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                                                                   Exhibit 10.77

October 8, 2003

Mr. Paul Intlekofer
Chief Financial Officer and Senior
Vice President, Corporate Development
Nutrition 21, Inc.
4 Manhattanville Road, Suite 202
Purchase, NY 10577

Dear Paul:

This letter represents our understanding of the basis upon which C.E. Unterberg,
Towbin ("CEUT") is engaged to provide financial  advisory and investment banking
services to Nutrition 21 (the  "Company").  This letter  solely  relates to such
financial  advisory and  investment  banking  services and not to any  potential
investment in the Company by CEUT.

1.    The Company hereby retains CEUT to act as its exclusive  financial advisor
      with  respect to a best efforts  private  placement  transaction  of up to
      $10.0 million of common,  preferred or debt securities (the "Securities").
      The Company will not offer any of the  Securities  for sale to, or solicit
      any  offers to buy  from,  any  person or  persons,  whether  directly  or
      indirectly,  otherwise  than  through  CEUT,  except for the list of names
      provided in Schedule A;  provided,  however,  that under no  circumstances
      shall  CEUT be  liable  for  failure  to obtain or  produce  the  proposed
      financing.

2.    As  part of our  engagement,  CEUT  will  provide  the  Company  with  the
      following services:

      a.    Subject  to  Company   approval,   identify  and  contact  potential
            institutional and/or strategic investors;

      b.    As necessary,  with  management  of the Company,  meet with approved
            potential investors and provide them with such information furnished
            by the Company as may be appropriate;

      c.    Assist  the  Company  in  negotiating   with  identified   potential
            investors; and

      d.    Assist the  Company and the  Company's  legal  counsel in  preparing
            documents  related  to the  transaction  and having  such  documents
            executed in order to close the private equity financing  transaction
            and any other agreements as may be necessary.


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3.    As compensation for the services  rendered by CEUT hereunder,  the Company
      agrees to pay CEUT the following amounts:

      a.    At each closing for the sale of Securities, a cash fee equal to 6.0%
            of the value of the Securities  sold at such closing,  together with
            common stock warrants (the "Warrants") equal in value to 3.0% of the
            Securities  sold at such  closing.  The Warrants  will expire on the
            fifth anniversary from closing;

      b.    In  the  event  the  Company  enters  into a  strategic  transaction
            involving a significant portion of the equity of the Company instead
            of, or in addition to,  completing the proposed  private  placement,
            the Company  agrees to pay CEUT a cash fee for its services equal to
            the greater of (i) the fee CEUT would have  earned for the  proposed
            private  placement  (subject to the  limitations  contained  in this
            letter) or (ii) a fee for acting as financial advisor to the Company
            in  connection  with  such  strategic  transaction  (such  fee to be
            consistent  with market  practice for such services when provided by
            nationally recognized investment banking firms).

4.    The Company  shall  reimburse  CEUT  promptly  upon request for all of its
      out-of-pocket  expenses,  including  fees  and  disbursements  of  counsel
      incurred by CEUT in connection with its engagement hereunder.

5.    CEUT and the Company have entered into a separate letter agreement,  dated
      the date hereof,  providing for the indemnification of CEUT by the Company
      in connection  with CEUT's  engagement  hereunder,  the terms of which are
      incorporated into this agreement in their entirety.

6.    For a period of 12 months from the date hereof, the Company grants to CEUT
      the right (provided this agreement has not been terminated by CEUT without
      cause or by the Company with cause) to provide investment banking services
      to the Company on an exclusive  basis in all matters for which  investment
      banking services are sought by the Company (the "Right of First Refusal").
      For the  purposes  hereof,  investment  banking  services  shall  include,
      without limitation, (i) acting as lead manager for any underwritten public
      offering of securities of the Company;  (ii) acting as placement  agent or
      financial advisor in connection with any private offering of securities of
      the Company; and, (iii) acting as financial advisor in connection with any
      sale or other  transfer  by the  Company,  directly  or  indirectly,  of a
      majority or controlling  portion of its capital stock or assets to another
      entity,  any  purchase or other  transfer by another  entity,  directly or
      indirectly,  of a majority or controlling  portion of the capital stock of
      assets of the Company, and any merger or consolidation of the Company with
      another entity. CEUT shall notify the Company of its intention to exercise
      the Right of First  Refusal  within 15 business days  following  notice in
      writing by the Company.  If CEUT declines to serve as investment banker to
      the Company pursuant to the Right of First Refusal, the Company shall have
      the right to retain any other person or persons to provide  such  services
      on terms and  conditions,  which are not materially more favorable to such
      other person or persons than the terms declined by CEUT.


