Exhibit 10.23

EXTENSION AND AMENDMENT AGREEMENT

AGREEMENT dated as of January 25, 2007 between Callisto Pharmaceuticals, Inc.,
a  Delaware corporation (the “Company”) and Gabriele M. Cerrone (the
“Consultant”).

The Company’s Board of Directors has determined, in light of the importance of
the Consultant’s services to the stability and interests of the Company and its
stockholders, to extend the term of the Consulting Agreement dated as of
December 27, 2004 (the “Consulting Agremeent”).

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained in this Agreement, it is agreed between the Company and the Consultant
as follows:

1.             EXTENSION AND AMENDMENT OF CONSULTING AGREEMENT.

(a)           Extension.   The “Initial Term” defined in Section 1.2 of the
Consulting Agreement is hereby extended to December 31, 2009, unless earlier
terminated in accordance with Section 10 of the Consulting Agreement.

(b)           Compensation.   The Company agrees to increase Consultant’s “Base
Compensation” (as defined in the Consulting Agreement) from $205,000 per year to
$275,000 per year commencing January 1, 2007, payable monthly in approximate
equal installments in advance.  In addition, the Consultant shall be granted an
aggregate of 225,000 ten-year non-qualified stock options pursuant to the
Company’s Stock Option Plan (the “Plan”) at an exercise price  per share equal
to the fair market value of the Company’s Common Stock on the date of execution
of this Agreement, as such value is defined in the Plan.  Subject to the
provisions of the Plan and Section 10 of the Consulting Agreement, one third of
such options shall vest on December 31, 2007, 2008 and 2009.  Once vested, the
options may be exercised until their expiration, notwithstanding any provision
of the Plan which requires exercise following termination of services in a
shorter period.  The Company will include the shares of equity securities of the
Company which may be issued upon the exercise of the options in any registration
statement under the Securities Act of 1933 which includes securities issuable to
any other executive officer of the Company.  In recognition of the services
beyond that required of Consultant during the period from July 1, 2006 to the
date of this Amendment, the Company will set aside and accrue a bonus for the
Consultant of $75,000, payable on March 31, 2007.  The Consultant shall be
eligible to earn a cash bonus of up to 22.5% of Base Compensation for each
twelve-month period during the Term based on meeting performance objectives and
bonus criteria to be mutually identified by Consultant and the Company’s Board
of Directors and any additonal bonuses and option grants as may be determined by
the Compensation Committee of the Company’s Board in its sole discretion.  In
the event no performance criteria has been set, the Consultant shall receive a
bonus of not less than 10% if bonuses are paid to any other of the Company’s
executive officers during or for the year of this agreement.  For purposes of
Section 3 and 4 of the Agreement, the Consultant’s advisory services in
connection with the planning, financing and execution of one or more plans of
corporate reorganization shall not be covered within the scope of services
provided under this Agreement, nor will the compensation under this Agreement be
deemed to cover such services.

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(c)           Amendment to Section 5 of the Consulting Agreement.

(i)            Section 5.1 of the Consulting Agreement is hereby amended,
effective immediately to include in reasonable expenses, the cost associatied
with accessing office facilities and administrative assistance outside of the
Company’s principal executive offices at such times that the Consultant is
attending to matters within the scope of this Agreement.

(ii)           Section 5.2 of the Consulting Agreement is hereby amended,
effective immediately to delete the Section in its entirety and replace it with
the following:

“During the Term, the Company, at its sole expense, shall provide Consultant
with one fully furnished and equipped executive office, one full-time qualified
and experienced administrative assistant, and such legal and accounting support
services as is deemed appropriate by the Consultant and approved by the
Company’s Chief Executive Officer.  Such services and facilities will not be
diminished without the Consultant’s prior consent.”

(d)           Amendment to Section 10.1(c) of the Consulting Agreement.  
Section 10.1(c) of the Consulting Agreement is hereby amended, effective
immediately to add the following paragraphs:

 “(iv)                   The severance compensation provided for in subsection
(9)(i) above shall be paid not later than the tenth day following the Date of
Termination; provided, however, that if the amount of such compensation cannot
be finally determined on or before such day, the Company shall pay to the
Consultant on such day an estimate, as determined in good faith by the Company
but subject to the provisions of Section 10.1(a)(v), of the minimum amount of
such compensation and shall pay the remainder of such compensation (together
with interest at the Federal short-term rate provided in Section
1274(d)(7)(C)(1) of the Code) as soon as the amount thereof can be determined
but in no event later than the thirtieth day after the Date of Termination. In
the event the amount of the estimated payment exceeds the amount subsequently
determined to have been due, such excess shall constitute a loan by the Company
to the Consultant payable on the fifth day after demand by the Company (together
with interest at the Federal short-term rate provided in Section
1274(d)(7)(C)(1) of the Code).

(v)                                 If the payment of the Total Payments (as
defined below) will be subject to the tax (the “Excise Tax”) imposed by Section
4999 of the Code, the Company shall pay the Consultant on or before the tenth
day following the Date of Termination, an additional amount (the “Gross-Up
Payment”) such that the net amount retained by the Consultant, after deduction
of any Excise Tax on Total Payments and any federal and state and local income
tax and Excise Tax upon the payment provided for by this paragraph, shall be
equal to the Total Payments. For purposes of determining whether any of the
payments will be subject to the Excise Tax and the amount of such Excise Tax,
(i) any payments or benefits received or to be received by the Consultant in
connection with a Change in Control of the

