Document:

Form of Warrant to purchase Common Stock

     

     

    Exhibit
      4.2

     

    NEITHER
      THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES
      HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
      SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
      ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
      EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
      AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
      TO
      SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
      COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
      SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED
      BY SUCH SECURITIES. 

     

     

    CALLISTO
      PHARMACEUTICALS, INC.

     

    WARRANT

     

    
      
        	
                Warrant
                  No. ___

              	
                Original
                  Issue Date: February 3,
                  2006

              

      

    

     

    Callisto
      Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), hereby certifies that, for value received, _____
      or
      its registered assigns (the "Holder"), is entitled to purchase
      from the Company up to a total of [ ] shares of Common Stock (each such share,
      a
"Warrant Share" and all such shares, the "Warrant
      Shares"), at any time and from time to time from and after the Original
      Issue Date and through and including February 3, 2009 (the "Expiration
      Date"), and subject to the following terms and conditions:

     

    
      1. 
Definitions.
        As used in this Warrant, the following terms shall have the respective
        definitions set forth in this Section 1. 

       

      "Business
        Day"
        means any day except Saturday, Sunday and any day that is a federal legal
        holiday in the United States or a day on which banking institutions in the
        State
        of New York are authorized or required by law or other government action
        to
        close.

       

      "Common
        Stock"
        means the common stock of the Company, par value $0.0001 per share, and any
        securities into which such common stock may hereafter be reclassified.

       

      "Exercise
        Price" means
        $1.25, subject to adjustment in accordance with Section 9.

       

             
        "Fundamental Transaction"
        means any of the following: (1) the Company effects any merger or consolidation
        of the Company with or into another Person, (2) the Company effects any sale
        of
        all or substantially all of its assets in one or a series of related
        transactions, (3) any

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    tender
      offer or exchange offer (whether by the Company or another Person) is completed
      pursuant to which holders of Common Stock are permitted to tender or exchange
      their shares for other securities, cash or property, or (4) the Company effects
      any reclassification of the Common Stock or any compulsory share exchange
      pursuant to which the Common Stock is effectively converted into or exchanged
      for other securities, cash or property.

    
       

      “Original
        Issue Date”
        means the Original Issue Date first set forth on the first page of this
        Warrant.

       

      “New
        York Courts”
        means the state and federal courts sitting in the City of New York, Borough
        of
        Manhattan.

       

      "Trading
        Day"
        means (i) a day on which the Common Stock is traded on a Trading Market,
        or (ii)
        if the Common Stock is not quoted on any Trading Market, a day on which the
        Common Stock is quoted in the over-the-counter market as reported by the
        Pink
        Sheets, LLC (or any similar organization or agency succeeding to its functions
        of reporting prices); provided, that in the event that the Common Stock is
        not
        listed or quoted as set forth in (i) and (ii) hereof, then Trading Day shall
        mean a Business Day.

       

      "VWAP"
        means on any particular Trading Day or for any particular period, the volume
        weighted average trading price per share of Common Stock on such date or
        for
        such period as reported by the Bloomberg L.P., or by any successor performing
        similar functions.

       

      2.             Registration
        of Warrant.
        The Company shall register this Warrant upon records to be maintained by
        the
        Company for that purpose (the "Warrant
        Register"),
        in the name of the record Holder hereof from time to time. The Company may
        deem
        and treat the registered Holder of this Warrant as the absolute owner hereof
        for
        the purpose of any exercise hereof or any distribution to the Holder, and
        for
        all other purposes, absent actual notice to the contrary.

       

      3.             Registration
        of Transfers.
        The Company shall register the transfer of any portion of this Warrant in
        the
        Warrant Register, upon surrender of this Warrant, with the Form of Assignment
        attached hereto duly completed and signed, to the Company at its address
        specified herein. Upon any such registration or transfer, a new Warrant to
        purchase Common Stock, in substantially the form of this Warrant (any such
        new
        Warrant, a "New
        Warrant"),
        evidencing the portion of this Warrant so transferred shall be issued to
        the
        transferee and a New Warrant evidencing the remaining portion of this Warrant
        not so transferred, if any, shall be issued to the transferring Holder. The
        acceptance of the New Warrant by the transferee thereof shall be deemed the
        acceptance by such transferee of all of the rights and obligations of a holder
        of a Warrant. 

       

      4.             Exercise
        and Duration of Warrants.
        

       

      (a) 
This
        Warrant shall be exercisable by the registered Holder at any time and from
        time
        to time on or after the Original Issue Date through and including the Expiration
        Date. At 6:30 p.m., New York City time on the Expiration Date, the portion
        of
        this Warrant not exercised prior thereto shall be and become void and of
        no
        value. Except as provided in Section 4(b) below, the Company may not call
        or
        redeem any portion of this Warrant without the prior written consent of the
        affected Holder.

       

    

    
      
        
        

      

      
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                (b) 
Subject
      to the provisions of this Section 4(b), if at any time following the effective
      date of a registration statement registering for resale the Warrant Shares
      (the
“Effective
      Date”):
      (i) the VWAP of the Common Stock for each of 10 consecutive Trading Days
      following the Effective Date is greater than $2.10 (subject to adjustment
      pursuant to Section 9), (ii) the Warrant Shares are either registered for resale
      pursuant to an effective registration statement naming the Holder as a selling
      stockholder thereunder (and the prospectus thereunder is available for use
      by
      the Holder as to all Warrant Shares) or freely transferable without volume
      restrictions pursuant to Rule 144(k) promulgated under the Securities Act,
      as
      determined by counsel to the Company pursuant to a written opinion letter
      addressed and in form and substance reasonably acceptable to the Holder and
      the
      transfer agent for the Common Stock, during the entire 10 Trading Day period
      referenced in (i) above through the expiration of the Call Date as set forth
      in
      the Company’s notice pursuant to this Section (the “Call
      Condition Period”),
      (iii) the Company shall have complied in all material respects with its
      obligations under this Warrant and (iv) the Common Stock shall at all times
      be
      listed or quoted on a Trading Market, then, subject to the conditions set forth
      in this Section, the Company may, in its sole discretion, elect to require
      the
      exercise of all of the then unexercised portion of this Warrant, on the date
      that is the fifth Trading Day after written notice thereof (a “Call
      Notice”)
      is received by the Holder (such fifth Trading Day shall be known as the
“Call
      Date”)
      at the address last shown on the records of the Company for the Holder or given
      by the Holder to the Company for the purpose of notice. The Company covenants
      and agrees that it will honor all Exercise Notices tendered through 6:30 p.m.
      (New York City time) on the Call Date. 

    
      
         

        5.     Delivery
          of Warrant Shares.

         

                    (a) 
To
          effect exercises hereunder, the Holder shall not be required to physically
          surrender this Warrant unless the aggregate Warrant Shares represented
          by this
          Warrant is being exercised. Upon delivery of the Exercise Notice (in the
          form
          attached hereto) to the Company (with the attached Warrant Shares Exercise
          Log)
          at its address for notice set forth herein and upon payment of the Exercise
          Price multiplied by the number of Warrant Shares that the Holder intends
          to
          purchase hereunder, the Company shall promptly (but in no event later than
          three
          Trading Days after the Date of Exercise (as defined herein)) issue and
          deliver
          to the Holder, a certificate for the Warrant Shares issuable upon such
          exercise,
          which shall be free of restrictive legends. The Company shall, upon request
          of
          the Holder and subsequent to the Effective Date, use its reasonable best
          efforts
          to deliver Warrant Shares hereunder electronically through the Depository
          Trust
          Corporation or another established clearing corporation performing similar
          functions, if available, provided,
          that, the Company may, but will not be required to change its transfer
          agent if
          its current transfer agent cannot deliver Warrant Shares electronically
          through
          the Depository Trust Corporation. A "Date
          of Exercise"
          means the date on which the Holder shall have delivered to the Company:
          (i) the
          Exercise Notice (with the Warrant Exercise Log attached to it), appropriately
          completed and duly signed and (ii) payment of the Exercise Price for the
          number
          of Warrant Shares so indicated by the Holder to be purchased.

         

                    (b) 
The
          Company's obligations to issue and deliver Warrant Shares in accordance
          with the
          terms hereof are absolute and unconditional, irrespective of any action
          or
          inaction by the Holder to enforce the same, any waiver or consent with
          respect
          to any provision hereof, the recovery of any judgment against any Person
          or any
          action to enforce the same, or any setoff, counterclaim, recoupment, limitation
          or termination, or any breach or alleged breach

         

      

    

    
      
        
        

      

      
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      bythe
        Holder or any other Person of any obligation to the Company or any violation
        or
        alleged violation of law by the Holder or any other Person, and irrespective
        of
        any other circumstance which might otherwise limit such obligation of the
        Company to the Holder in connection with the issuance of Warrant Shares.
        Nothing
        herein shall limit a Holder's right to pursue any other remedies available
        to it
        hereunder, at law or in equity including, without limitation, a decree of
        specific performance and/or injunctive relief with respect to the Company's
        failure to timely deliver certificates representing Warrant Shares upon exercise
        of the Warrant as required pursuant to the terms
        hereof.

    

    
       

      6. 
Charges,
        Taxes and Expenses.
        Issuance and delivery of Warrant Shares upon exercise of this Warrant shall
        be
        made without charge to the Holder for any issue or transfer tax, withholding
        tax, transfer agent fee or other incidental tax or expense in respect of
        the
        issuance of such certificates, all of which taxes and expenses shall be paid
        by
        the Company; provided, however, that the Company shall not be required to
        pay
        any tax which may be payable in respect of any transfer involved in the
        registration of any certificates for Warrant Shares or Warrants in a name
        other
        than that of the Holder. The Holder shall be responsible for all other tax
        liability that may arise as a result of holding or transferring this Warrant
        or
        receiving Warrant Shares upon exercise hereof.

       

      7. 
Replacement
        of Warrant.
        If this Warrant is mutilated, lost, stolen or destroyed, the Company shall
        issue
        or cause to be issued in exchange and substitution for and upon cancellation
        hereof, or in lieu of and substitution for this Warrant, a New Warrant, but
        only
        upon receipt of evidence reasonably satisfactory to the Company of such loss,
        theft or destruction and customary and reasonable indemnity (which shall
        not
        include a surety bond), if requested. Applicants for a New Warrant under
        such
        circumstances shall also comply with such other reasonable regulations and
        procedures and pay such other reasonable third-party costs as the Company
        may
        prescribe. If a New Warrant is requested as a result of a mutilation of this
        Warrant, then the Holder shall deliver such mutilated Warrant to the Company
        as
        a condition precedent to the Company’s obligation to issue the New
        Warrant.

       

      8. 
Reservation
        of Warrant Shares.
        The Company covenants that it will at all times reserve and keep available
        out
        of the aggregate of its authorized but unissued and otherwise unreserved
        Common
        Stock, solely for the purpose of enabling it to issue Warrant Shares upon
        exercise of this Warrant as herein provided, the number of Warrant Shares
        which
        are then issuable and deliverable upon the exercise of this entire Warrant,
        free
        from preemptive rights or any other contingent purchase rights of Persons
        other
        than the Holder (taking into account the adjustments and restrictions of
        Section
        9).
        The Company covenants that all Warrant Shares so issuable and deliverable
        shall,
        upon issuance and the payment of the applicable Exercise Price in accordance
        with the terms hereof, be duly and validly authorized, issued and fully paid
        and
        nonassessable.

