Document:

4.1 Form of Warrant issued to Trilogy Capital Partners, Inc.

     

    Exhibit
      4.1

     

    NEITHER
      THESE WARRANTS NOR THE COMMON STOCK ISSUABLE UPON EXERCISE OF THESE WARRANTS
      HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
      OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, PLEDGED OR
      TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
      SECURITIES UNDER THE ACT OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS
      AVAILABLE.

     

    

    
      	1,793,322 Warrants	
              July
                18, 2005

            

    

     

    

     

    CALLISTO
      PHARMACEUTICALS, INC.

    

    WARRANTS

    

    

    

    Callisto
      Pharmaceuticals, Inc., a Delaware corporation (“KAL”),
      certifies that, for value received, Trilogy Capital Partners, Inc.
      (“Trilogy”),
      or registered assigns (the “Holder”),
      is the owner of One Million Seven Hundred Ninety Three Thousand Three Hundred
      Twenty Two (1,793,322) Warrants of KAL (the “Warrants”).
      Each Warrant entitles the Holder to purchase from KAL at any time prior to
      the
      Expiration Date (as defined below) one share of the common stock of KAL (the
      “Common
      Stock”)
      for $1.03 per share (the “Exercise
      Price”),
      on the terms and conditions hereinafter provided. The Exercise Price and the
      number of shares of Common Stock purchasable upon exercise of each Warrant
      are
      subject to adjustment as provided in this Certificate. 

     

    1. Vesting;
      Expiration Date; Exercise

     

    1.1 
      Vesting. The Warrants shall vest and become exercisable as of the date of this
      Certificate.

     

    1.2 Expiration
      Date. The Warrants shall expire on July 18, 2008 (the “Expiration
      Date”).

     

    1.3 Manner
      of Exercise. The Warrants are exercisable by delivery to KAL of the following
      (the “Exercise
      Documents”):
      (a) this Certificate (b) a written notice of election to exercise the Warrants;
      and (c) payment of the Exercise Price in cash, by check or by “net” exercise as
      contemplated by Section 1.4 of this Certificate. Within three business days
      following receipt of the foregoing, KAL shall execute and deliver to the Holder:
      (a) a certificate or certificates representing the aggregate number of shares
      of
      Common Stock purchased by the Holder, and (b) if less than all of the Warrants
      evidenced by this Certificate are exercised, a new certificate evidencing the
      Warrants not so exercised.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.4 Net
      Exercise. In lieu of the payment methods set forth in Section 1.3 above
and
      subject to Section 1.5 below, commencing one year from the date
      hereof,
      the Holder may elect to exchange all or some of the Warrant for the number
      of
      shares of Common Stock computed using the following formula:

     

    X
      = Y
      (A-B)

    A

     

    Where
      X = the number of shares of Common Stock to be issued to Holder.

     

    Y
      = the number of shares of Common Stock purchasable under the Warrants being
      exchanged (as adjusted to the date of such calculation).

     

    A
      = the Market Price on the date of receipt by KAL of the exercise
      documents.

     

    B
      = the Exercise Price of the Warrants being exchanged (as adjusted in accordance
      with the terms of Section 2 hereof).

     

    The
      “Market
      Price”
      on any trading day shall be deemed to be the last reported sale price of the
      Common Stock on such day, or, in the case no such reported sales take place
      on
      such day, the last reported sale price on the preceding trading day on which
      there was a last reported sales price, as officially reported by the principal
      securities exchange in which the shares of Common Stock are listed or admitted
      to trading or by the Nasdaq Stock Market, or if the Common Stock is not listed
      or admitted to trading on any national securities exchange or the Nasdaq Stock
      Market, the last sale price, or if there is no last sale price, the closing
      bid
      price, as furnished by the National Association of Securities Dealers, Inc.
      (such as through the OTC Bulletin Board) or a similar organization or if Nasdaq
      is no longer reporting such information. If the Market Price cannot be
      determined pursuant to the sentence above, the Market Price shall be determined
      in good faith (using customary valuation methods) by the Board of Directors
      of
      KAL based on the information best available to it, including recent arms-length
      sales of Common Stock to unaffiliated persons.

