Letter of Engagement between Trilogy Capital Partners, Inc. and Callisto Pharmaceuticals,
      Inc. dated July 18, 2005.


     

     

    Exhibit
      10.1

     

    


    


     

    Letter
      of Engagement

    Callisto
      Pharmaceuticals, Inc.

    July
      18, 2005

    


    


    The
      following sets forth the agreement for the engagement of Trilogy Capital
      Partners, Inc. (“Trilogy”)
      by
      Callisto Pharmaceuticals, Inc. (“KAL”
      or
      the “Company”):

    


    
      
        	
                Term
                  and Termination

              	
                Twelve months,
                  commencing as of the date set forth above (the “Initial
                  Term”),
                  and terminable thereafter by either party upon 30 days’ prior written
                  notice. In addition, either party may terminate this Agreement
                  by written
                  notice for material breach by the other party of any of its obligations
                  or
                  agreements under this Agreement or the Confidentiality Agreement
                  unless
                  such material breach is cured and corrected within 10 days following
                  receipt of such notice.

              
	 	 
	
                Objective

              	
                The
                  development and implementation of a proactive marketing program
                  to
                  increase the awareness of KAL and generate a significant increase
                  in
                  liquidity and market capitalization. In addition, upon request,
                  Trilogy
                  will advise KAL in business development and strategic advisory
                  services.

              
	 	 
	
                The
                  Program

              	
                Trilogy
                  will structure and implement a marketing program designed to create
                  extensive financial market and investor awareness for KAL to drive
                  long-term shareholder support. The core drivers of the program
                  will be to
                  create institutional and retail buying in the Company’s stock through a
                  proactive sales and marketing program emphasizing technology-driven
                  communications, coupled with 1-to-1 selling and leveraging KAL’s image to
                  attract additional long term investors and to create additional
                  opportunities in M&A and Business Development. As share price is
                  affected by various factors, Trilogy can give no assurance that
                  the
                  marketing program will result in an increase in KAL’s stock
                  price.

              


      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      
        
          	 	
                  Trilogy
                    understands that during any period in which the Company is in
                    “registration” for a public offering of securities under the Securities
                    Act of 1933, and during the distribution of such securities,
                    the Company’s
                    investor relations and marketing efforts will be severely limited.
                    However, it will be the responsibility of the Company (with the
                    advice of
                    its securities counsel) to determine what investor relations
                    and financial
                    marketing efforts are permissible and non-permissible during
                    such periods,
                    and Trilogy will follow the direction of the Company and its
                    securities
                    counsel. Trilogy
                    agrees that it will not take any action to influence anyone to
                    purchase
                    the Company’s stock by making an improper or illegal payment, directly or
                    indirectly.

                
	 	 
	
                  Responsibilities

                	
                  In
                    addition to marketing and financial public relations, Trilogy
                    will assume
                    the responsibilities of an in-house Investor Relations Officer
                    for KAL on
                    a full turnkey basis, including the generation of corporate and
                    shareholder communications, retail and institutional investor
                    contact and
                    media. Trilogy will work in conjunction with the Company’s management,
                    securities counsel, investment bankers and auditors and under
                    supervision
                    of management. The content is as follows:

                  	
                      Campaign
                        Development and Execution

                    
	
                      Press
                        Announcements: drafting, approval and distribution

                    
	
                      Database
                        Development and Management

                    
	
                      Image
                        Analysis: recommendations and implementation

                    
	
                      Messaging:
                        institutional and retail

                    
	
                      Online
                        presentations: drafting and production responsibilities 

                    
	
                      Website
                        Overhaul - installation and maintenance of auto IR
                        program

                    
	
                      Email
                        messaging: targets: Retail and Institutional/Other
                        databases

                    
	
                      Media
                        including Interactives and PowerPoints

                    
	
                      Direct
                        Mail: shareholder, media, KAL relationship universe

                    
	
                      Public
                        Relations

                    
	
                      Capital
                        Conferences

                    


                  Trilogy
                    will not publish or publicly release any press release or other
                    document
                    (“IR
                    Documents”)
                    regarding the Company that has not been approved in writing by
                    the
                    Company. The Company assumes responsibility for the accuracy
                    and
                    completeness of all IR Documents and the compliance of such Documents
                    with
                    applicable laws, rules and regulations. The Company agrees that
                    Trilogy
                    has no obligation 

                


        

         

        
          
            
            

          

          
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            	 	or
                    duty to verify the accuracy or completeness of the IR
                    Documents.
	 	 