       

      9. 
Certain
        Adjustments.
        The Exercise Price and number of Warrant Shares issuable upon exercise of
        this
        Warrant are subject to adjustment from time to time as set forth in this
        Section
        9.

       

                  (a)     Stock
        Dividends and Splits.
        If the Company, at any time while this Warrant is outstanding, (i) pays a
        stock
        dividend on its Common Stock or otherwise makes a 

       

    

    
      
        
        

      

      
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      distribution
        on any class of capital stock that is payable in shares of Common Stock,
        (ii)
        subdivides outstanding shares of Common Stock into a larger number of shares,
        or
        (iii) combines outstanding shares of Common Stock into a smaller number of
        shares, then in each such case the Exercise Price shall be multiplied by
        a
        fraction of which the numerator shall be the number of shares of Common Stock
        outstanding immediately before such event and of which the denominator shall
        be
        the number of shares of Common Stock outstanding immediately after such event.
        Any adjustment made pursuant to clause (i) of this paragraph shall become
        effective immediately after the record date for the determination of
        stockholders entitled to receive such dividend or distribution, and any
        adjustment pursuant to clause (ii) or (iii) of this paragraph shall become
        effective immediately after the effective date of such subdivision or
        combination.

       

                  (b)    Fundamental
        Transactions.
        If, at any time while this Warrant is outstanding there is a Fundamental
        Transaction, then the Holder shall have the right thereafter to receive,
        upon
        exercise of this Warrant, the same amount and kind of securities, cash or
        property as it would have been entitled to receive upon the occurrence of
        such
        Fundamental Transaction if it had been, immediately prior to such Fundamental
        Transaction, the holder of the number of Warrant Shares then issuable upon
        exercise in full of this Warrant (the "Alternate
        Consideration").
        For purposes of any such exercise, the determination of the Exercise Price
        shall
        be appropriately adjusted to apply to such Alternate Consideration based
        on the
        amount of Alternate Consideration issuable in respect of one share of Common
        Stock in such Fundamental Transaction, and the Company shall apportion the
        Exercise Price among the Alternate Consideration in a reasonable manner
        reflecting the relative value of any different components of the Alternate
        Consideration. If holders of Common Stock are given any choice as to the
        securities, cash or property to be received in a Fundamental Transaction,
        then
        the Holder shall be given the same choice as to the Alternate Consideration
        it
        receives upon any exercise of this Warrant following such Fundamental
        Transaction. At the Holder's option and request, any successor to the Company
        or
        surviving entity in such Fundamental Transaction shall, either (1) issue
        to the
        Holder a new warrant substantially in the form of this Warrant and consistent
        with the foregoing provisions and evidencing the Holder's right to purchase
        the
        Alternate Consideration for the aggregate Exercise Price upon exercise thereof,
        or (2) purchase the Warrant from the Holder for a purchase price, payable
        in
        cash within five Trading Days after such request (or, if later, on the effective
        date of the Fundamental Transaction), equal to the Black Scholes value of
        the
        remaining unexercised portion of this Warrant on the date of such request.
        The
        terms of any agreement pursuant to which a Fundamental Transaction is effected
        shall include terms requiring any such successor or surviving entity to comply
        with the provisions of this paragraph (b) and insuring that the Warrant (or
        any
        such replacement security) will be similarly adjusted upon any subsequent
        transaction analogous to a Fundamental Transaction.

       

                  (c)    Number
        of Warrant Shares.
        Simultaneously with any adjustment to the Exercise Price pursuant to this
        Section 9, the number of Warrant Shares that may be purchased upon exercise
        of
        this Warrant shall be increased or decreased proportionately, so that after
        such
        adjustment the aggregate Exercise Price payable hereunder for the adjusted
        number of Warrant Shares shall be the same as the aggregate Exercise Price
        in
        effect immediately prior to such adjustment.

       

    

    
      
        
        

      

      
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                  (d) 
Calculations.
        All calculations under this Section
        9
        shall be made to the nearest cent or the nearest 1/100th
        of a share, as applicable. The number of shares of Common Stock outstanding
        at
        any given time shall not include shares owned or held by or for the account
        of
        the Company, and the disposition of any such shares shall be considered an
        issue
        or sale of Common Stock.

    

    
       

                  (e) 
Notice
        of Adjustments.
        Upon the occurrence of each adjustment pursuant to this Section
        9,
        the Company at its expense will promptly compute such adjustment in accordance
        with the terms of this Warrant and prepare a certificate setting forth such
        adjustment, including a statement of the adjusted Exercise Price and adjusted
        number or type of Warrant Shares or other securities issuable upon exercise
        of
        this Warrant (as applicable), describing the transactions giving rise to
        such
        adjustments and showing in detail the facts upon which such adjustment is
        based.
        Upon written request, the Company will promptly deliver a copy of each such
        certificate to the Holder and to the Company's Transfer Agent.

       

                  (f) 
Notice
        of Corporate Events.
        If the Company (i) declares a dividend or any other distribution of cash,
        securities or other property in respect of its Common Stock, including without
        limitation any granting of rights or warrants to subscribe for or purchase
        any
        capital stock of the Company or any Subsidiary, (ii) authorizes or approves,
        enters into any agreement contemplating or solicits stockholder approval
        for any
        Fundamental Transaction or (iii) authorizes the voluntary dissolution,
        liquidation or winding up of the affairs of the Company, then the Company
        shall
        deliver to the Holder a notice describing the material terms and conditions
        of
        such transaction (but only to the extent such disclosure would not result
        in the
        dissemination of material, non-public information to the Holder) at least
        10
        calendar days prior to the applicable record or effective date on which a
        Person
        would need to hold Common Stock in order to participate in or vote with respect
        to such transaction, and the Company will take all steps reasonably necessary
        in
        order to insure that the Holder is given the practical opportunity to exercise
        this Warrant prior to such time so as to participate in or vote with respect
        to
        such transaction; provided, however, that the failure to deliver such notice
        or
        any defect therein shall not affect the validity of the corporate action
        required to be described in such notice.

       

      10. 
Payment
        of Exercise Price.
        

       

                  (a) 
This
        Warrant may be exercised by the Holder as to the whole or any lesser number
        of
        the Warrant Shares covered hereby, upon surrender of this Warrant to the
        Company
        at its principal executive office together with the Notice of Exercise attached
        hereto as Exhibit A, duly completed and executed by the Holder, and payment
        to the Company of the aggregate Exercise Price for the Warrant Shares to
        be
        purchased in the form of (i) a check made payable to the Company,
        (ii) wire transfer according to the Company’s instructions or
        (iii) any combination of (i) and (ii). 

       

      11. 
No
        Fractional Shares.
        No fractional shares of Warrant Shares will be issued in connection with
        any
        exercise of this Warrant. In lieu of any fractional shares which would,
        otherwise be issuable, the Company shall pay cash equal to the product of
        such
        fraction multiplied by the closing price of one Warrant Share as reported
        by the
        applicable Trading Market on the date of exercise.

       

    

    
      
        
        

      

      
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      12. 
Notices.
        Any and all notices or other communications or deliveries hereunder (including,
        without limitation, any Exercise Notice) shall be in writing and shall be
        deemed
        given and effective on the earliest of (i) the date of transmission, if such
        notice or communication is delivered via facsimile at the facsimile number
        specified in this Section prior to 6:30 p.m. (New York City time) on a Trading
        Day, (ii) the next Trading Day after the date of transmission, if such notice
        or
        communication is delivered via facsimile at the facsimile number specified
        in
        this Section on a day that is not a Trading Day or later than 6:30 p.m. (New
        York City time) on any Trading Day, (iii) the Trading Day following the date
        of
        mailing, if sent by nationally recognized overnight courier service, or (iv)
        upon actual receipt by the party to whom such notice is required to be given.
        The addresses for such communications shall be: (i) if to the Company, to
        420
        Lexington Avenue, Suite 1609, New York, New York 10170, Attn: Chief Executive
        Officer, or to facsimile no.: (212) 297-0020 (or such other address as the
        Company shall indicate in writing in accordance with this Section), or (ii)
        if
        to the Holder, to the address or facsimile number appearing on the Warrant
        Register or such other address or facsimile number as the Holder may provide
        to
        the Company in accordance with this Section.

       

      13. 
Warrant
        Agent.
        The Company shall serve as warrant agent under this Warrant. Upon 10 calendar
        days' notice to the Holder, the Company may appoint a new warrant agent.
        Any
        corporation into which the Company or any new warrant agent may be merged
        or any
        corporation resulting from any consolidation to which the Company or any
        new
        warrant agent shall be a party or any corporation to which the Company or
        any
        new warrant agent transfers substantially all of its corporate trust or
        shareholders services business shall be a successor warrant agent under this
        Warrant without any further act. Any such successor warrant agent shall promptly
        cause notice of its succession as warrant agent to be mailed (by first class
        mail, postage prepaid) to the Holder at the Holder's last address as shown
        on
        the Warrant Register.

       

      14. 
Miscellaneous.

       

                  (a) 
This
        Warrant shall be binding on and inure to the benefit of the parties hereto
        and
        their respective successors and assigns. Subject to the preceding sentence,
        nothing in this Warrant shall be construed to give to any Person other than
        the
        Company and the Holder any legal or equitable right, remedy or cause of action
        under this Warrant. This Warrant may be amended only in writing signed by
        the
        Company and the Holder and their successors and assigns.

                  

                  (b) 
All
        questions concerning the construction, validity, enforcement and interpretation
        of this Warrant shall be governed by and construed and enforced in accordance
        with the internal laws of the State of New York (except for matters governed
        by
        corporate law in the State of Delaware), without regard to the principles
        of
        conflicts of law thereof. Each party agrees that all legal proceedings
        concerning the interpretations, enforcement and defense of this Warrant and
        the
        transactions herein contemplated (“Proceedings”)
        (whether brought against a party hereto or its respective Affiliates, employees
        or agents) shall be commenced exclusively in the New York Courts. Each party
        hereto hereby irrevocably submits to the exclusive jurisdiction of the New
        York
        Courts for the adjudication of any dispute hereunder or in connection herewith
        or with any transaction contemplated hereby or discussed herein, and hereby
        irrevocably waives, and agrees not to assert in any Proceeding, any claim
        that
        it is not personally subject to the jurisdiction of any New York Court, or
        that
        such Proceeding has been commenced in an 

       

    

    
      
        
        

      

      
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    improper
      or inconvenient forum. Each party hereto hereby irrevocably waives personal
      service of process and consents to process being served in any such Proceeding
      by mailing a copy thereof via registered or certified mail or overnight delivery
      (with evidence of delivery) to such party at the address in effect for notices
      to it under this Warrant and agrees that such service shall constitute good
      and
      sufficient service of process and notice thereof. Nothing contained herein
      shall
      be deemed to limit in any way any right to serve process in any manner permitted
      by law. Each party hereto hereby irrevocably waives, to the fullest extent
      permitted by applicable law, any and all right to trial by jury in any legal
      proceeding arising out of or relating to this Warrant or the transactions
      contemplated hereby. If either party shall commence a Proceeding to enforce
      any
      provisions of this Warrant, then the prevailing party in such Proceeding shall
      be reimbursed by the other party for its attorney’s fees and other costs and
      expenses incurred with the investigation, preparation and prosecution of such
      Proceeding.

    
       

                  (c) 
The
        headings herein are for convenience only, do not constitute a part of this
        Warrant and shall not be deemed to limit or affect any of the provisions
        hereof.