     

    
      
        
        

      

      
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    1.5 Restriction
      on “Net” Exercise. Notwithstanding any other provision of this Certificate,
      Holder shall only be permitted to effect a “net” exercise of the Warrants if on
      the date of exercise (a) the Holder has not been provided an opportunity to
      include the shares of Common Stock issuable upon exercise of the Warrants in
      a
      Registration Statement pursuant to Section 9.2; or (b) (i) the Holder has been
      provided an opportunity to include the shares of Common Stock issuable upon
      the
      exercise of the Warrants in a Registration Statement pursuant to Section 9.2,
      (ii) Holder has notified the Company that it wishes to include such shares
      in
      such Registration Statement, and (iii) Holder is not then permitted to sell
      the
      shares underlying the Warrants pursuant to such Registration Statement.

     

    1.6 Warrant
      Exercise Limitation. Notwithstanding any other provision of this Agreement,
      if
      as of the date of exercise KAL has a class of securities registered under
      Section 12 of the Securities Exchange Act of 1934, as amended, Holder may not
      exercise Warrants under this Section 1 to the extent that immediately following
      such exercise Holder would beneficially own 5% or more of the outstanding Common
      Stock of KAL. For this purpose, a representation of the Holder that following
      such exercise it would not beneficially own 5% or more of the outstanding Common
      Stock of KAL shall be conclusive and binding upon KAL.

     

    2. Adjustments
      of Exercise Price and Number and Kind of Conversion Shares

     

    2.1 In
      the event that KAL shall at any time hereafter (a) pay a dividend in Common
      Stock or securities convertible into Common Stock; (b) subdivide or split its
      outstanding Common Stock; (c) combine its outstanding Common Stock into a
      smaller number of shares; then the number of shares to be issued immediately
      after the occurrence of any such event shall be adjusted so that the Holder
      thereafter may receive the number of shares of Common Stock it would have owned
      immediately following such action if it had exercised the Warrants immediately
      prior to such action and the Exercise Price shall be adjusted to reflect such
      proportionate increases or decreases in the number of shares.

     

    2.2 In
      case
      of any reclassification, capital reorganization, consolidation, merger, sale
      of
      all or substantially all of KAL’s assets or any other change in the Common Stock
      of KAL, other than as a result of a subdivision, combination, or stock dividend
      provided for in Section 2.1 (any of which, a “Change
      Event”),
      then,
      as a condition of such Change Event, lawful provision shall be made, and duly
      executed documents evidencing the same from KAL or its successor shall be
      delivered to the Holder, so that the Holder shall have the right at any time
      prior to the expiration of the Warrants to purchase, at a total price equal
      to
      that payable upon the exercise of the Warrants, the kind and amount of shares
      of
      stock and other securities and property receivable in connection with such
      Change Event by a holder of the same number of shares of Common Stock as were
      purchasable by the Holder immediately prior to such Change Event. In any such
      case appropriate provisions shall be made with respect to the rights and
      interest of the Holder so that the provisions hereof shall thereafter be
      applicable with respect to any shares of stock or other securities and property
      deliverable upon exercise hereof, and appropriate adjustments shall be made
      to
      the Exercise Price per share payable hereunder, provided the Exercise Price
      for
      all the Warrants shall remain the same. The
      provisions of this Section 2.2 shall similarly apply to successive
      reclassifications, capital reorganizations, mergers, consolidations, sales
      or
      other transfers.

     

    3. Reservation
      of Shares. KAL
      shall at all times reserve and keep available out of its authorized but unissued
      shares of Common Stock, such number of shares of Common Stock as shall from
      time
      to time be issuable upon exercise of the Warrants. If at any time the number
      of
      authorized but unissued shares of Common Stock shall not be sufficient to permit
      the exercise of the Warrants, KAL shall promptly

     

    
      
        
        

      

      
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    seek
      such corporate action as may necessary to increase its authorized but unissued
      shares of Common Stock to such number of shares as shall be sufficient for
      such
      purpose.

     

    4. Certificate
      as to Adjustments. In
      each case of any adjustment in the Exercise Price, or number or type of shares
      issuable upon exercise of these Warrants, the Chief Financial Officer of KAL
      shall compute such adjustment in accordance with the terms of these Warrants
      and
      prepare a certificate setting forth such adjustment and showing in detail the
      facts upon which such adjustment is based, including a statement of the adjusted
      Exercise Price. KAL shall promptly send (by facsimile and by either first class
      mail, postage prepaid or overnight delivery) a copy of each such certificate
      to
      the Holder.

     

    5. Loss
      or Mutilation. Upon
      receipt of evidence reasonably satisfactory to KAL of the ownership of and
      the
      loss, theft, destruction or mutilation of this Certificate, and of indemnity
      reasonably satisfactory to it, and (in the case of mutilation) upon surrender
      and cancellation of these Warrants, KAL will execute and deliver in lieu thereof
      a new Certificate of like tenor as the lost, stolen, destroyed or mutilated
      Certificate.