	
                    Fees

                  	
                    $12,500
                      per month, with first payment due on execution. Wiring information
                      is set
                      forth below.

                  
	 	 
	
                    Equity

                    Compensation

                  	
                    KAL
                      has concurrently herewith issued to Trilogy 1,793,322 Warrants.
                      Each
                      Warrant represents the right to purchase one share of Common
                      Stock for
                      $1.03 per share at any time through the third year following
                      issuance. The
                      Company agrees to file a Registration Statement with the Securities
                      and
                      Exchange Commission registering the shares underlying the Warrants
                      no
                      later than August 30, 2005. 

                  
	 	 
	
                    Marketing
                      Budget

                  	
                    To
                      support the financial marketing program, KAL acknowledges that
                      it will
                      incur certain third party marketing costs. Trilogy will not
                      incur these
                      costs on behalf of the Company except with the approval of
                      the Company or
                      pursuant to a budget approved by the Company (which budget
                      shall not be
                      less than $200,000). The Company shall have no obligation to
                      reimburse
                      Trilogy for any third party marketing cost that exceeds the
                      approved
                      budget or is otherwise not approved by the Company. The Company
                      understands that prompt payment of these costs is vital to
                      the on-going
                      investor relations program, and therefore shall pay these costs
                      promptly
                      upon invoice, to Trilogy (to enable Trilogy to promptly reimburse
                      these
                      third parties). The Company shall indemnify and hold Trilogy
                      harmless from
                      any losses, claims, costs, expenses, liabilities and damages
                      from failure
                      to timely pay these third party marketing costs.

                  
	 	 
	
                    Indemnification

                  	
                    The
                      Company agrees to provide the indemnification set forth in
“Exhibit A”
                      attached hereto. 

                  
	 	 
	
                    Corporate
                      Obligations

                  	
                    The
                      obligations of Trilogy are solely corporate obligations, and
                      no officer,
                      director, employee, agent, shareholder or controlling person
                      of Trilogy
                      shall be subject to any personal liability whatsoever to any
                      person, nor
                      will any such claim be asserted by or on behalf of any other
                      party to this
                      Agreement.

                  
	 	 
	
                    Additional
                      Services

                  	
                    If
                      Trilogy is called upon to render services directly or indirectly
                      relating
                      to the subject matter of this Agreement, beyond the services
                      contemplated
                      above (including, but not limited to, production of documents,
                      answering
                      interrogatories, giving depositions, giving


                  


          

           

          
            
              
              

            

            
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              	 	expert
                      or other testimony, whether by
                      agreement, subpoena or otherwise), the Company shall pay to
                      Trilogy a
                      reasonable hourly rates for the persons involved for the time
                      expended in
                      rendering such services, including, but not limited to, time
                      for meetings,
                      conferences, preparation and travel, and all related costs
                      and expenses
                      and the reasonable legal fees and expenses of Trilogy’s
                      counsel.
	 	 
	
                      Confidentiality

                    	
                      Trilogy
                        agrees to execute the confidentiality agreement with the
                        Company set forth
                        in “Exhibit B” attached hereto.

                    
	 	 
	
                      Survival
                        of Certain Provisions

                    	
                      The
                        Sections entitled “Indemnification” (including “Exhibit A”), “Corporate
                        Obligations,”“Additional Services” and “Confidentiality” (including
                        “Exhibit B”) shall survive any termination of this Agreement and Trilogy’s
                        engagement pursuant to this Agreement. In addition, such
                        termination shall
                        not terminate Trilogy’s right to compensation accrued through the date of
                        termination and for reimbursement of expenses (including
                        third party
                        marketing costs). Any purported termination of this Agreement
                        by the
                        Company prior to the end of the Initial Term, or any termination
                        by
                        Trilogy as a result of non-payment or other material breach
                        by the Company
                        (including the failure to pay third-party marketing costs),
                        shall not
                        terminate Trilogy’s right to the fees through the entire Initial Term (as
                        Trilogy’s time and commitment are expected to be greater in the first
                        part
                        of its engagement).

                    
	 	 
	
                      Services/Costs

                    	
                      The
                        compensation paid to Trilogy under this Agreement will cover
                        all costs for
                        Trilogy personnel. Travel and entertainment costs for Trilogy
                        personnel,
                        in addition to certain third-party costs, will be borne by
                        the Company.
                        Trilogy will provide reasonable documentation to support
                        reimbursement
                        claims. Trilogy will not incur any particular reimbursable
                        cost of $500 or
                        aggregate costs of $10,000 or more without the written approval
                        from the
                        Company. These costs do not included third-party marketing
                        costs under
                        “Marketing Budget.”