       

              (d) 
In
        case any one or more of the provisions of this Warrant shall be invalid or
        unenforceable in any respect, the validity and enforceability of the remaining
        terms and provisions of this Warrant shall not in any way be affected or
        impaired thereby and the parties will attempt in good faith to agree upon
        a
        valid and enforceable provision which shall be a commercially reasonable
        substitute therefor, and upon so agreeing, shall incorporate such substitute
        provision in this Warrant.

       

                  (e) 
Prior
        to exercise of this Warrant, the Holder hereof shall not, by reason of being
        a
        Holder, be entitled to any rights of a stockholder with respect to the Warrant
        Shares.

       

      IN
        WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
        by its
        authorized officer as of the date first indicated above.

       

    

    
      	 	 	 
	 	
              CALLISTO
                PHARMACEUTICALS, INC.

            
	 
 	 
 	 
 
	 	By:  	 
	 	
              

            
	 	Name:
              Gary S. Jacob
Title: Chief Executive
              Officer

    

     

     

     

    
      
        
        

      

      
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    EXERCISE
      NOTICE

    CALLISTO
      PHARMACEUTICALS, INC.

    WARRANT
      DATED FEBRUARY 3, 2006

     

    The
      undersigned Holder hereby irrevocably elects to purchase _____________ shares
      of
      Common Stock pursuant to the above referenced Warrant. Capitalized terms used
      herein and not otherwise defined have the respective meanings set forth in
      the
      Warrant.

     

    (1)    The
      undersigned Holder hereby exercises its right to purchase _________________
      Warrant Shares pursuant to the Warrant.

     

    (2)    Payment
      of
      $______ in cash has been made by wire transfer or check delivered to the
      Company.

     

    (3)    Pursuant
      to
      this Exercise Notice, the Company shall deliver to the holder _______________
      Warrant Shares in accordance with the terms of the Warrant.

     

     

    
      
        	
              	 
	 	 
	
                Dated:
                  ______________,
                  ______ 

              	
                Name
                  of Holder:

              
	 	 
	 	
                (Print)
                  ______________________________

              
	 	 
	 	
                By:
                  ________________________________

              
	 	
                Name:
                  ______________________________

              
	 	
                Title:
                  _______________________________

              
	 	 
	 	
                (Signature
                  must conform in all respects to name of holder as specified on
                  the face of
                  the Warrant)

              

      

       

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    Warrant
      Shares Exercise Log

     

    
       

      
        	
                Date

              	
                Number
                  of Warrant Shares Available to be Exercised

              	
                Number
                  of Warrant Shares Exercised

              	
                Number
                  of Warrant Shares Remaining to be Exercised

              
	 	
                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

              	 	 

      

       

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    CALLISTO
      PHARMACEUTICALS, INC.

    WARRANT
      ORIGINALLY ISSUED FEBRUARY 3, 2006

    WARRANT
      NO. ___

     

    FORM
      OF
      ASSIGNMENT

     

    [To
      be
      completed and signed only upon transfer of Warrant]

     

    FOR
      VALUE
      RECEIVED, the undersigned hereby sells, assigns and transfers unto
      ________________________________ the right represented by the above-captioned
      Warrant to purchase ____________ shares of Common Stock to which such Warrant
      relates and appoints ________________ attorney to transfer said right on the
      books of the Company with full power of substitution in the
      premises.

     

    
      Dated: _______________,
        ____

       

       

       

      
        	 	_______________________________________
	 	(Signature must conform in all respects
                to
                name of holder as specified on the face of the Warrant)
	 	 
	 	 
	 	_______________________________________
	 	Address of Transferee
	 	 
	 	 
	 	_______________________________________
	 	 
	 	_______________________________________

      

       

       

      In
        the
        presence of:

       

       

      __________________________

    

     

    
      11Securities Purchase Agreement dated February 3, 2006 between Callisto Pharmaceuticals,
      Inc. and the investors listed on Exhibit A thereto.

     

     

    Exhibit
      10.1

     

    SECURITIES
      PURCHASE AGREEMENT

     

    This
      Securities Purchase Agreement (this “Agreement”) is made as of February 3, 2006
      between Callisto Pharmaceuticals, Inc., a Delaware corporation (the “Company”),
      and the investors listed on Exhibit
      A
      hereto,
      each of which is herein referred to as an “Investor” and collectively, the
“Investors”.

     

    RECITALS:

     

    WHEREAS,
      the Investors desire to purchase from the Company, and the Company desires
      to
      sell to the Investors, up to 5,000,000 shares of the Company’s common stock, par
      value $0.0001 per share (the “Common Stock”) and up to 1,250,000 warrants to
      purchase shares of the Common Stock (the “Warrants”), upon the terms and subject
      to the conditions set forth herein;

     

    NOW,
      THEREFORE, in consideration of the premises and mutual covenants contained
      herein, the parties hereto agree as follows:

     

    1.             PURCHASE
      AND SALE OF SECURITIES.

     

    1.1          
      Purchase
      and Sale of Securities.
      Upon
      the terms and subject to the conditions of this Agreement, at the Closing (as
      defined below), the Company agrees to sell to the Investors, and each Investor
      agrees to purchase from the Company the number of shares of the Company’s Common
      Stock and Warrants set forth opposite such Investor’s name on Exhibit
      A hereto
      (collectively, the “Securities”) at the per share purchase price of $1.20
      (“Purchase Pric e”). The Warrants shall be exercisable at $1.60 per share for a
      period of 15 months from the date of issuance.

     

    1.2          
      Closing.
      The
      closing of the purchase and sale of the Securities (the “Closing”) shall take
      place at the offices of the Company at 5:00 p.m., Eastern time on February
      3,
      2006, or such other location, time or date as the parties shall mutually agree,
      but only after the satisfaction or waiver of each of the conditions set forth
      in
      Sections 6 and 7 (the “Closing Date”).

     

    1.3          
      Deliveries.
      At the
      Closing, the Company shall deliver to each Investor at the address set forth
      on
      such Investor’s signature page hereto, a certificate or certificates, registered
      in the name of the applicable Investor, representing the shares of Common Stock
      and Warrants purchased by such Investor, and each Investor shall deliver to
      the
      Company the aggregate Purchase Price, by wire transfer of immediately available
      funds to the following account:

     

    HSBC
      Bank
      USA

    950
      Third
      Avenue

    New
      York,
      NY 10022

    

    A/C
      of
      Sichenzia Ross Friedman Ference LLP, IOLA

    A/C#
      629034125

    ABA#
      021001088

    REMARK:
      CALLISTO

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
      2.            
        REPRESENTATIONS
        AND WARRANTIES OF THE COMPANY.

    

     

    For
      purposes of this Section, all references to “Company” in Sections 2.1, 2.4 (with
      the exception of subsection (a) thereof), 2.7, 2.9 through 2.12, and 2.14
      through 2.20 shall be deemed to be a reference to the Company and all of its
      direct and indirect subsidiaries. The Company hereby represents and warrants
      to
      each Investor that, except as set forth on a Schedule of Exceptions (the
“Company Schedule of Exceptions”) attached hereto as Schedule
      A,
      which
      exceptions shall be deemed to be representations and warranties as if made
      hereunder:

     

    2.1          
      Corporate
      Organization.
      The
      Company is a corporation duly organized, validly existing and in good standing
      under the laws of its state of incorporation, and has the requisite corporate
      power and authority to own or lease its properties and to carry on its business
      as now being conducted. The Company is duly qualified as a foreign corporation
      to do business and is in good standing in every jurisdiction in which the
      property owned or leased by it or the nature of the business conducted by it
      makes such qualification necessary, except to the extent that the failure to
      be
      so qualified or in good standing would not have, individually or in the
      aggregate, a Material Adverse Effect. For purposes of this Agreement, “Material
      Adverse Effect” shall mean, as to any entity, any material adverse effect on the
      business, operations, conditions (financial or otherwise), assets, results
      of
      operations or prospects of that entity individually or of the Company and its
      subsidiaries as a whole. 

     

    2.2          
      Capitalization;
      Organizational Documents.

     

    (a)        
      The
      authorized capital stock of the Company will consist immediately prior to the
      Closing of 100,000,000 shares of Common Stock, of which as of the date hereof,
      33,233,096 shares are issued and outstanding, and 20,000,000 shares of preferred
      stock of the Company, of which, as of the date hereof, no shares are issued
      or
      outstanding. All of the issued and outstanding shares have been duly and validly
      issued and are fully paid and nonassessable and have been issued in accordance
      with all applicable federal and state securities laws. No shares of Common
      Stock
      are subject to preemptive rights or any other similar rights or any liens
      suffered or permitted by the Company. There are no preemptive rights or rights
      of first refusal or similar rights which are binding on the Company permitting
      any person to subscribe for or purchase from the Company shares of its capital
      stock pursuant to any provision of applicable law, the Certificate of
      Incorporation (as defined below) or the Company’s By-laws. There are no
      securities or instruments containing anti-dilution or similar provisions that
      will be triggered by the issuance of the Securities. The Company has made
      available to each Investor true and correct copies of the Company’s Certificate
      of Incorporation, as amended and as in effect on the date hereof (the
“Certificate of Incorporation”), and the Company’s By-laws, as in effect on the
      date hereof (the “By-laws”). 

     

    (b)          
      Upon
      issuance of the Securities and payment of the Purchase Price therefor in
      accordance with the terms of this Agreement, the Securities will be duly
      authorized, validly issued, fully paid and nonassessable, and free and clear
      of
      any restrictions on transfer and

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    any
      taxes, claims, liens, pledges, options, security interests, purchase rights,
      preemptive rights, trusts, encumbrances or other rights or interests of any
      other person (other than any restrictions under the Securities Act of 1933,
      as
      amended (the “Securities Act”). 

     

    2.3          
      Authorization;
      Enforcement.
      (a) The
      Company has the requisite corporate power and authority to enter into and
      perform its obligations under this Agreement and to issue, sell and perform
      its
      obligations with respect to the Securities in accordance with the terms hereof,
      (b) the execution and delivery of this Agreement by the Company and the
      consummation by it of the transactions contemplated hereby have been duly
      authorized by the Company’s Board of Directors and its stockholders and no
      further consent or authorization is required by the Company, its Board of
      Directors or its stockholders, except as disclosed on the Company Schedule
      of
      Exceptions and (c) this Agreement has been duly executed and delivered by the
      Company. This Agreement, when executed and delivered by the Company, constitutes
      a valid and binding obligation of the Company enforceable against the Company
      in
      accordance with its terms, except as such enforceability may be limited by
      general principles of equity or applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation or similar laws relating to, or
      affecting generally, the enforcement of creditors’ rights and
      remedies.

     

    2.4          
      No
      Conflicts.
      The
      execution, delivery and performance of this Agreement by the Company, and the
      consummation by the Company of the transactions contemplated hereby, will not
      (a) result in a violation of the Certificate of Incorporation or By-laws of
      the
      Company, or (b) violate or conflict with, or result in a breach of, any
      provision of, or constitute a default (or an event which with notice or lapse
      of
      time or both would become a default) under, or give to others any rights of
      termination, amendment, acceleration or cancellation of, or result in the
      creation of any lien on or against any of the properties of the Company, any
      note, bond, mortgage, agreement, license, indenture or instrument to which
      the
      Company is a party, or result in a violation of any statute, law, rule,
      regulation, writ, injunction, order, judgment or decree applicable to the
      Company or by which any property or asset of the Company is bound or affected,
      except where such violation, conflict, breach or other consequence would not
      have a Material Adverse Effect. Except as specifically contemplated by this
      Agreement, the Company is not required to obtain any consent, authorization
      or
      order of, or make any filing or registration with, any court or governmental
      or
      regulatory or self-regulatory agency in order for it to execute, deliver or
      perform any of its obligations under or contemplated by this Agreement in
      accordance with the terms hereof. All consents, authorizations, orders, filings
      and registrations that the Company is required to obtain pursuant to the
      preceding sentence have been obtained or effected on or prior to the date
      hereof. 