     

    6. Representations
      and Warranties of KAL. KAL
      hereby represents and warrants to Holder that:

     

    6.1 Due
      Authorization. All corporate action on the part of KAL, its officers, directors
      and shareholders necessary for (a) the authorization, execution and delivery
      of,
      and the performance of all obligations of KAL under, these Warrants, and (b)
      the
      authorization, issuance, reservation for issuance and delivery of all of the
      Common Stock issuable upon exercise of these Warrants, has been duly taken.
      These Warrants constitute a valid and binding obligation of KAL enforceable
      in
      accordance with their terms, subject, as to enforcement of remedies, to
      applicable bankruptcy, insolvency, moratorium, reorganization and similar laws
      affecting creditors’ rights generally and to general equitable
      principles.

     

    6.2 Organization.
      KAL is a corporation duly organized, validly existing and in good standing
      under
      the laws of the State referenced in the first paragraph of this Certificate
      and
      has all requisite corporate power to own, lease and operate its property and
      to
      carry on its business as now being conducted and as currently proposed to be
      conducted.

     

    6.3 Valid
      Issuance of Stock. Any shares of Common Stock issued upon exercise of these
      Warrants will be duly and validly issued, fully paid and
      non-assessable.

     

    6.4 Governmental
      Consents. All consents, approvals, orders, authorizations or registrations,
      qualifications, declarations or filings with any federal or state governmental
      authority on the part of KAL required in connection with the consummation of
      the
      transactions contemplated herein have been obtained.

     

    7. Representations
      and Warranties of Trilogy.
      Trilogy hereby represents and warrants to KAL that:

     

    7.1 Trilogy
      is acquiring the Warrants for its own account, for investment purposes
      only.

     

    7.2 Trilogy
      understands that an investment in the Warrants involves a high degree of risk,
      and Trilogy has the financial ability to bear the economic risk of this
      investment in the Warrants, including a complete loss of such investment.
      Trilogy has adequate means for providing for its current financial needs and
      has
      no need for liquidity with respect to this investment.

     

    
      
        
        

      

      
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    7.3 Trilogy
      has such knowledge and experience in financial and business matters that it
      is
      capable of evaluating the merits and risks of an investment in the Warrants
      and
      in protecting its own interest in connection with this transaction.

     

    7.4 Trilogy
      understands that the Warrants have not been registered under the Securities
      Act
      of 1933, as amended (the “Securities
      Act”)
      or under any state securities laws. Trilogy is familiar with the provisions
      of
      the Securities Act and Rule 144 thereunder and understands that the restrictions
      on transfer on the Warrants may result in Trilogy being required to hold the
      Warrants for an indefinite period of time.

     

    7.5 Trilogy
      agrees not to sell, transfer, assign, gift, create a security interest in,
      or
      otherwise dispose of, with or without consideration (collectively, “Transfer”)
      any of the Warrants except pursuant to an effective registration statement
      under
      the Securities Act or an exemption from registration. As a further condition
      to
      any such Transfer, except in the event that such Transfer is made pursuant
      to an
      effective registration statement under the Securities Act, if in the reasonable
      opinion of counsel to KAL any Transfer of the Warrants by the contemplated
      transferee thereof would not be exempt from the registration and prospectus
      delivery requirements of the Securities Act, KAL may require the contemplated
      transferee to furnish KAL with an investment letter setting forth such
      information and agreements as may be reasonably requested by KAL to ensure
      compliance by such transferee with the Securities Act.

     

    8. Notices
      of Record Date

     

    In
      the event:

     

    8.1 KAL
      shall take a record of the holders of its Common Stock (or other stock or
      securities at the time receivable upon the exercise of these Warrants), for
      the
      purpose of entitling them to receive any dividend or other distribution, or
      any
      right to subscribe for or purchase any shares of stock of any class or any
      other
      securities or to receive any other right; or

     

    8.2 of
      any consolidation or merger of KAL with or into another corporation, any capital
      reorganization of KAL, any reclassification of the capital stock of KAL, or
      any
      conveyance of all or substantially all of the assets of KAL to another
      corporation in which holders of KAL’s stock are to receive stock, securities or
      property of another corporation; or

     

    8.3 of
      any voluntary dissolution, liquidation or winding-up of KAL; or

     

    8.4 of
      any redemption or conversion of all outstanding Common Stock;

