the State of New York and in New York County shall be
tantamount to service in person or within the State of New York and in New York
County and shall confer personal jurisdiction and venue on either of the said
courts.
 

 
10.           Prepayment.  The Maker shall have the right to prepay the Note on
30 days prior written notice to the Holder without penalty.
 

 
11.           Notices of Record Date, Etc. in the Event of Certain Events.  The
Maker shall furnish the Holder with 30 days advance written notice of any of the
following action:
 

 
A.  Any capital reorganization of the Maker, any reclassification or
recapitalization of the capital stock of the Maker or any transfer of all or
substantially all of the assets of the Maker to any other person or any
consolidation or merger involving the Maker; or
 

 
B.  Any voluntary or involuntary dissolution, liquidation or winding-up of the
Maker. In such event, the Maker will mail to the Holder at least 30 days prior
to the earliest date specified in the legal document filed with a court of
competent jurisdiction and/or any governmental authority, a notice specifying:
 

 
(i) The date on which any such record is to be taken for the purpose of such
dividend, distribution or right, and the amount and character of such dividend,
distribution or right; and
 

 
(ii) The date on which any such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation or winding-up is expected to
become effective and the record date for determining stockholders entitled to
vote thereon; or
 

 
C. Any taking by the Maker of a record of the holders of any class of securities
of the Maker for the purpose of determining the holders thereof who are entitled
to receive any dividend (other than a cash dividend payable out of earned
surplus at the same rate as that of the last such cash dividend theretofore
paid) or other distribution, or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right.
 

 
12.           Assignment and Binding Effect.  This Note is binding upon and
shall inure to the benefit of the Parties hereto and their respective successors
and assigns.
 

 
13.             Loss, Theft, Destruction or Mutilation.  In case this Note shall
become mutilated or defaced or be destroyed, lost or stolen,  the Maker shall
execute and deliver a new Note in exchange for and upon surrender and
cancellation of such mutilated or defaced Note or in lieu of and in substitution
for such Note so destroyed, lost or stolen, upon the Holder of such Note filing
with the Maker evidence reasonably satisfactory to  the Maker that such Note has
been so mutilated, defaced, destroyed, lost or stolen and of the ownership
thereof by the Holder as may be necessary; provided, however, that the Maker
shall be entitled, as a condition to the execution and delivery of such new
Note, to demand indemnity satisfactory to it and payment of reasonable expenses
and charges incurred in connection with the delivery of such new Note.
 

 
14.             Captions.  The captions herein are included for convenience of
reference and shall be ignored in the construction or interpretation hereof.
 

 
15.             Entire Agreement.  Each of the Parties hereby covenants that
this Note, along with the Guaranty and the Security Agreement, is intended to
and does contain and embody herein all of the understandings and agreements,
both written or oral, of the Parties hereby with respect to the subject matter
of this Note, and that there exists no oral agreement or understanding, express
or implied liability, other than the Guaranty and the Security Agreement,
whereby the absolute, final and unconditional character and nature of the Note
shall be in any way invalidated, empowered or affected.
 

 

 
CELLCEUTIX CORPORATION
 

 

 
By: ___________________________________
 
       Leo Ehrlich, Chief Financial Officer
 
       and acting Chief Executive Officer
 

 

 
 

--------------------------------------------------------------------------------

 
 
AMENDED AND RESTATED SECURITY AGREEMENT
 
AMENDED AND RESTATED SECURITY AGREEMENT (this “Agreement”), dated as of January
1, 2011, 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 in substitution
for the promissory note currently held by the Secured Party a Second Amended and
Restated Convertible Promissory Note dated as of the date hereof (the “Amended
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 Amended Note pursuant to the Guaranty (the “Guaranty”) dated as of the
date hereof; and
 
WHEREAS, in order to induce the Secured Party to accept the Amended Note,
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
Amended 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 all of the property and assets of the Debtors,
including 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 Debtors’ businesses and all improvements thereto
(collectively, the “Equipment”); and

 
(ii) All inventory of the Debtors, including all materials, work in process and
finished goods (“Inventory”); 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; 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’ 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 Debtors’ obligations under this Agreement,
the Amended Note and the Guaranty, 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 Amended Note and the loans
extended pursuant thereto; (ii) any and all other fees, indemnities, costs,
obligations and liabilities of the Debtors from time to time under or in
connection with this Agreement, the Amended 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 Amended Note and to secure the complete and timely payment,
performance and discharge in full, as the case may be, of all of the
Obligations, each of 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 Debtors’ 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 Debtor authorizes 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 Amended
Note) under the Amended Note;