     

    2.5          
      SEC
      Documents; Financial Statements.
      The
      Company has filed all reports, schedules, forms, statements and other documents
      required to be filed by it with the Securities and Exchange Commission (the
      “SEC”) pursuant to the reporting requirements of the Securities Exchange Act of
      1934, as amended (the “Exchange Act”) (all of the foregoing, and all other
      documents and registration statements heretofore filed by the Company with
      the
      SEC being hereinafter referred to as the “SEC Documents”). The Common Stock is
      currently listed on the American Stock Exchange. The Company has delivered
      or
      made available to each Investor true and complete copies of the SEC Documents.
      As of their respective dates, the SEC Documents complied in all material
      respects with the requirements of the Securities Act, and the
      Exchange

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    Act
      and
      the rules and regulations of the SEC promulgated thereunder applicable to the
      SEC Documents, and none of the SEC Documents, at the time they were filed with
      the SEC (except those SEC Documents that were subsequently amended), contained
      any untrue statement of a material fact or omitted to state a material fact
      required to be stated therein or necessary in order to make the statements
      therein, in light of the circumstances under which they were made, not
      misleading. Except as disclosed in the Company Schedule of Exceptions, as of
      their respective dates, the financial statements of the Company and its
      subsidiaries included (or incorporated by reference) in the SEC Documents
      complied as to form in all material respects with applicable accounting
      requirements and the published rules and regulations of the SEC or other
      applicable rules and regulations with respect thereto. Such financial statements
      have been prepared in accordance with generally accepted accounting principles
      applied on a consistent basis during the periods involved (except (a) as may
      be
      otherwise indicated in such financial statements or the notes thereto, or (b)
      in
      the case of unaudited interim statements, to the extent they may exclude
      footnotes or may be condensed or summary statements) and fairly present the
      financial position of the Company and its subsidiaries as of the dates thereof
      and the results of its operations and cash flows for the periods then ended
      (subject, in the case of unaudited statements, to normal year-end audit
      adjustments). As of the date hereof, the Company has, on a timely basis, made
      all filings required to be made by the Company with the SEC and the Company
      is
      eligible to file a registration statement on Form S-3 with respect to
      outstanding shares of its Common Stock and shares issuable upon exercise of
      outstanding Warrants to be offered for sale for the account of any person other
      than the Company. 

     

    2.6          
      Securities
      Law Exemption.
      Assuming the truth and accuracy of each Investor’s representations set forth in
      this Agreement, the offer, sale and issuance of the Securities as contemplated
      by this Agreement are exempt from the registration requirements of the
      Securities Act and applicable state securities laws, and neither the Company
      nor
      any authorized agent acting on its behalf has taken or will take any action
      hereafter that would cause the loss of such exemption.

     

    2.7          
      Litigation.
      All
      actions, suits, arbitrations or other proceedings or, to the Company’s
      knowledge, investigations pending or threatened against the Company that would
      have a Material Adverse Effect on the Company, are disclosed in the SEC
      Documents. There is no action, suit, proceeding or, to the Company’s knowledge,
      investigation that questions this Agreement or the right of the Company to
      execute, deliver and perform under same. 

     

    2.8          
      Use
      of
      Proceeds.
      The net
      proceeds from the sale of the Securities shall be used solely for general
      corporate and working capital purposes.

     

    2.9          
      Intellectual
      Property.
      The
      Company owns, or has the contractual right to use, sell or license all
      intellectual property necessary or required for the conduct of its business
      as
      presently conducted and as proposed to be conducted, including, without
      limitation, all trade secrets, processes, source code, licenses, trademarks,
      service marks, trade names, logos, brands, copyrights, patents, franchises,
      domain names and permits. The Company has not received any communications
      alleging that the Company has violated or, by conducting its business presently
      conducted or as proposed to be conducted, violates or will violate any
      intellectual property rights of any other person or entity.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    2.10         Title
      to Property and Assets.
      The
      Company has good and marketable title to or, in the case of leases and licenses,
      has valid and subsisting leasehold interests or licenses in, all of its
      properties and assets (whether real or personal, tangible or intangible) free
      and clear of any liens or other encumbrances, except for liens or other
      encumbrances that do not, individually or in the aggregate, have a Material
      Adverse Effect. With respect to property leased by the Company, the Company
      has
      a valid leasehold interest in such property pursuant to leases which are in
      full
      force and effect, and the Company is in compliance in all material respects
      with
      the provisions of such leases. 

     

    2.11         Compliance
      with Laws.
      The
      Company is and has been in compliance with all laws, rules, regulations, orders,
      judgments or decrees that are applicable to the Company, the conduct of its
      business as presently conducted and as proposed to be conducted, and the
      ownership of its property and assets (including, without limitation, all
      Environmental Laws (as defined below) and laws related to occupational safety,
      health, wage and hour, and employment discrimination). All required reports
      and
      filings with governmental authorities have been properly made as and when
      required, except where the failure to report or file would not, individually
      or
      in the aggregate, have a Material Adverse Effect. “Environmental Laws” means all
      federal, state, local and foreign laws, ordinances, treaties, rules,
      regulations, guidelines and permit conditions relating to contamination or
      pollution of the environment (including ambient air, surface water, ground
      water, land surface or subsurface strata) or the protection of human health
      and
      worker safety, including, without limitation, laws and regulations relating
      to
      transportation, storage, use, manufacture, disposal or release of, or exposure
      of employees or others to, Hazardous Materials (as defined below) or emissions,
      discharges, releases or threatened releases of Hazardous Materials. “Hazardous
      Materials” means any substance that has been designated by any governmental
      entity or by applicable Environmental Laws to be radioactive, toxic, hazardous
      or otherwise a danger to health or the environment, including, without
      limitation, PCBs, asbestos, petroleum, urea formaldehyde and all substances
      listed as hazardous substances pursuant to the Comprehensive Environmental
      Response, Compensation, and Liability Act of 1980, as amended, or defined as
      a
      hazardous waste pursuant to the Resource Conservation and Recovery Act of 1976,
      as amended, and the regulations promulgated pursuant to Environmental Laws,
      but
      excluding office and janitorial supplies maintained in accordance with
      Environmental Laws.

     

    2.12         Licenses
      and Permits.
      The
      Company has obtained and maintains all material federal, state, local and
      foreign licenses, permits, consents, approvals, registrations, memberships,
      authorizations and qualifications required to be maintained in connection with
      the operations of the Company as presently conducted and as proposed to be
      conducted, the lack of which could have a Material Adverse Effect. The Company
      is not in default in any material respect under any of such licenses, permits,
      consents, approvals, registrations, memberships, authorizations and
      qualifications.

     

    2.13         Related
      Entities.
      Except
      for the Subsidiaries set forth on the Company Schedule of Exceptions, the
      Company does not presently own or control, directly or indirectly, any interest
      in any other subsidiary, corporation, association or other business entity.
      The
      Company is not a party to any joint venture, partnership or similar
      arrangement.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    2.14         Changes.
      Except
      as disclosed on the Company Schedule of Exceptions, since December 31, 2004,
      the
      Company has operated its business diligently and in the ordinary course of
      business and, to the knowledge of the Company, there has not been, or the
      Company has not (as the case may be):

     

    (a)          
      any
      Material Adverse Effect;

     

    (b)          
      any
      damage, destruction or loss, whether or not covered by insurance, which would
      have a Material Adverse Effect;

     

    (c)          
      any
      waiver or compromise by the Company of a valuable right or of a material debt
      owed it; 

     

    (d)          
      sold,
      encumbered, assigned or transferred any material assets or properties of the
      Company, other than in the ordinary course of business;

     

    (e)          
      incurred
      any liability, whether accrued, absolute, contingent or otherwise, and whether
      due or to become due, other than (i) in the ordinary course of business or
      (ii)
      liabilities that are not, individually or in the aggregate, material to the
      business, operations, condition (financial or otherwise), assets or results
      of
      operations of the Company;

     

    (f)          
      created,
      incurred, assumed or guaranteed any indebtedness or subjected any of its assets
      to any lien or encumbrance, except for indebtedness, liens or encumbrances
      that
      are not, individually or in the aggregate, material to the business, operations,
      condition (financial or otherwise), assets or results of operations of the
      Company;

     

    (g)          
      directly
      or indirectly redeemed, purchased or otherwise acquired any shares of capital
      stock of the Company;

     

    (h)          
      declared,
      set aside or paid any dividends or made any other distributions in cash or
      property on the Company’s capital stock;

     

    (i)          
      except
      in
      the ordinary course of business of the Company, materially increased the
      compensation payable or to become payable by the Company to any of its officers,
      employees or directors or materially increased any bonus, insurance, pension
      or
      other employee benefit plan, payment or arrangement made by the Company for
      or
      with any such officers, employees or directors;

     

    (j)          
      made
      any
      direct or indirect loan to any stockholder, employee, officer or director of
      the
      Company, other than advances made in the ordinary course of
      business;

     

    (k)          
      changed
      any agreement to which the Company is a party which would have a Material
      Adverse Effect; or

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (l)          
      entered
      into any agreement or commitment to do any of the things described in this
      Section 2.14.

     

    2.15         Employee
      Benefit Plans.
      All
“employee benefit plans,” as such term is defined in the Employee Retirement
      Income Security Act of 1974, as amended (“ERISA”), to which the Company has any
      liability or obligation, contingent or otherwise, comply in all material
      respects and have been maintained and administered in material compliance with
      ERISA, the Internal Revenue Code of 1986, as amended (the “Code”), and all other
      statutes, orders and governmental rules and regulations applicable to such
      employee benefit plans. To the Company’s knowledge, the Company has not incurred
      any liability pursuant to ERISA or the penalty or excise tax provisions of
      the
      Code relating to employee benefit plans (as defined in ERISA), and no event,
      transaction or condition has occurred or exists that could reasonably be
      expected to result in the incurrence of any such liability by the Company,
      or in
      the imposition of any lien on any of the rights, properties or assets of the
      Company pursuant to ERISA or to such penalty or excise tax provisions of the
      Code. The Company does not maintain or contribute to, and has not maintained
      or
      contributed to, any “multiemployer plan,” as such term is defined in
      ERISA.

     

    2.16         Taxes.
      The
      Company has timely filed all tax returns and reports (federal, state and local)
      required to be filed and these returns and reports are true and correct in
      all
      material respects. The Company has paid all taxes and other assessments shown
      to
      be due on such returns or reports. Neither the Internal Revenue Service nor
      any
      state or local taxing authority has, during the past three (3) years, examined
      or informed the Company it is in the process of examining any such tax returns
      and reports. The provision for taxes of the Company as shown on the financial
      statements included in the most recent SEC Filing, is adequate for taxes due
      or
      accrued as of the date thereof and since that date the Company has provided
      adequate accruals in accordance with generally accepted accounting principals
      in
      its financial statements for any taxes incurred that have not been paid, whether
      or not shown as being due on any tax returns. The Company has not elected,
      pursuant to the Code, to be treated as a collapsible corporation pursuant to
      Section 341(f) of the Code, nor has it made any other elections pursuant to
      the
      Code (other than elections that relate solely to methods of accounting,
      depreciation or amortization) that would have a Material Adverse Effect.