     

    then,
      and in each such case, KAL will mail or cause to be mailed to the Holder a
      notice specifying, as the case may be, (a) the date on which a record is to
      be
      taken for the purpose of such dividend, distribution or right, or (b) the date
      on which such reorganization, reclassification, consolidation, merger,
      conveyance, dissolution, liquidation, winding-up, redemption or conversion
      is to
      take place, and the time, if any is to be fixed, as of which the holders of
      record of Common Stock (or such stock or securities as at the time are
      receivable upon the exercise of these Warrants), shall be entitled to exchange
      their shares of Common Stock (or such other stock or securities), for securities
      or other property deliverable upon such reorganization, reclassification,
      consolidation, merger, conveyance, dissolution,

     

    
      
        
        

      

      
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    liquidation
      or winding-up. KAL shall use all reasonable efforts to ensure such notice shall
      be delivered at least 15 days prior to the date therein specified. 

     

    9.  Registration
      Rights.
      

     

    9.1 Definitions.
      For purposes of this Section 9, the following terms shall have the meanings
      set
      forth below:

     

    9.1.1 A
      “Blackout
      Event”
      means any of the following: (a) the possession by KAL of material information
      that is not ripe for disclosure in a registration statement or prospectus,
      as
      determined reasonably and in good faith by the Chief Executive Officer or the
      Board of Directors of KAL or that disclosure of such information in the
      Registration Statement or the prospectus constituting a part thereof would
      be
      materially detrimental to the business and affairs of KAL; or (b) any material
      engagement or activity by KAL which would, in the reasonable and good faith
      determination of the Chief Executive Officer or the Board of Directors of KAL,
      be materially adversely affected by disclosure in a registration statement
      or
      prospectus at such time. 

     

    9.1.2 “Exchange
      Act”
      shall mean the Securities Exchange Act of 1934, as amended.

     

    9.1.3 “Included
      Shares”
      shall mean any Registrable Shares included in a Registration.

     

    9.1.4 “Registrable
      Shares”
      shall mean the shares of Common Stock (or such stock or securities as at the
      time are receivable upon the exercise of these Warrants) issuable upon exercise
      of the Warrants and any other warrants and or other securities issued to Trilogy
      in connection with performing investor relations services for KAL, and shares
      or
      securities issued as a result of stock split, stock dividend or reclassification
      of such shares.

     

    9.1.5 “Registration”
      shall mean a registration of securities under the Securities Act pursuant to
      Section 9.2 or 9.3 of this Agreement. 

     

    9.1.6 “Registration
      Period”
      with respect to any Registration Statement the period commencing the effective
      date of the Registration Statement and ending upon withdrawal or termination
      of
      the Registration Statement.

     

    9.1.7 “Registration
      Statement”
      shall mean the registration statement, as amended from time to time, filed
      with
      the SEC in connection with a Registration. 

     

    9.1.8 “SEC”
      shall mean the Securities and Exchange Commission.

     

    9.2 
      Demand Registration. No later than August 30, 2005, KAL shall prepare and file
      with the SEC a Registration Statement for the purpose of registering the sale
      of
      the Registrable Shares under the Securities Act, and shall use its commercially
      reasonable efforts to cause the Registration Statement to become effective
      within 60 days of the date of filing. Once
      effective, KAL shall prepare and file with the SEC such amendments and
      supplements to the Registration Statement and the prospectus forming a part
      thereof as may be necessary to keep the Registration Statement effective until
      the earliest date on which (a) all the Included Shares have been disposed of
      pursuant to the Registration Statement, or (b) all of the Included Shares then
      held by Holder may be sold under the provisions of Rule 144 without limitation
      as to volume, whether pursuant to Rule 144(k) or otherwise. 

     

    
      
        
        

      

      
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    9.3 
      Piggyback Registration. Unless the Registrable Shares are then included in
      a
      Registration Statement or can be sold under the provisions of Rule 144 without
      limitation as to volume, whether pursuant to Rule 144(k) or otherwise, if KAL
      shall determine to register any Common Stock under the Securities Act for sale
      in connection with a public offering of Common Stock (other than pursuant to
      an
      employee benefit plan or a merger, acquisition or similar transaction), KAL
      will
      give written notice thereof to Holder and will include in such Registration
      Statement any of the Registrable Shares which Holder may request be included
      (“Included
      Shares”)
      by a writing delivered to KAL within 15 days after the notice given by KAL
      to
      Holder; provided, however, that if the offering is to be firmly underwritten,
      and the representative of the underwriters of the offering refuse in writing
      to
      include in the offering all of the shares of Common Stock requested by KAL
      and
      others, the shares to be included shall be allocated first to KAL and any
      shareholder who initiated such Registration and then among the others based
      on
      the respective number of shares of Common Stock held by such persons. If KAL
      decides not to, and does not, file a Registration Statement with respect to
      such
      Registration, or after filing determines to withdraw the same before the
      effective date thereof, KAL will promptly so inform Holder, and KAL will not
      be
      obligated to complete the registration of the Included Shares included therein.
      