                    
	 	 
	
                      Attorneys’
                        Fees

                    	
                      If
                        any action or proceeding is brought to enforce or interpret
                        any provision
                        of this Agreement, the prevailing party shall be entitled
                        to recover as an
                        element of its costs, and not its damages, reasonable attorneys’ fees to
                        be fixed by the court. 

                    


            

             

            
              
                
                

              

              
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                      Governing
                        Law

                    	
                      California,
                        without giving effect to the principles of conflicts of law
                        thereof.

                    
	 	 
	
                      Board
                        Approval

                    	
                      This
                        Agreement is subject to approval of the Board of Directors
                        of KAL. KAL
                        agrees to submit this Agreement for approval no later than
                        July 22, 2005.
                        If KAL does not advise Trilogy in writing that its Board
                        of Directors has
                        approved this Agreement by 5:00 P.S.T. on July 22, 2005,
                        Trilogy may
                        thereafter terminate this Agreement. In the event KAL terminates
                        this
                        Agreement because its Board of Directors does not approve
                        this Agreement,
                        or Trilogy terminates this Agreement under this provision,
                        this Agreement
                        shall be deemed void ab initio, and neither party shall have
                        any duty,
                        obligation or liability to the other under this Agreement
                        and Trilogy
                        shall return the Warrants to KAL.


                    


            

          

        

      

    

     

    
 

    
      
        

      



    [Signatures
      on following page.]

     

    
      
        
        

      

      
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    Agreed
      and Accepted:

     

    
      	Callisto
              Pharmaceuticals,
              Inc.	 	 	Trilogy
              Capital Partners, Inc.
	 	 	 	 	 
	 	 	 	 	 
	By  	/s/
              Gary S. Jacob	 	 	By  	/s/
              Paul Karon
	 	
              

            	 	 	 	
              

            
	 	
              Gary
                S. Jacob

              Chief
                Executive Officer

            	 	 	 	
              Paul
                Karon

              President

            


    

     

     

     

    Wiring:
      

     

    Trilogy
      Capital Partners, Inc.

    Signature
      Bank New York

    Private
      Client Group

    New
      York, NY 10016

    Account:
      1500565515

    ABA:
      026013576

     

    
      
        
        

      

      
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    EXHIBIT
      A

    


    Indemnification
      Provisions

    


    


    Callisto
      Pharmaceuticals, Inc. (the
      “Company”)
      unconditionally, absolutely and irrevocably agrees to and shall indemnify and
      hold harmless Trilogy Capital Partners, Inc. (“Trilogy”)
      and
      its past, present and future directors, officers, affiliates, counsel,
      shareholders, employees, agents, representatives, contractors, successors and
      assigns (Trilogy and such persons are collectively referred to as the
“Indemnified
      Persons”)
      from
      and against any and all losses, claims, costs, expenses, liabilities and damages
      (or actions in respect thereof) arising out of or related to this Agreement,
      and
      any actions taken or omitted to be taken by an Indemnified Person in connection
      with this Agreement (“Indemnified
      Claim”).
      Without limiting the generality of the foregoing, such indemnification shall
      cover losses, claims, costs, expenses, liabilities and damages imposed on or
      incurred by the Indemnified Persons, directly or indirectly, relating to,
      resulting from, or arising out of any misstatement of fact or omission of fact,
      or any inaccuracy in any information provided or approved by the Company in
      connection with the engagement, including information in any SEC filing, press
      release, website, marketing material or other document, whether or not the
      Indemnified Persons relied thereon or had knowledge thereof, claims of third
      parties providing marketing services to the Company. In addition, the Company
      agrees to reimburse the Indemnified Persons for legal or other expenses
      reasonably incurred by them in respect of each Indemnified Claim at the time
      such expenses are incurred. Notwithstanding the foregoing, the Company shall
      not
      be obligated under the foregoing for any loss, claim, liability or damage that
      is finally determined by a court with proper jurisdiction to have resulted
      primarily from the willful misconduct, bad faith or gross negligence of the
      Indemnified Person or from the failure of the Indemnified Person to be
      registered or licensed as a broker or dealer under the Securities Exchange
      Act
      of 1934 or applicable state securities laws or as an investment advisor under
      the Investment Advisors Act of 1940 or applicable investment advisor state
      laws.