     

    2.17         Insurance.
      The
      Company has in full force and effect fire, casualty and liability insurance
      policies sufficient in amount (subject to reasonable deductibles) to allow
      the
      Company to replace any of its properties that might be damaged or destroyed
      to
      the extent and in the manner customary for companies in similar business
      similarly situated.

     

    2.18         Employees.
      The
      Company does not have any collective bargaining agreements with any of its
      employees. There is no labor union organizing activity pending or, to the
      Company’s knowledge, threatened with respect to the Company.

     

    2.19         Material
      Contracts.
      All
      contracts, agreements, instruments, leases, licenses, arrangements,
      understandings or other documents filed with or required to be filed as exhibits
      to the SEC Documents to which the Company therein is a party or by which it
      may
      be bound have been so filed (the “Material Contracts”). The Material Contracts
      that have been filed

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    as
      exhibits are complete and correct copies of the contracts, agreements,
      instruments, leases, licenses, arrangement, understanding or other documents
      of
      which they purport to be copies. The Material Contracts are valid and in full
      force and effect as to the Company, and, to the Company’s knowledge, to the
      other parties thereto. Except as otherwise disclosed herein, the Company is
      not
      in violation of, or default under (and there does not exist any event or
      condition which, after notice or lapse of time or both, would constitute such
      a
      default under), the Material Contracts, except to the extent that such
      violations or defaults, individually or in the aggregate, could not reasonably
      be expected to have a Material Adverse Effect. The Company has not received
      any
      notice of cancellation or any written communication threatening cancellation
      of
      any Material Contract by any other party thereto. The Company is not a party
      to
      and is not bound by any contract, agreement or instrument, or subject to any
      restriction under the Certificate of Incorporation, its bylaws or other
      governing documents that would have a Material Adverse Effect.

     

    2.20         Suppliers.
      No
      supplier that was material to the Company during the previous twenty-four (24)
      months, has terminated, materially reduced or threatened to terminate or
      material reduce its provision of products or services to the
      Company. 

     

    2.21         Brokers
      and Finders.
      Except
      as disclosed in the Schedule of Exceptions, the Company has not employed any
      broker, finder, consultant or intermediary in connection with the transactions
      contemplated by this Agreement that would be entitled to a broker’s, finder’s or
      similar fee or commission in connection herewith and therewith.

     

    2.22         Disclosure.
      This
      Agreement, Schedules and Exhibits hereto and all other documents delivered
      to
      the Investors in connection herewith or therewith at the Closing, do 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. There are no facts that, individually
      or
      in the aggregate, would have a Material Adverse Effect that have not been
      disclosed to each Investor in this Agreement (including the Schedules and
      Exhibits hereto), the SEC Documents or any other documents delivered to each
      Investor in connection herewith or therewith at the Closing.

     

    3.            
      REPRESENTATIONS
      AND WARRANTIES OF INVESTOR.

     

    Each
      of
      the Investors, severally and not jointly, hereby represents and warrants to
      the
      Company as to itself and not as to any other Investor, that:

     

    3.1          
      Organization.
      The
      Investor is a corporation, limited liability company or limited partnership,
      as
      the case may be, duly organized, validly existing and in good standing in the
      jurisdiction of its formation. The Investor has all requisite power and
      authority to execute, deliver and perform all of its obligations of this
      Agreement.

     

    3.2          
      Authorization;
      Enforcement.
      (a) The
      Investor has the requisite power and authority to enter into and perform its
      obligations under this Agreement, (b) the execution and delivery of this
      Agreement by the Investor and the consummation by it of the transactions
      contemplated hereby have been duly authorized by all necessary corporate action
      on the part of the Investor, and (c) this Agreement has been duly executed
      and
      delivered by the Investor. To

     

    
      
        
        

      

      
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    the
      knowledge of the Investor, no other proceedings on the part of the Investor
      are
      necessary to approve and authorize the execution and delivery of this Agreement.
      This Agreement, when executed and delivered, constitutes a valid and binding
      obligation of the Investor, enforceable against the Investor in accordance
      with
      its terms, except as such enforceability may be limited by general principles
      of
      equity or applicable bankruptcy, insolvency, reorganization, moratorium,
      liquidation or similar laws relating to, or affecting generally, the enforcement
      of creditors’ rights and remedies.

     

    3.3          
      No
      Conflicts.
      The
      execution, delivery and performance of this Agreement by the Investor, and
      the
      consummation by the Investor of the transactions contemplated hereby will not
      (a) result in a violation of the organizational documents of the Investor,
      or
      (b) result in a violation of any statute, law, rule, regulation, writ,
      injunction, order, judgment or decree applicable to the Investor, except where
      such violation, conflict, breach or other consequence would not have a Material
      Adverse Effect. The Investor is not required to obtain any consent,
      authorization or order of, or make any filing or registration with, any court
      or
      governmental or regulatory or self-regulatory agency in order for it to execute,
      deliver or perform any of its obligations under or contemplated by this
      Agreement in accordance with the terms hereof.

     

    3.4          
      Investment
      Representations.

     

    (a)          
      The
      Investor is an “accredited investor”, as defined in Regulation D promulgated
      under the Securities Act, and has such knowledge, sophistication and experience
      in financial and business matters that the Investor is capable of evaluating
      the
      merits and risks of the investment in the Securities.

     

    (b)          
      The
      Investor (i) has adequate means of providing for its current financial needs
      and
      possible contingencies, and has no need for liquidity of investment in the
      Company, (ii) can afford to hold unregistered Securities for an indefinite
      period of time and sustain a complete loss of the entire amount of the
      subscription, and (iii) has not made an overall commitment to investments which
      are not readily marketable that is so disproportionate as to cause such overall
      commitment to become excessive.

     

    (c)          
      The
      Investor agrees and understands that the Securities are being offered and sold
      to the Investor in reliance upon specific exemptions from the registration
      requirements of the Securities Act and the rules and regulations promulgated
      thereunder and that, in order to determine the availability of such exemptions
      and the eligibility of the Investor to acquire the Securities, the Company
      is
      relying upon the truth and accuracy of the Investor’s representations and
      warranties, and compliance with the Investor’s covenants and agreements, set
      forth in this Agreement. The Investor further agrees with the Company that
      (i)
      no Securities were offered or sold to the Investor by means of any form of
      general solicitation or general advertising, and in connection therewith, the
      Investor did not (1) receive or review any advertisement, article, notice or
      other communication published in a newspaper or magazine or similar media or
      broadcast over television or radio, whether closed circuit or generally
      available; or (2) attend any seminar meeting or industry investor conference
      whose attendees were invited by any general solicitation or general advertising.
      The Investor hereby acknowledges that the offering of the Securities has not
      been reviewed by the SEC or any state regulatory authority

     

    
      
        
        

      

      
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    since
      the
      offering of the Securities is intended to be exempt from the registration
      requirements of Section 5 of the Securities Act pursuant to Regulation D
      promulgated thereunder. The Investor understands that the Securities have not
      been registered under the Securities Act and agrees not to sell or otherwise
      transfer the Securities unless they are registered under the Securities Act
      or
      unless an exemption from such registration is available.

     

    (d)          
      The
      Securities are being purchased by the Investor for its own account, for
      investment purposes only, not for the account of any other person, or
      corporation and not with a view to distribution, assignment or resale to others
      in whole or in part. The Investor has no present intention of selling, granting
      any participation in, or otherwise distributing the Securities. The Investor
      does not have any contract, undertaking, agreement or arrangement with any
      person to sell, transfer, pledge, hypothecate, grant any option to purchase
      or
      otherwise dispose of any of the Securities. Nothing herein shall prevent the
      distribution of any Securities to any subsidiary, member, partner, stockholder,
      affiliate or former member, partner, stockholder or affiliate of the Investor
      in
      compliance with the Securities Act and applicable state “blue sky”
laws.

     

    (e)          
      The
      Investor has had access to the Company’s SEC Documents and other public
      filings.

     

    (f)          
      With
      respect to corporate tax and other economic considerations involved in an
      investment in the Securities, the Investor is not relying on the Company. The
      Investor has carefully considered and has, to the extent the Investor believes
      such discussion necessary, discussed with its professional legal, tax,
      accounting and financial advisors the suitability of an investment in the
      Securities for its particular tax and financial situation and has determined
      that the Securities are a suitable investment for the Investor.

     

    (g)          
      The
      Company has made available to the Investor all documents and information that
      the Investor has requested relating to an investment in the
      Securities.

     

    (h)          
      Subject
      to the Company’s disclosures in this Agreement and the SEC Documents, the
      Investor recognizes that the Company has generated no revenues to date, is
      not
      expected to have any products commercially available for a number of years,
      if
      at all, and that investment in the Company involves substantial risks, including
      loss of the entire amount of such investment and has taken full cognizance
      of
      and understands all of the risk factors relating to the purchase of the
      Securities.

     

    (i)          
      The
      Investor has not been formed for the specific purpose of acquiring the
      Securities.

     

    4.            
      COVENANTS.

     

    4.1          
      Confidentiality.
      Each
      Investor hereby acknowledges that unauthorized disclosure of information
      regarding the offering of the Securities pursuant to this Agreement may cause
      the Company to violate Regulation FD and each Investor agrees to keep such
      information confidential. The Company shall not publicly disclose the name
      of
      any Investor, or include the name of any Investor in any filing with the
      Commission or any regulatory agency or trading

     

    
      
        
        

      

      
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    market,
      without the prior written consent of such Investor, except (i) as required
      by
      the federal securities laws and in connection with the registration statement
      contemplated by this Agreement and (ii) to the extent such disclosure is
      required by law or trading market regulations.

     

    4.2          
      Restrictions
      on Transfer.

     

    (a)          
      Each
      Investor hereby agrees, severally and not jointly, that, except in accordance
      with a registration statement filed pursuant to Section 5.2 of this Agreement,
      it will not dispose of any of such Investor’s Securities (other than pursuant to
      Rule 144 promulgated under the Securities Act (“Rule 144”) or pursuant to a
      registration statement filed with the SEC pursuant to the Securities Act) unless
      and until such Investor shall have (A) notified the Company of the proposed
      disposition and shall have furnished the Company with a statement of the
      circumstances surrounding the proposed disposition and (B) if requested by
      the
      Company, furnished the Company with an opinion of counsel, reasonably
      satisfactory in form and substance to the Company and the Company’s counsel, to
      the effect that such disposition will not require registration under the
      Securities Act. The restrictions on transfer imposed by this Section 4.2 shall
      cease and terminate as to the Securities held by an Investor when: (x) such
      Securities shall have been effectively registered under the Securities Act
      and
      sold by the holder thereof in accordance with such registration, or (y) on
      delivery of an opinion of the kind described in the preceding sentence with
      respect to such Securities. Each certificate evidencing the Securities shall
      bear an appropriate restrictive legend as set forth in Section 4.2(b), except
      that such legend shall not be required after a transfer is made in compliance
      with Rule 144 or pursuant to a registration statement or if the opinion of
      counsel referred to above is issued and provides that such legend is not
      required in order to establish compliance with any provisions of the Securities
      Act. The Company agrees that pursuant to the prior sentence, it will, no later
      than five Business Days (“Business Day” shall mean any day banks are open for
      business in New York, New York) following (a) receipt by the Company’s transfer
      agent of a certificate representing Securities issued with a restrictive legend,
      accompanied by a certification of the Investor in form suitable for processing
      by the Company that a prospectus has been delivered (in the case of sale
      pursuant to prospectus, a “Prospectus Letter”) or customary supporting
      documentation, including legal opinion if required pursuant to Clause (B) above,
      “Supporting Documentation”) and (b) receipt by the Company of notice of such
      delivery to the transfer agent and Prospectus Letter or Supporting
      Documentation, as the case may be (such notice to be sent by facsimile to the
      attention of the Company’s president and CEO at the fax number set forth in
      Section 8.6 hereof) deliver or cause to be delivered (evidence of deposit for
      next day delivery with a nationally recognized overnight delivery service shall
      be deemed delivery) to such Investor a certificate representing such Securities
      that is free from all restrictive and other legends. The Company may not make
      any notation on its records or give instructions to any transfer agent of the
      Company that enlarge the restrictions on transfer set forth in this Section.
      In
      the event the Prospectus Letter or Supporting Documentation is not in form
      suitable for processing by to the Company, the five Business Days shall toll
      until the Company receives a Prospectus Letter or Supporting Documentation
      that
      is in form suitable for processing. 