     

    9.4 
      Certain Covenants. In connection with any Registration: 

     

    9.4.1 KAL
      shall take all lawful action such that the Registration Statement, any amendment
      thereto and the prospectus forming a part thereof does not contain an untrue
      statement of a material fact or omit to state a material fact required to be
      stated therein or necessary to make the statements therein, in light of the
      circumstances under which they are made, not misleading. Upon becoming aware
      of
      the occurrence of any event or the discovery of any facts during the
      Registration Period that make any statement of a material fact made in the
      Registration Statement or the related prospectus untrue in any material respect
      or which material fact is omitted from the Registration Statement or related
      prospectus that requires the making of any changes in the Registration Statement
      or related prospectus so that it will not contain any untrue statement of a
      material fact or omit to state a material fact necessary to make the statements
      therein, in light of the circumstances under which they are made, not misleading
      (taking into account any prior amendments or supplements), KAL shall promptly
      notify Holder, and, subject to the provisions of Section 9.5, as soon as
      reasonably practicable prepare (but, subject to Section 9.5, in no event more
      than five business days in the case of a supplement or seven business days
      in
      the case of a post-effective amendment) and file with the SEC a supplement
      or
      post-effective amendment to the Registration Statement or the related prospectus
      or file any other required document so that, as thereafter delivered to a
      purchaser of Shares from Holder, such prospectus will not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make
      the statements therein, in light of the circumstances under which they were
      made, not misleading.

     

    9.4.2 At
      least three business days prior to the filing with the SEC of the Registration
      Statement (or any amendment thereto) or the prospectus forming a part thereof
      (or any supplement thereto), KAL shall provide draft copies thereof to Holder
      and shall consider incorporating into such documents such comments as Holder
      (and its counsel) may propose to be incorporated therein. Notwithstanding the
      foregoing, no prospectus supplement, the form of which has previously been
      provided to Holder, need be delivered in draft form to Holder.

     

    9.4.3 KAL
      shall promptly notify Holder upon the occurrence of any of the following events
      in respect of the Registration Statement or the prospectus forming a part
      thereof: (a) the receipt

     

    
      
        
        

      

      
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    of
      any request for additional information from the SEC or any other federal or
      state governmental authority, the response to which would require any amendments
      or supplements to the Registration Statement or related prospectus; (b) the
      issuance by the SEC or any other federal or state governmental authority of
      any
      stop order suspending the effectiveness of the Registration Statement or the
      initiation of any proceedings for that purpose; or (c) the receipt of any
      notification with respect to the suspension of the qualification or exemption
      from qualification of any of the Shares for sale in any jurisdiction or the
      initiation or threatening of any proceeding for such purpose.

     

    9.4.4 KAL
      shall furnish to Holder with respect to the Included Shares registered under
      the
      Registration Statement (and to each underwriter, if any, of such Shares) such
      number of copies of prospectuses and such other documents as Holder may
      reasonably request, in order to facilitate the public sale or other disposition
      of all or any of the Included Shares by Holder pursuant to the Registration
      Statement.

     

    9.4.5 In
      connection with any registration pursuant to Section 9.2, KAL shall file or
      cause to be filed such documents as are required to be filed by KAL for normal
      Blue Sky clearance in states specified in writing by Holder; provided,
      however,
      that KAL shall not be required to qualify to do business or consent to service
      of process in any jurisdiction in which it is not now so qualified or has not
      so
      consented.

     

    9.4.6 KAL
      shall bear and pay all expenses incurred by it and Holder (other than
      underwriting discounts, brokerage fees and commissions and fees and expenses
      of
      more than one law firm) in connection with the registration of the Shares
      pursuant to the Registration Statement. 

     

    9.4.7 As
      a condition to including Registrable Shares in a Registration Statement, Holder
      must provide to KAL such information regarding itself, the Registrable Shares
      held by it and the intended method of distribution of such Shares as shall
      be
      required to effect the registration of the Registrable Shares and, if the
      offering is being underwritten, Holder must provide such powers of attorney,
      indemnities and other documents as may be reasonably requested by the managing
      underwriter.