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Company or the Consultant’s termination of employment, whether payable pursuant
to the terms of Section 10 of this Agreement or any other plan, arrangement or
agreement with the Company, its successors, any person whose actions result in a
Change in Control of the Company or any corporation affiliated (or which, as a
result of the completion of transaction causing such a Change in control, will
become affiliated) with the Company within the meaning of Section 1504 of Code
(the “Total Payments”) shall be treated as “parachute payments” within the
meaning of Section 28OG(b)(2) of the Code, and all “excess parachute payments”
within the meaning of Section 28OG(b)(1) shall be treated as subject to the
Excise Tax, unless in the opinion of tax counsel selected by the Company’s
independent auditors and acceptable to the Consultant, the Total Payments (in
whole or in part) do not constitute parachute payments, or such excess parachute
payments (in whole or in part) represent reasonable compensation for services
actually rendered within the meaning of Section 28OG(b)(4) of the Code either in
their entirety or in excess of the base amount within the meaning of Section
28OG(b)(3) of the Code, or are otherwise not subject to the Excise Tax, (ii) the
amount of the Total Payments that shall be treated as subject to the Excise Tax
shall be equal to the lesser of (A) the total amount of the Total Payments or
(B) the amount of excess parachute payments or benefit shall be determined by
the Company’s independent auditors in accordance with the principles of Section
28OG(d)(3) and (4) of the Code. For purposes of determining the amount of the
Gross-Up Payment, the Consultant shall be deemed to pay federal income taxes at
the highest marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the Consultant’s
residence an the Date of Termination, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and local
taxes. In the event the Excise Tax is subsequently determined to be less than
the amount taken into account hereunder at the time of termination of the
Consultant’s employment, the Consultant shall repay to the Company at the time
the amount of such reduction in Excise Tax is finally determined the portion of
the Gross-Up Payment that can be repaid such that the Consultant remains whole
on an after-tax basis following such repayment (taking into account any
reduction in income or excise taxes to the Consultant from such repayment) plus
interest on the amount of such repayment at the Federal short-term rate provided
in Section 1274(d)(1)(C)(i) of the Code. In the event the Excise Tax is
determined to exceed the amount taken into account hereunder at the time of the
termination of the Consultant’s employment (including by reason of any payment
the existence or amount of which cannot be determined at the time of the
Gross-Up Payment), the Company shall make an additional gross-up payment in
respect of such excess (plus any interest payable with respect to such excess)
at the time that the amount of such excess is finally determined.”

(f)            Amendment to Section 12.2 of the Consulting Agreement.   Section
12.2 of the Consulting Agreement is hereby amended, effective immediately, to
add the term “for Good Reason” after the term “Consultant” in the fifth line of
such Section.

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(f)            Effect on Consulting Agreement.   Except as modified by this
Agreement, all of the terms of the Consulting Agreement shall continue in full
force and effect. In the event of a discrepancy between the Consulting Agreement
and this Agreement, the terms of this Agreement shall be controlling.

2.                                       NO OBLIGATION TO MITIGATE DAMAGES: NO
EFFECT ON OTHER CONTRACTUAL RIGHTS,

(a)           The Consultant shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor  shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by the Consultant as a
result of employment by another client after the termination of the Consultant’s
consultancy, or otherwise.

(b)           The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Consultant’s existing rights, or rights which would accrue solely
as a result of the passage of time, under any Benefit Plan, Consulting Agreement
or other contract, plan or arrangement of the Company or any of its subsidiaries
of which the Consultant shall be a beneficiary.

3.                                       SUCCESSOR TO THE COMPANY.

(a)           The Company will require any successor or assign (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance, satisfactory to the Consultant, to assume and agree to
perform this Agreement and the Consulting Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession or assignment had taken place. Any failure of the Company to obtain
such agreement prior to the effectiveness of any such succession or assignment
shall be a material breach of the Consulting Agreement and in such case the
Consultant shall have the right to terminate his consultancy for Good Reason and
become fully entitled to the benefits of Section 10 of the Consulting Agreement.
As used in this Agreement, “Company” shall mean the Company as hereinbefore
defined and any successor assign to its business and/or assets as aforesaid
which executes and delivers the agreement provided for in this Section 3 or
which otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law.

(b)           This Agreement shall inure to the benefit of and be enforceable by
the Consultant’s personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Consultant should
die while any amounts are still payable to the Consultant hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Consultant’s devisee, legatee, or other designee
or, if there be no such designee, to the Consultant’s estate.

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4.                                     NOTICE.

For purposes of this Agreement, notices and all other communications provided
for in this Agreement shall be in writing and shall be deemed to have been duly
given when delivered or mailed by United States registered mail, return receipt
requested, postage prepaid, as follows:

if to the Company:

 

Callisto Pharmaceuticals, Inc.

 

420 Lexington Avenue, Suite 1609

 

New York, New York 10070

 

or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.

5.                                       MISCELLANEOUS.

No provisions of this Agreement may be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in a writing signed by the
Consultant and the Company. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior to subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement. This Agreement
shall be governed by and construed in accordance with the laws of Delaware.

6.                                       VALIDITY.

The invalidity or enforceability of any provi­sions of this Agreement shall not
affect the validity or  enforce­ability of any other provision of this
Agreement, which shall remain in full force and effect.

7.                                       COUNTERPARTS.

This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be an original but all of which together will constitute one and
same instrument.

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8.                                       LEGAL FEES AND EXPENSES.

The Company or one of its subsidiaries shall pay all legal fees and expenses
which the Consultant may incur as a result of the Company’s contesting the
validity, enforceability or the Consultant’s interpretation of, or
determinations under, this Agreement.

 

 

CALLISTO PHARMACEUTICALS, INC.,

 

 

 

 

 

 

 

By:

/s/

GARY S. JACOB

 

Name:

Gary S. Jacob

 

Title:

Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

/s/ GABRIELE M. CERRONE

 

Gabriele M. Cerrone

 

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