     

    (b)          
      Notwithstanding
      the provisions of Section 4.2(a), no registration statement or opinion of
      counsel shall be necessary for a transfer by an Investor of the Securities
      to a
      subsidiary, member, partner, stockholder or affiliate of that Investor, if
      the
      transferee agrees

     

    
      
        
        

      

      
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    in
      writing to be subject to the terms hereof to the same extent as if such
      transferee were an Investor hereunder.

     

    (c)          
      It
      is
      understood that, subject to Sections 4.2(a) and 4.2(b), the certificates
      evidencing the Securities will bear the following legends:

     

    (i)          
      THESE
      SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
“SECURITIES ACT”) OR UNDER APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
      TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES
      ACT
      AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AVAILABLE EXEMPTIONS
      FROM SUCH REGISTRATION, PROVIDED THAT THE SELLER DELIVERS TO THE COMPANY AN
      OPINION OF COUNSEL (WHICH OPINION IS REASONABLY SATISFACTORY TO THE COMPANY)
      CONFIRMING THE AVAILABILITY OF SUCH EXEMPTION.

     

    (ii)          
      Any
      legend required by the laws of any other applicable jurisdiction. 

     

    4.3          
      Securities
      Compliance.
      The
      Company shall take all action necessary to comply with any federal or state
      securities laws applicable to the transactions contemplated
      hereunder.

     

    5.            
      REGISTRATION
      RIGHTS.

     

    5.1          
      Registrable
      Shares.
      As used
      herein the term “Registrable Security” means (a) each of the Shares, (b) the
      shares of Common Stock of the Company issuable upon exercise of the Warrants
      and
      (c) any Common Stock of the Company issued as (or issuable on the conversion
      or
      exercise of any warrant, right or other security that is issued as) a dividend
      or other distribution with respect to, or in exchange for, or in replacement
      of,
      the shares referenced in clause (a) above; provided,
      however, that
      with
      respect to any particular Registrable Security held by an Investor, such
      security shall cease to be a Registrable Security when, as of the date of
      determination, (a) it has been effectively registered under the Securities
      Act and disposed of pursuant thereto, or (b) registration under the
      Securities Act is no longer required for the immediate public distribution
      of
      any particular Registrable Shares held by that Investor and its affiliates.
      In
      the event of any merger, reorganization, consolidation, recapitalization or
      other change in corporate structure affecting the Common Stock, such adjustment
      shall be made in the definition of “Registrable Security” as is appropriate in
      order to prevent any dilution or enlargement of the rights granted pursuant
      to
      this Section 5.

     

    5.2          
      Mandatory
      Registration.
      

     

    (a)          
      On
      or
      before 60 days following the Closing Date, the Company shall prepare and file
      with the Commission the Registration Statement covering the resale of all of
      the
      Registrable Shares for an offering to be made on a continuous basis pursuant
      to
      Rule 415 (the “Required Filing Date”). The Registration Statement required
      hereunder shall be on Form S-3 (except if the Company is not then eligible
      to
      register for resale the Registrable Shares on Form

     

    
      
        
        

      

      
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    S-3,
      in
      which case the Registration Statement shall be on another appropriate form
      in
      accordance herewith). The Company shall use its commercially reasonable efforts
      to cause the Registration Statement to be declared effective under the
      Securities Act as promptly as possible after the filing thereof, but in any
      event not later than the 120th
      day
      after the Closing Date (the “Effectiveness Date”), and shall use its
      commercially reasonable efforts to keep the Registration Statement continuously
      effective under the Securities Act until the earlier of the date when all
      Registrable Shares covered by the Registration Statement (a) have been sold
      pursuant to the Registration Statement or an exemption from the registration
      requirements of the Securities Act or (b) may be sold without volume
      restrictions pursuant to Rule 144(k) as determined by the counsel to the Company
      pursuant to a written opinion letter to such effect, addressed and acceptable
      to
      the Company’s transfer agent and the affected Investors or (c) the second
      anniversary of the date on which the Registration Statement is declared
      effective (the “Effectiveness
      Period”)
      or
      such longer time as the Company may determine.

     

    (b)          
      If: (i) the Registration Statement is not filed on or prior to its Required
      Filing Date or (ii) the Company fails to file with the Commission a request
      for
      acceleration in accordance with Rule 461 promulgated under the Securities Act,
      within five business days of the date that the Company is notified (orally
      or in
      writing, whichever is earlier) by the Commission that a Registration Statement
      will not be “reviewed”, or not subject to further review, or (iii) a
      Registration Statement filed or required to be filed hereunder is not declared
      effective by the Commission on or before the required Effectiveness Date, or
      (iv) after a Registration Statement is first declared effective by the
      Commission, it ceases for any reason to remain continuously effective as to
      all
      Registrable Securities for which it is required to be effective, or the
      Investors are not permitted to utilize the Prospectus therein to resell such
      Registrable Securities, for in any such cases 60 business days (which need
      not
      be consecutive days) in the aggregate during any 12-month period (any such
      failure or breach being referred to as an “Event”)
      and
      for purposes of clause (i) or (iii) the date on which such Event occurs, or
      for
      purposes of clause (ii) the date on which such five business day period is
      exceeded, or for purposes of clause (iv) the date on which such 60 business
      day
      period is exceeded, being referred to as “Event
      Date”,
      then in
      addition to any other rights the Investors may have hereunder or under
      applicable law the Company shall pay to each Investor an amount in cash, as
      liquidated damages and not as a penalty, equal to 1% of the aggregate purchase
      price paid by such Investor pursuant to this Agreement for any Registrable
      Securities then held by such Investor on each monthly anniversary of each such
      Event Date (if the applicable Event shall not have been cured by such date)
      until the applicable Event is cured. The liquidated damages pursuant to the
      terms hereof shall apply on a pro-rata basis for any portion of a month prior
      to
      the cure of an Event and shall not exceed an aggregate of 8% of the aggregate
      purchase price paid by the Investors pursuant to this Agreement. 

     

    
      
        
        

      

      
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    (c)          
      Notwithstanding
      the foregoing, if the Company shall furnish to the Investors a certificate
      signed by the Chief Executive Officer of the Company stating that in the good
      faith judgment of the Board of Directors of the Company it would not be in
      the
      best interest of the Company for such registration statement to be filed, the
      Company shall have the right to defer taking such action with respect to such
      filing for a period of not more than sixty (60) days after the date of such
      certificate; provided,
      however,
      that
      the Company shall not defer its obligation in this manner more than once in
      any
      twelve (12) month period. 

     

    (d)          
      In
      the
      event, the Investor fails to provide the Company with any information that
      is
      required to be provided in the Registration Statement with respect to such
      Investor pursuant to Section 5.3(k) within ten (10) days of receiving a request
      for such information from the Company, the Company shall send an additional
      request to the Investor (the “Additional Request”) and in the event the Investor
      fails to respond to the Company within five (5) days of receipt of the
      Additional Request, the Company shall be entitled to exclude such Investor’s
      Registrable Shares from the Registration Statement.

     

    5.3          
      Covenants
      of the Company With Respect to Registration.

     

    The
      Company covenants and agrees as follows:

     

    (a)          
      Not
      less
      than five business days prior to the filing of the Registration Statement or
      any
      related Prospectus or any amendment or supplement thereto, furnish to the
      Investors copies of all such documents proposed to be filed (including documents
      incorporated or deemed incorporated by reference to the extent requested by
      such
      person), which documents will be subject to the review of such Investors within
      such five business days. The Company shall not file the Registration Statement
      or any such Prospectus or any amendments or supplements thereto to which the
      holders of a majority of the Registrable Shares shall reasonably object in
      good
      faith based on the advice of counsel and the Company shall make reasonable
      efforts to address the objections raised. In the event the holders of a majority
      of the Registrable Shares object to any such filing pursuant to the previous
      sentence, then the Required Filing Date or Effectiveness Date, as the case
      may
      be, shall be extended by the number of days that elapse between the date the
      Company is notified of the objection until the day following the date the
      Company has been notified that such objection no longer exists.

     

    (b)          
      Following
      the effective date of the Registration Statement under Section 5.2, the Company
      shall, upon the request of the Investors, forthwith supply such reasonable
      number of copies of the Registration Statement, preliminary prospectus and
      prospectus meeting the requirements of the Securities Act, and other documents
      necessary or incidental to the public offering of the Registrable Shares, as
      shall be reasonably requested by the Investors to permit the Investors to make
      a
      public distribution of the Registrable Shares registered in connection with
      the
      Registration Statement. 

     

    (c)          
      The
      Company shall prepare and file with the SEC such amendments and supplements
      to
      such Registration Statement and the prospectus used in connection with such
      Registration Statement as may be necessary to comply with the Securities Act
      with respect to the

     

    
      
        
        

      

      
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    disposition
      of all Shares covered by such Registration Statement during the period of time
      such Registration Statement remains effective;

     

    (d)          
      The
      Company shall use its commercially reasonable efforts to register and qualify
      the Shares covered by such Registration Statement under such other securities
      or
      Blue Sky laws of such jurisdictions as shall be reasonably requested by the
      Investors; provided that the Company shall not be required in connection
      therewith or as a condition thereto to qualify to do business or to file a
      general consent to service of process in any such states or
      jurisdictions;

     

    (e)          
      During
      the period of time such Registration Statement remains effective, the Company
      shall notify each Investor of Registrable Shares covered by such registration
      statement at any time when a prospectus relating thereto is required to be
      delivered under the Securities Act or the happening of any event as a result
      of
      which the prospectus included in such Registration Statement, as then in effect,
      includes an untrue statement of a material fact or omits to state a material
      fact required to be stated therein or necessary to make the statements therein
      not misleading in the light of the circumstances then existing;

     

    (f)          
      The
      Company shall use its commercially reasonable efforts to cause all such
      Registrable Shares registered hereunder to be listed on each securities exchange
      on which securities of the same class issued by the Company are then
      listed;

     

    (g)          
      The
      Company shall provide a transfer agent and registrar for all Registrable Shares
      registered hereunder and a CUSIP number for all such Registrable Shares, in
      each
      case not later than the effective date of such registration; and

     

    (k)          
      The
      obligations of the Company hereunder with respect to the Registrable Shares
      are
      subject to the Investors’ furnishing to the Company such information concerning
      the Investors, the Registrable Shares and the terms of the Investors’ offering
      of such Registrable Shares as are required to be included in the Registration
      Statement by Commission regulations or pursuant to a specific Commission comment
      on the Registration Statement.