     

    9.4.8 Following
      the effectiveness of the Registration Statement, upon receipt from KAL of a
      notice that the Registration Statement contains an untrue statement of material
      fact or omits to state any material fact required to be stated therein or
      necessary to make the statements therein not misleading in light of the
      circumstances under which they were made, Holder will immediately discontinue
      disposition of Included Shares pursuant to the Registration Statement until
      KAL
      notifies Holder that it may resume sales of Included Shares and, if necessary,
      provides to Holder copies of the supplemental or amended prospectus.

     

    9.5 
      Blackout Event. KAL shall not be obligated to file a post-effective amendment
      or
      supplement to the Registration Statement or the prospectus constituting a part
      thereof during the continuance of a Blackout Event; provided, however, that
      no
      Blackout Event may be deemed to exist for more than 60 days. Without the express
      written consent of Holder, if required to permit the continued sale of Shares
      by
      Holder, a post-effective amendment or supplement to Registration Statement
      or
      the prospectus constituting a part thereof must be filed no later than the
      61st
      day following commencement of a Blackout Event.

     

    
      
        
        

      

      
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    9.6 
      Rule 144. With a view to making available to Holder the benefits of Rule 144,
      KAL agrees, until such time as Holder can sell all remaining Registrable Shares
      under the provisions Rule 144(k), to:

     

    9.6.1.1 comply
      with the provisions of paragraph (c)(1) of Rule 144; and

     

    9.6.1.2 file
      with the SEC in a timely manner all reports and other documents required to
      be
      filed by KAL pursuant to Section 13 or 15(d) under the Exchange Act; and, if
      at
      any time it is not required to file such reports but in the past had been
      required to or did file such reports, it will, upon the request of a Purchaser,
      make available other information as required by, and so long as necessary to
      permit sales of its Shares pursuant to, Rule 144.

     

    9.7 
      KAL Indemnification. KAL agrees to indemnify and hold harmless Holder, and
      its
      officers, directors and agents (including broker or
      underwriter selling Included Shares for Holder), and each person, if any, who
      controls Holder within the meaning of Section 15 of the Securities Act or
      Section 20 of the Exchange Act from and against any and all losses, claims,
      damages and liabilities caused by (a) any violation or alleged violation by
      KAL
      of the Securities Act, Exchange Act, any state securities laws or any rule
      or
      regulation promulgated under the Securities Act, Exchange Act or any state
      securities laws, (b) any untrue statement or alleged untrue statement of a
      material fact contained in any registration statement or prospectus relating
      to
      the Included Shares (as amended or supplemented if KAL shall have furnished
      any
      amendments or supplements thereto) or any preliminary prospectus, or (c) caused
      by any omission or alleged omission to state therein a material fact required
      to
      be stated therein or necessary to make the statements therein not misleading
      in
      light of the circumstances under which they were made, except insofar as such
      losses, claims, damages or liabilities are caused by any such untrue statement
      or omission or alleged untrue statement or omission based upon information
      furnished in writing to KAL by Holder or on Holder’s behalf expressly for use
      therein.

     

    9.8 
      Holder Indemnification. Holder agrees to indemnify and hold harmless KAL, its
      officers, directors and agents and each person, if any, who controls KAL within
      the meaning of either Section 15 of the Securities Act or Section 20 of the
      Exchange Act to the same extent as the foregoing indemnity from KAL to Holder,
      but only with respect to information furnished in writing by Holder or on
      Holder’s behalf expressly for use in any registration statement or prospectus
      relating to the Registrable Shares, or any amendment or supplement thereto,
      or
      any preliminary prospectus. 

     

    9.9 
      Indemnification Procedures. In case any proceeding (including any governmental
      investigation) shall be instituted involving any person in respect of which
      indemnity may be sought pursuant to this Section 9, such person (an
“Indemnified
      Party”)
      shall promptly notify the person against whom such indemnity may be sought
      (the
“Indemnifying
      Party”)
      in writing and the Indemnifying Party shall assume the defense thereof,
      including the employment of counsel reasonably satisfactory to such Indemnified
      Party, and shall assume the payment of all fees and expenses; provided that
      the
      failure of any Indemnified Party so to notify the Indemnifying Party shall
      not
      relieve the Indemnifying Party of its obligations hereunder except to the extent
      (and only to the extent that) that the Indemnifying Party is materially
      prejudiced by such failure to notify. In any such proceeding, any Indemnified
      Party shall have the right to retain its own counsel, but the fees and expenses
      of such counsel shall be at the expense of such Indemnified Party unless (a)
      the
      Indemnifying Party and the Indemnified Party shall have mutually agreed to
      the
      retention of such counsel or (b) in the reasonable judgment of such Indemnified
      Party representation of both parties by the same counsel would be inappropriate
      due to actual or potential differing interests between them. It is understood
      that the Indemnifying Party shall not, in connection with any proceeding or
      related proceedings in the same