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7.    The Company  recognizes and confirms that CEUT in acting  pursuant to this
      engagement will be using publicly available information and information in
      reports  and  other  materials  provided  by  others,  including,  without
      limitation,  information  provided by or on behalf of the Company and that
      CEUT does not assume  responsibility for and may rely, without independent
      verification,  on the accuracy and  completeness of any such  information.
      The  Company  agrees  to  furnish  or  cause to be  furnished  to CEUT all
      necessary or appropriate  information for use in its engagement and hereby
      warrants that any information  relating to the Company,  that is furnished
      to CEUT by or on behalf of the  Company,  will be true and  correct in all
      material respects and not misleading.

8.    The term of this engagement shall extend until twelve (12) months from the
      date of this  agreement  and shall  automatically  renew  thereafter  on a
      month-to-month  basis until  terminated,  in writing by either party.  Any
      such  termination  shall  not  (except  as  provided  herein)  affect  the
      compensation,  reimbursement,  right of first  refusal or  indemnification
      provisions  set forth herein,  all of which shall remain in full force and
      effect.  In addition,  the Company  shall be  responsible  for any fees as
      outlined  above for any private  financing  transaction  undertaken by the
      Company in lieu of the contemplated  transaction described herein with any
      investors contacted by CEUT that is concluded within 12 months of the date
      of termination of this agreement.

9.    Notwithstanding its engagement as placement agent hereunder, CEUT may not,
      without  its  prior  written  consent,  be quoted  or  referred  to in any
      document,  release or communication prepared, issued or transmitted by the
      Company (including any entity controlled by, or under common control with,
      the Company and any director, officer, employee or agent thereof).

10.   Following  completion  of this  engagement,  CEUT  shall have the right to
      place advertisements in financial and other newspapers and journals at its
      own expense describing its services to the Company hereunder.

11.   This  Agreement is governed by the laws of the State of New York,  without
      regard to such  state's  rules  concerning  conflicts  of law, and will be
      binding  upon and inure to the  benefit of the  Company and CEUT and their
      respective  successors  and  assigns.  The Company and CEUT agree to waive
      trial by jury in any action,  proceeding or counterclaim  brought by or on
      behalf of either party with respect to any matter  whatsoever  relating to
      or arising out of any actual or proposed  transaction or the engagement of
      or performance by CEUT  hereunder.  The Company also hereby submits to the
      jurisdiction  of the  courts  of the  State of New York in any  proceeding
      arising out of or relating to this Agreement,  including  federal district
      courts located in such state,  agrees not to commence any suit,  action or
      proceeding  relating  thereto  except in such courts,  and waives,  to the
      fullest extent  permitted by law, the right to move to dismiss or transfer
      any action brought in such court on the basis of any objection to personal
      jurisdiction,  venue or inconvenient forum. This agreement may be executed
      in two or more  counterparts,  each of  which  shall  be  deemed  to be an
      original, but all of which shall constitute one and the same agreement.


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CEUT will act under this  Agreement  as an  independent  contractor  with duties
solely to the Company.

The Company  acknowledges  that CEUT and its  affiliates may have and may in the
future have investment  banking and other  relationships with parties other than
the Company,  which parties may have interests  with respect to this  placement.
Although CEUT in the course of such other  relationships may acquire information
about the  placement,  potential  purchasers  of the  Securities  or such  other
parties,  CEUT shall have no  obligation  to disclose  such  information  to the
Company or to use such  information on behalf of the Company.  Furthermore,  the
Company acknowledges that CEUT may have fiduciary or other relationships whereby
CEUT may  exercise  voting  power  over  securities  of various  persons,  which
securities  may  from  time to time  include  securities  of the  Company  or of
potential  purchasers of the  Securities or others with  interests in respect of
the placement.  The Company  acknowledges that CEUT may exercise such powers and
otherwise  perform its  functions  in  connection  with such  fiduciary or other
relationships without regard to its relationship to the Company hereunder.

Please note that CEUT is a full services  securities  firm engaged in securities
trading and  brokerage  activities,  as well as  providing  investment  banking,
financing  and  financial  advisory  services.  In the  ordinary  course  of our
trading,  brokerage and financing activities,  CEUT or its affiliates may at any
time  hold  long  or  short  positions,   and  may  trade  or  otherwise  effect
transactions,  for our own  account or the  accounts  of  customers,  in debt or
equity  securities  or senior loans of the Company or any other company that may
be involved in the transactions contemplated by this Agreement.

If the foregoing  correctly sets forth the  understanding  and agreement between
CEUT and the Company,  please so indicate in the space provided for that purpose
below,  together  with the enclosed  duplicate  original,  and return one (1) of
these  originals  to us,  whereupon  this  letter  shall  constitute  a  binding
agreement as of the date hereof.



Sincerely,

C.E. Unterberg, Towbin

By:   /s/ Christine Gallagher
      ---------------------------
      Managing Director


Approved and agreed to as of October 8, 2003:

Nutrition 21, Inc.

By:   /s/ Paul Intlekofer
      ---------------------------
      Paul Intlekofer
      Chief Financial Officer and Senior
      Vice President, Corporate Development


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