     

    5.4          
      Expenses.
      All
      expenses incurred in effecting a registration pursuant to this Agreement
      (including, without limitation, all registration, qualification and filing
      fees,
      printing expenses, fees and disbursements of counsel for the Company, blue
      sky
      fees and expenses) shall be borne by the Company. All transfer taxes,
      underwriting discounts and selling commissions applicable to the sale of the
      Registrable Shares shall be borne by the Investors thereof.

     

    5.5          
      Indemnification.
      In the
      event any Registrable Shares are included in a Registration Statement under
      this
      Section 5:

     

    (a)          
      To
      the
      extent permitted by law, the Company will indemnify and hold harmless each
      Investor, the partners, officers, directors, stockholders, members and managers
      of such Investor, each person, if any, who controls such Investor within the
      meaning of the Securities Act or the Exchange Act, against any losses, claims,
      damages, or liabilities (joint or several) to which they may become subject
      under the Securities Act, the Exchange Act or other federal or state law,
      insofar as such losses, claims, damages, or liabilities (or actions in respect
      thereof) arise out of or are based upon any of the following statements,
      omissions or

     

    
      
        
        

      

      
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    violations
      (each, a “Violation”): (i) any untrue statement or alleged untrue statement of a
      material fact contained in such Registration Statement, including any
      preliminary prospectus or final prospectus contained therein or any amendments
      or supplements thereto, (ii) the omission or alleged omission to state therein
      a
      material fact required to be stated therein, or necessary to make the statements
      therein not misleading, or (iii) any violation or alleged violation by the
      Company of the Securities Act, the Exchange Act, any state securities law or
      any
      rule or regulation promulgated under the Securities Act, the Exchange Act or
      any
      state securities law; and the Company will pay to each such Investor,
      underwriter or controlling person, as incurred, any legal or other expenses
      reasonably incurred by them in connection with investigating or defending any
      such loss, claim, damage, liability, or action; provided,
      however,
      that the
      indemnity agreement contained in this Section 5.5(a) shall not apply to amounts
      paid in settlement of any such loss, claim, damage, liability, or action if
      such
      settlement is effected without the consent of the Company (which consent shall
      not be unreasonably withheld or delayed), nor shall the Company be liable to
      any
      Investor, underwriter or controlling person for any such loss, claim, damage,
      liability, or action to the extent that it arises out of or is based upon a
      Violation which occurs in reliance upon and in conformity with written
      information furnished expressly for use in connection with such registration
      by
      any such Investor, underwriter or controlling person.

     

    (b)          
      To
      the
      extent permitted by law, each selling Investor will indemnify and hold harmless
      the Company, each of its directors, each of its officers who has signed the
      Registration Statement, each person, if any, who controls the Company within
      the
      meaning of the Securities Act, against any losses, claims, damages, or
      liabilities (joint or several) to which any of the foregoing persons may become
      subject, under the Securities Act, the Exchange Act or other federal or state
      law, insofar as such losses, claims, damages, or liabilities (or actions in
      respect thereto) arise out of or are based upon any Violation, in each case
      to
      the extent (and only to the extent) that such Violation occurs in reliance
      upon
      and in conformity with written information furnished by such Investor expressly
      for use in connection with such registration; and each such Investor will pay,
      as incurred, any legal or other expenses reasonably incurred by any person
      indemnified pursuant to this Section 5.5(b), in connection with investigating
      or
      defending any such loss, claim, damage, liability, or action; provided,
      however, that
      the
      indemnity agreement contained in this Section 5.5(b) shall not apply to amounts
      paid in settlement of any such loss, claim, damage, liability or action if
      such
      settlement is effected without the consent of the Investor (which consent shall
      not be unreasonably withheld or delayed); provided
      further that
      in
      no event shall any indemnity under this Section 5.5(b) exceed the net proceeds
      from the offering received by such Investor.

     

    (c)          
      Promptly
      after receipt by an indemnified party under this Section 5.5 of notice of the
      commencement of any action (including any governmental action), such indemnified
      party will, if a claim in respect thereof is to be made against any indemnifying
      party under this Section 5.5, deliver to the indemnifying party a written notice
      of the commencement thereof and the indemnifying party shall have the right
      to
      participate in, and, to the extent the indemnifying party so desires, jointly
      with any other indemnifying party similarly noticed, to assume the defense
      thereof with counsel mutually satisfactory to the parties; provided,
      however, that
      an
      indemnified party (together with all other indemnified parties which may be
      represented without conflict by one counsel) shall have the right to retain
      one
      separate counsel, with the

     

    
      
        
        

      

      
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    reasonable
      fees and expenses to be paid by the indemnifying party, if representation of
      such indemnified party by the counsel retained by the indemnifying party would
      be inappropriate due to actual or potential differing interests between such
      indemnified party and any other party represented by such counsel in such
      proceeding. The failure to deliver written notice to the indemnifying party
      within a reasonable time after receipt of notice of the commencement of any
      such
      action, if prejudicial to its ability to defend such action, shall relieve
      such
      indemnifying party of any liability to the indemnified party under this Section
      5.5, but the omission so to deliver written notice to the indemnifying party
      will not relieve it of any liability that it may have to any indemnified party
      otherwise than under this Section 5.5.

     

    (d)          
      If
      the
      indemnification provided for in this Section 5.5 is held by a court of competent
      jurisdiction to be unavailable to an indemnified party with respect to any
      loss,
      liability, claim, damage or expense referred to therein, then the indemnifying
      party, in lieu of indemnifying such indemnified party hereunder, shall
      contribute to the amount paid or payable by such indemnified party as a result
      of such loss, liability, claim, damage, or expense in such proportion as is
      appropriate to reflect the relative fault of the indemnifying party on the
      one
      hand and of the indemnified party on the other in connection with the statements
      or omissions that resulted in such loss, liability, claim, damage or expense
      as
      well as any other relevant equitable considerations; provided
      that in
      no event shall any contribution by an Investor under this Section 5.5(d) exceed
      the net proceeds from the offering received by such Investor. The relative
      fault
      of the indemnifying party and of the indemnified party shall be determined
      by
      reference to, among other things, whether the untrue or alleged untrue statement
      of a material fact or the omission to state a material fact relates to
      information supplied by the indemnifying party or by the indemnified party
      and
      the parties’ relative intent, knowledge, access to information, and opportunity
      to correct or prevent such statement or omission.

     

    (e)          
      Notwithstanding
      the foregoing, to the extent that the provisions on indemnification and
      contribution contained in the underwriting agreement entered into in connection
      with the underwritten public offering are in conflict with the foregoing
      provisions, the provisions in the underwriting agreement shall
      control.

     

    (f)          
      The
      obligations of the Company and Investors under this Section 5.5 shall survive
      the completion of any offering of Registrable Shares in a registration statement
      and the termination of this Agreement.

     

    5.6          
      Suspension
      of Sales.

     

    (a)          
      With
      respect to the Registration Statement filed pursuant to Section 5.2, subject
      to
      the payment of any liquidated damages which may accrue pursuant to Section
      5.2(b)(iv), the Company may suspend sales of Registrable Shares under such
      Registration Statement for a period of not more than sixty (60) days in any
      twelve (12) month period with respect to such Registration Statement if, at
      any
      time the Company is engaged in confidential negotiations or other confidential
      business activities, the disclosure of which would be required if such sales
      were not suspended and the Board of Directors of the Company determines in
      good
      faith that such suspension would be in the Company’s best interest at such time;
provided,
      that
      the Company shall not be permitted to suspend such sales for more
      than

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    sixty
      (60) days in any twelve (12) month period. In order to suspend sales pursuant
      to
      this Section 5.6(a), the Company shall promptly (but in any event within five
      (5) business days), upon determining to seek such suspension, deliver to each
      holder of Registrable Shares a certificate signed by an executive officer of
      the
      Company stating that the Company is suspending such filing pursuant to this
      Section 5.6(a). Each holder of Registrable Shares hereby agrees to keep
      confidential any information disclosed to it in any such certificate (including
      the fact that a certificate was delivered).

     

    (b)          
      If
      the
      Company suspends such Registration Statement pursuant to Section 5.6(a) above,
      the Company shall, as promptly as practicable following the termination of
      the
      circumstances which entitled the Company to do so but in no event more than
      fifteen (15) days thereafter, take such actions as may be necessary to file
      or
      reinstate the effectiveness of such Registration Statement and/or give written
      notice to the selling Investors authorizing them to resume sales pursuant to
      such Registration Statement. If, as a result thereof, the prospectus included
      in
      such Registration Statement has been amended to comply with the requirements
      of
      the Securities Act, the Company shall enclose such revised prospectus with
      the
      notice to the selling Investors given pursuant to this Section 5.6(b), and
      the
      selling Investors shall make no offers or sales of Shares pursuant to such
      Registration Statement other than by means of such revised
      prospectus.

     

    5.7          
      Transfer
      or Assignment of Registration Rights.
      The
      rights to cause the Company to register Registrable Shares granted to an
      Investor by the Company under this Section 5 may be transferred or assigned
      by
      an Investor to a transferee or assignee of such Registrable Shares that (i)
      is a
      subsidiary, parent, current or former partner, current or former limited
      partner, current or former member, current or former manager or stockholder
      of
      an Investor, (ii) is an entity controlling, controlled by or under common
      control, or under common investment management, with an Investor, including
      without limitation a corporation, partnership or limited liability company
      that
      is a direct or indirect parent or subsidiary of the Investor, or (iii) is a
      transferee or assignee of not less than 50,000 shares of Registrable Shares
      (as
      presently constituted and subject to subsequent adjustments for stock splits,
      stock dividends, reverse stock splits and the like), provided
      that
      the
      Company is given written notice at the time of or within a reasonable time
      after
      said transfer or assignment, stating the name and address of said transferee
      or
      assignee and identifying the Securities with respect to which such registration
      rights are being transferred or assigned, and provided
      further that
      the
      transferee or assignee of such rights assumes the obligations of such Investor
      under this Section 5. 

     

    5.8          
      Reports
      Under Exchange Act.
      With a
      view to making available to the Investors the benefits of Rule 144 promulgated
      under the Securities Act and any other rule or regulation of the SEC that may
      at
      any time permit an Investor to sell Securities of the Company to the public
      without registration, the Company agrees to:

     

    (a)          
      Make
      and
      keep public information available, as those terms are used in SEC Rule 144,
      at
      all times;

     

    (b)          
      File
      with
      the SEC in a timely manner all reports and other documents required of the
      Company under the Securities Act and the Exchange Act;

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    (c)          
      Furnish
      to any Investor, so long as the Investor owns any Registrable Shares, forthwith
      on request, (i) a written statement by the Company that it has complied with
      the
      reporting requirements of SEC Rule 144, the Securities Act and the Exchange
      Act,
      (ii) a copy of the most recent annual or quarterly report of the Company and
      such other reports and documents so filed by the Company, and (iii) such other
      information as may be reasonably requested in availing any Investor of any
      rule
      or regulation of the SEC that permits the selling of any such securities without
      registration; and 

     

    (d)          
      Undertake
      any additional actions reasonably necessary to maintain the availability of
      the
      use of Rule 144.