     

    
      
        
        

      

      
        -
          9 -

        
          

        

      

      
        
        

      

    

     

    jurisdiction,
      be liable for the reasonable fees and expenses of more than one separate firm
      of
      attorneys (in addition to any local counsel) at any time for all such
      Indemnified Parties (including in the case of Holder, all of its officers,
      directors and controlling persons) and that all such fees and expenses shall
      be
      reimbursed as they are incurred. In the case of any such separate firm for
      the
      Indemnified Parties, the Indemnified Parties shall designate such firm in
      writing to the Indemnifying Party. The Indemnifying Party shall not be liable
      for any settlement of any proceeding effected without its written consent (which
      consent shall not be unreasonably withheld or delayed), but if settled with
      such
      consent, or if there be a final judgment for the plaintiff, the Indemnifying
      Party shall indemnify and hold harmless such Indemnified Parties from and
      against any loss or liability (to the extent stated above) by reason of such
      settlement or judgment. No Indemnifying Party shall, without the prior written
      consent of the Indemnified Party, effect any settlement of any pending or
      threatened proceeding in respect of which any Indemnified Party is or could
      have
      been a party and indemnity could have been sought hereunder by such Indemnified
      Party, unless such settlement includes an unconditional release of such
      Indemnified Party from all liability arising out of such
      proceeding.

     

    9.10 Contribution.
      To the extent any indemnification by an Indemnifying Party is prohibited or
      limited by law, the Indemnifying Party agrees to make the maximum contribution
      with respect to any amounts for which, he, she or it would otherwise be liable
      under this Section 9 to the fullest extent permitted by law; provided, however,
      that (a) no contribution shall be made under circumstances where a party would
      not have been liable for indemnification under this Section 9 and (b) no seller
      of Registrable Securities guilty of fraudulent misrepresentation (within the
      meaning used in the Securities Act) shall be entitled to contribution from
      any
      party who was not guilty of such fraudulent misrepresentation.

     

    10. Nontransferability.
      Trilogy may not sell or transfer any Warrants to any person other than a
      director, officer, employee, manager or affiliate of Trilogy (or a person
      controlled by one or more directors, officers, employees, managers or affiliates
      of Trilogy) or to a person or entity that assists Trilogy in providing services
      to KAL pursuant to the Letter of Engagement dated July 18, 2005 as the same
      may
      be amended from time to time, without the consent of KAL.

     

    11. Severability.
      If
      any term, provision, covenant or restriction of these Warrants is held by a
      court of competent jurisdiction to be invalid, void or unenforceable, the
      remainder of the terms, provisions, covenants and restrictions of these Warrants
      shall remain in full force and effect and shall in no way be affected, impaired
      or invalidated.

     

    12. Notices.
      All
      notices, requests, consents and other communications required hereunder shall
      be
      in writing and shall be effective when delivered or, if delivered by registered
      or certified mail, postage prepaid, return receipt requested, shall be effective
      on the third day following deposit in United States mail: to the Holder, at
      Trilogy Capital Partners, Inc., 11726 San Vicente Boulevard, Suite 235, Los
      Angeles, CA 90049; and if addressed to KAL, at Callisto Pharmaceuticals, Inc.,
      420 Lexington Avenue, Suite 1609, New York, NY 10170, or such other address
      as
      Holder or KAL may designate in writing.

     

    13. No
      Rights as Shareholder. The
      Holder shall have no rights as a shareholder of KAL with respect to the shares
      issuable upon exercise of the Warrants until the receipt by KAL of all of the
      Exercise Documents. 

     

    
      
        
        

      

      
        -
          10 -

        
          

        

      

      
        
        

      

    

     

    
      	 	 	 
	 	Callisto
              Pharmaceuticals, Inc.
	 