(b) The breach of Cellceutix Delaware’s obligations under the Guaranty;

(c) Any representation or warranty of either Debtor herein shall prove to have
been incorrect in any material respect when made; or

(d) The failure by either Debtor to observe or perform any of its obligations
hereunder unless, within five (5) days after delivery to such Debtor of notice
of such failure by or on behalf of the Secured Party, such default is cured; 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 either Debtor, or a proceeding shall be commenced by either Debtor,
or by any governmental authority having jurisdiction over such Debtor, seeking
to establish the invalidity or unenforceability thereof, or either 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 Amended 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 either Debtor shall become entitled to
receive or shall receive any securities or other property, such 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 such 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 Amended 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 either Debtor by the Secured Party, all
rights of such Debtor to exercise the voting and other consensual rights which
it would otherwise be entitled to exercise and all rights of such 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 Debtors or any
of its direct or indirect subsidiaries.
 
(iii)   The Secured Party shall have the right to operate the business of each
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 such 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 each 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 each 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 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 Amended Note.  Until so
paid, any fees payable hereunder shall be added to the principal amount of the
Amended 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 Amended 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) each Debtor shall remain obligated and liable under each contract
or agreement included in the Collateral to be observed or performed by such
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 either 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 Amended Note, the Guaranty 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 Amended Note, the Guaranty 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 Amended 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 bill,
bill 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 sue 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
Amended 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 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:
If to Cellceutix Corporation:

Cellceutix Corporation
 
100 Cummings Center, Suite 151-B
 
Beverly, Massachusetts 01915
 

 
Telephone:  (978) 921-0404
 
Facsimile:  (339) 222-1749
 

 
If to Cellceutix Pharma, Inc.:

Cellceutix Pharma, Inc.
c/o Cellceutix Corporation
100 Cummings Center, Suite 151-B
Beverly, Massachusetts 01915

Telephone:  (978) 921-0404
Facsimile:  (339) 222-1749

In both cases, with a copy to:

Tarter, Krinsky & Drogin, LLP
New York, NY 10018
Attention:  Peter Campitiello, Esq.
Telephone:  (212) 216-8085
Facsimile:   (212) 216-8001
 
If to the Secured Party:

 
White Star, LLC
 
Attn: Murray Huberfeld
 
152 West 57th Street, 54th Floor
 
New York, NY 10019
 

 
Facsimile: (212) 582-2424
 

 

 
With a copy to:
 

 
Black & Associates
 
350 Fifth Avenue, Suite 6710
 
New York, NY 10118
 
Attn: Louis E. Black, Esq.
 
Telephone: (212) 564-4972
 
Facsimile:  (646) 349-5045
 

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 Amended 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 Amended 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 Debtors 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 Amended Note or any other agreement, instrument or other document executed
or delivered in connection herewith or therewith.

 

 

 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

Security Agreement Amended Note Cellceutix
 
 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated
Security Agreement to be duly executed on the day and year first above written.
 
CELLCEUTIX CORPORATION
 
By: ___________________________
      Leo Ehrlich, Chief Financial Officer
 
      and acting Chief Executive Officer
 

 
CELLCEUTIX PHARMA INC.
 

 
By: ___________________________
      Leo Ehrlich, Chief Financial Officer
 
      and acting Chief Executive Officer
 

 
SECURED PARTY:
 

 
WHITE STAR, LLC
 

 
By: ___________________________
      Murray Huberfeld
 

 

 

Security Agreement Amended Note Cellceutix
 
 

--------------------------------------------------------------------------------

 

SCHEDULE A
 

 
There is no Schedule A referred to in this Agreement.
 

 

 
 

--------------------------------------------------------------------------------

 

 
SCHEDULE B
 

 

 
None.
 

 
 

--------------------------------------------------------------------------------

 

SCHEDULE C
 

 
Entity:                                                                Jurisdiction:
 

 
Cellceutix
Corporation                                                                Nevada
 
Cellceutix Pharma,
Inc.                                                                Delaware
 

 

 
 

--------------------------------------------------------------------------------

 

SCHEDULE D
 

 

 
CELLCEUTIX CORPORATION
 

 
CELLCEUTIX PHARMA, INC.
 

 
 

--------------------------------------------------------------------------------

 

SCHEDULE E
 

 
None.