     

    5.9          
      Delay
      of Registration.
      No
      Investor shall have any right to obtain or seek an injunction restraining or
      otherwise delaying any registration as the result of any controversy that might
      arise with respect to the interpretation or implementation of this Section
      5.

     

    6.            
      CONDITIONS
      TO INVESTOR OBLIGATIONS AT CLOSING.

     

    The
      obligations of the Investors to purchase the Securities at the Closing are
      subject to the fulfillment on or prior to the Closing of each of the following
      conditions:

     

    6.1          
      Representations
      and Warranties.
      The
      representations and warranties of the Company contained in Section 2 shall
      be
      true in all material respects on and as of the Closing Date with the same effect
      as though such representations and warranties had been made on and as of the
      Closing Date, except that any representations and warranties stated as being
      true and correct as of a date other than the date hereof shall be true and
      correct as of such other date.

     

    6.2          
      Performance.
      The
      Company shall have performed and complied with all agreements, obligations
      and
      conditions contained in this Agreement that are required to be performed or
      complied with by it on or before the Closing.

     

    6.3          
      Qualifications.
      All
      authorizations, approvals, or permits, if any, of any governmental authority
      or
      regulatory body of the United States or of any state of the United States that
      are required in connection with the lawful issuance and sale of the Securities
      to the Investors pursuant to this Agreement shall have been duly obtained and
      shall be effective on and as of the Closing.

     

    6.4          
      Proceedings
      and Documents.
      All
      corporate and other proceedings undertaken in connection with the transactions
      contemplated at the Closing and all documents incident thereto shall be
      reasonably satisfactory in form and substance to each Investor, and they shall
      have received all such counterpart original and certified or other copies of
      such documents as they may reasonably request. 

     

    6.5          
      Absence
      of Litigation.
      No
      proceeding challenging this Agreement or the transactions contemplated hereby
      or
      thereby, or seeking to prohibit, alter, prevent or delay the Closing, shall
      have
      been instituted against the Company before any court, arbitrator or governmental
      body, agency or official and shall be pending.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    6.6          
      Compliance
      Certificate.
      The
      Company shall deliver to the Investors at the Closing, relating to the
      Investors’ purchase of Securities, a certificate signed by the Chief Executive
      Officer of the Company stating that the Company has complied with or satisfied
      each of the conditions to the Investors’ obligation to consummate the Closing
      set forth in Sections 6.1 through 6.5, unless waived in writing by the
      Investors.

     

    6.7          
      Legal
      Opinion.  Legal
      counsel to the Company shall deliver to the Investors a legal opinion
      substantially in the form set forth as Exhibit B hereto.

     

    6.8          
      Legal
      Prohibition.
      The
      purchase of the Securities by the Investors shall not be prohibited by any
      law
      or governmental order or regulation.

     

    7.            
      CONDITIONS
      TO THE COMPANY’S OBLIGATIONS AT CLOSING.

     

    The
      obligations of the Company under Section 1 of this Agreement are subject to
      the
      fulfillment on or before the Closing of each of the following
      conditions:

     

    7.1          
      Representations
      and Warranties.
      The
      representations and warranties of each Investor contained in Section 3 shall
      be
      true in all respects on and as of the Closing Date with the same effect as
      though such representations and warranties had been made on and as of the
      Closing Date, except that any representations and warranties stated as being
      true and correct as of a date other than the date hereof shall be true and
      correct as of such other date.

     

    7.2          
      Performance.
      Each
      Investor shall have performed and complied with all agreements, obligations
      and
      conditions contained in this Agreement that are required to be performed or
      complied with by it on or before the Closing.

     

    7.3          
      Qualifications.
      All
      authorizations, approvals, or permits, if any, of any governmental authority
      or
      regulatory body of the United States or of any state of the United States that
      are required in connection with the lawful issuance and sale of the Securities
      to the Investors pursuant to this Agreement shall have been duly obtained and
      shall be effective on and as of the Closing.

     

    7.4          
      Proceedings
      and Documents.
      All
      corporate and other proceedings undertaken in connection with the transactions
      contemplated by this Agreement and all documents incident thereto shall be
      reasonably satisfactory in form and substance to the Company and its counsel,
      and they shall have received all such counterpart original and certified or
      other copies of such documents as they may reasonably request.

     

    8.            
      MISCELLANEOUS.

     

    8.1          
      Survival
      of Warranties.
      The
      warranties, representations, agreements, covenants and undertakings of the
      Company or the Investors contained in or made pursuant to this Agreement shall
      survive the execution and delivery of this Agreement and the Closing and shall
      in no way be affected by any investigation of the subject matter thereof made
      by
      or on behalf of the Investors or the Company.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    8.2          
      Incorporation
      by Reference.
      All
      Exhibits and Schedules appended to this Agreement are herein incorporated by
      reference and made a part hereof.

     

    8.3          
      Successor
      and Assignees.
      All
      terms, covenants, agreements, representations, warranties and undertakings
      in
      this Agreement made by and on behalf of any of the parties hereto shall bind
      and
      inure to the benefit of the respective successors and assigns of the parties
      hereto (including transferees of any Securities) whether so expressed or not,
      subject to Section 5.7.

     

    8.4          
      Amendments
      and Waivers.
      Neither
      this Agreement nor any provision hereof shall be waived, modified, changed,
      discharged, terminated, revoked or canceled except by an instrument in writing
      signed by the party against whom any change, discharge or termination is sought.
      Failure of either party to exercise any right or remedy under this Agreement
      or
      any other agreement between the Company and the Investors, or otherwise, or
      delay by the Company or the Investors in exercising such right or remedy, will
      not operate as a waiver thereof, nor shall any single or partial exercise
      thereof preclude any other or further exercise thereof or the exercise of any
      other right, power or privilege. The rights and remedies herein provided shall
      be cumulative and not exclusive of any rights or remedies provided by
      law.

     

    8.5          
      Governing
      Law.
      This
      Agreement shall be deemed a contract made under the laws of the State of New
      York, without giving effect to the conflicts of law principles
      thereof.

     

    8.6          
      Notices.
      All
      notices, requests, consents, demands, notice or other communication required
      or
      permitted under this Agreement shall be in writing and shall be deemed duly
      given and received when delivered personally or transmitted by facsimile, or
      one
      business day after being deposited for next-day delivery with a nationally
      recognized overnight delivery service, or three days after being deposited
      as
      first class mail with the United States Postal Services, all charges or postage
      prepaid, and properly addressed:

     

    to
      the
      Company at:

     

    Callisto
      Pharmaceuticals, Inc.

    420
      Lexington Avenue, Suite 1609

    New
      York,
      New York 10170

    Tel:
      (212) 297-0010

    Fax:
      (212) 297-0020

    Attention:
      Chief Executive Officer

     

    with
      a
      copy (which shall not constitute notice) to:

     

    Sichenzia
      Ross Friedman Ference LLP

    1065
      Avenue of the Americas

    New
      York,
      New York 10018

    Fax:
      (212) 930-9725

    Attention:
      Jeffrey J. Fessler

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    or
      to the
      Investors at the address set forth opposite each Investor’s name on Exhibit A
      hereto 

     

    or
      such
      other address as may be furnished in writing by a party hereto.

     

    8.7          
      Counterparts.
      This
      Agreement may be executed in counterparts, all of which together shall
      constitute one and the same instrument.

     

    8.8          
      Effect
      of Headings.
      The
      section and paragraph headings herein are included for convenience only and
      shall not affect the construction hereof.

     

    8.9          
      Entire
      Agreement.
      This
      Agreement and the Exhibits and Schedules hereto and thereto constitute the
      entire agreement among the Company and the Investors with respect to the subject
      matter hereof. There are no representations, warranties, covenants or
      undertakings with respect to the subject matter hereof other than those
      expressly set forth herein. This Agreement supersedes all prior agreements
      between the parties with respect to the Securities purchased hereunder and
      the
      subject matter hereof.

     

    8.10         Publicity.
      Neither
      party shall originate any publicity, news release or other public announcement,
      written or oral, whether relating to the performance under this Agreement or
      the
      existence of any arrangement between the parties, without the prior written
      consent of the other party (which consent shall not be unreasonably withheld
      or
      delayed), except where such publicity, news release or other public announcement
      is required by law or by Section 4.1; provided
      that, in
      such event, each such party shall (a) promptly consult the other party in
      connection with any such publicity, news release or other public announcement
      prior to its release; (b) promptly provide the other party a copy thereof;
      and
      (c) use commercially reasonable efforts to ensure that such portions of such
      information as may reasonably be designated by the other party are accorded
      confidential treatment by the applicable governmental entity.

     

    8.11          Severability.
      If any
      provision of this Agreement is held by a court of competent jurisdiction to
      be
      unenforceable under applicable law, such provision shall be replaced with a
      provision that accomplishes, to the extent possible, the original business
      purpose of such provision in a valid and enforceable manner, and the balance
      of
      the Agreement shall be interpreted as if such provision were so modified and
      shall be enforceable in accordance with its terms.

     

    8.12          Interpretation.
      This
      Agreement shall be construed according to its fair language. The rule of
      construction to the effect that any ambiguities are to be resolved against
      the
      drafting party shall not be employed in the interpretation of this Agreement.
      

     

    8.13          No
      Strict Construction.
      The
      language used in this Agreement will be deemed to be the language chosen by
      the
      parties to express their mutual intent, and no rules of strict construction
      will
      be applied against any party.

     

    8.14          Independent
      Nature of Investors’ Obligations and Rights.
      The
      obligations of each Investor under this Agreement are several and not joint
      with
      the obligations of any other

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    Investor,
      and no Investor shall be responsible in any way for the performance of the
      obligations of any other Investor under this Agreement. The decision of each
      Investor to purchase Securities pursuant to this Agreement has been made by
      such
      Investor independently of any other Investor and independently of any
      information, materials, statements or opinions as to the business, affairs,
      operations, assets, properties, liabilities, results of operations, condition
      (financial or otherwise) or prospects of the Company which may have been made
      or
      given by any other Investor or by any agent or employee of any other Investor,
      and no Investor or any of its agents or employees shall have any liability
      to
      any other Investor (or any other person) relating to or arising from any such
      information, materials, statements or opinions. Nothing contained herein, and
      no
      action taken by any Investor pursuant thereto, shall be deemed to constitute
      the
      Investors as a partnership, an association, a joint venture or any other kind
      of
      entity, or create a presumption that the Investors are in any way acting in
      concert or as a group with respect to such obligations or the transactions
      contemplated by this Agreement. Each Investor acknowledges that no other
      Investor has acted as agent for such Investor in connection with making its
      investment hereunder and that no other Investor will be acting as agent of
      such
      Investor in connection with monitoring its investment hereunder. Each Investor
      shall be entitled to independently protect and enforce its rights, including
      without limitation the rights arising out of this Agreement, and it shall not
      be
      necessary for any other Investor to be joined as an additional party in any
      proceeding for such purpose. The Company has elected to provide all Investors
      with the same terms and form of this Agreement for the convenience of the
      Company and not because it was required or requested to do so by the
      Investors.

    

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, this Agreement has been executed as of the date first above
      written, by the duly authorized representatives of the parties
      hereto.

     

     

    
      	 	CALLISTO PHARMACEUTICALS, INC.
	 	 
	 	By:
              ______________________________
	 	 
	 	Name:
              ____________________________
	 	 
	 	Title:
              _____________________________
	 	 
	 	 
	 	INVESTOR
	 	 
	 	 
	 	By:
              ______________________________

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