 	 
 	 
 
	 	By:  	 
	 	
              

            
	 	Gary
              S. Jacob, Chief Executive
              Officer

    

     

    
      
        
        

      

      
        -
          11 -

        
          

        

      

      
        
        

      

    

    
      EXHIBIT
        “A”

    

     

    NOTICE
      OF EXERCISE

     

    (To
      be signed only upon exercise of the Warrants)

     

    

     

    To:      
      Callisto
      Pharmaceuticals, Inc.

     

    The
      undersigned hereby elects to purchase shares of Common Stock (the
“Warrant Shares”) of Callisto Pharmaceuticals, Inc.
      (“KAL”), pursuant to the terms of the enclosed warrant
      certificate (the “Certificate”). The undersigned tenders
      herewith payment of the exercise price pursuant to the terms of the Certificate.
      

     

    The
      undersigned hereby represents and warrants to, and agrees with, KAL as follows:
      

     

    1.     
      Holder
      is acquiring the Warrant Shares for its own account, for investment purposes
      only and not with a view to distribution in violation of the Securities Act
      of
      1933, as amended (the “Securities
      Act”).

     

    2.     
      Holder
      understands that an investment in the Warrant Shares involves a high degree
      of
      risk, and Holder has the financial ability to bear the economic risk of this
      investment in the Warrant Shares, including a complete loss of such investment.
      Holder has adequate means for providing for its current financial needs and
      has
      no need for liquidity with respect to this investment.

     

    3.     
      Holder
      has such knowledge and experience in financial and business matters that it
      is
      capable of evaluating the merits and risks of an investment in the Warrant
      Shares and in protecting its own interest in connection with this
      transaction.

     

    4.     
      Holder
      understands that the issuance of the Warrant Shares to Holder has not been
      registered under the Securities Act or under any state securities laws. Holder
      is familiar with the provisions of the Securities Act and Rule 144 thereunder
      and understands that the restrictions on transfer on the Warrant Shares may
      result in Holder being required to hold the Warrant Shares for an indefinite
      period of time unless the transfer by Holder is registered under the Securities
      Act.

     

    5.     
      Holder
      agrees not to sell, transfer, assign, gift, create a security interest in,
      or
      otherwise dispose of, with or without consideration (collectively, “Transfer”)
      any of the Warrant Shares except pursuant to an effective registration statement
      under the Securities Act or an exemption from registration. As a further
      condition to any such Transfer, except in the event that such Transfer is made
      pursuant to an effective registration statement under the Securities Act, if
      in
      the reasonable opinion of counsel to KAL any Transfer of the Warrant Shares
      by
      the contemplated transferee thereof would not be exempt from the registration
      and prospectus delivery requirements of the Securities Act, KAL may require
      the
      contemplated transferee to furnish KAL with an investment letter setting forth
      such information and agreements as may be reasonably requested by KAL to ensure
      compliance by such transferee with the Securities Act.

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

     

    Each
      certificate evidencing the Warrant Shares will bear the following
      legend:

     

    “THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933 (THE “ACT”) OR ANY APPLICABLE STATE SECURITIES LAWS AND
      MAY NOT BE EXERCISED, SOLD, PLEDGED OR TRANSFERRED IN THE ABSENCE OF AN
      EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE ACT OR UNLESS
      AN
      EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.

     

    6.     
      Immediately
      following this exercise of Warrants, if as of the date of exercise KAL has
      a
      class of securities registered under Section 12 of the Securities Exchange
      Act
      of 1934, as amended, the undersigned will not beneficially own five percent
      (5%)
      or more of the then outstanding Common Stock of KAL (based on the number of
      shares outstanding set forth in the most recent periodic report filed by KAL
      with the Securities and Exchange Commission and any additional shares which
      have
      been issued since that date of which Holder is aware have been
      issued).

     

     

    Number
      of Warrants Exercised: ______________

     

    Net
      Exercise ____ Yes ___ No 

     

    Dated:
      ____________________   

    

    

     

    _____________________________________________________

     

     

     

    -2-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 

                

        

         

        
          
            
            

          

          
            -
              2
              -

            
              

            

          

          
            
            

          

           

        

        
          
            	 	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

                  

          

           

          
            
              
              

            

            
              -
                3
                -

              
                

              

            

            
              
              

            

             

          

          
            
              	 	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. 

                    

            

             

            
              
                
                

              

              
                -
                  4
                  -

                
                  

                

              

              
                
                

              

               

            

            
              	
                      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.]

     

    
      
        
        

      

      
        -
          5
          -

        
          

        

      

      
        
        

      

    

    

    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

     

    
      
        
        

      

      
        -
          6
          -

        
          

        

      

      
        
        

      

    

     

    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.

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