Document:

Exhibit 4.1

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: September 8, 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 September         ,
2011 (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 $1.00, 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.

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.  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.

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)

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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, unless otherwise required by the Purchase Agreement,
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 by the 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

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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 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

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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.

(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

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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).

(b)           If at any
time after one year from the Original Issue Date there is no effective
Registration Statement registering, or no current prospectus available for, the
resale of the Warrant Shares by the Holder, then this Warrant may also be
exercised at such time by means of a “cashless exercise” in which the Holder
shall be entitled to receive a certificate for the number of Warrant Shares
equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

(A) =  the
VWAP on the Trading Day immediately preceding the date of such election;

(B) =   the
Exercise Price of this Warrant, as adjusted; and

(X) =   the
number of Warrant Shares issuable upon exercise of this Warrant in accordance
with the terms of this Warrant by means of a cash exercise rather than a
cashless exercise.

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.

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

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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
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.

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(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 SEPTEMBER      , 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
shall take the form of (check applicable box):

o in
lawful money of the United States; or

o the
cancellation of such number of Warrant Shares as is necessary, in accordance
with the formula set forth in subsection 10(b), to exercise this Warrant with
respect to the maximum number of Warrant Shares purchasable pursuant to the
cashless exercise procedure set forth in subsection 10(b).

(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)

  
								

 

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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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

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CALLISTO PHARMACEUTICALS, INC.

WARRANT ORIGINALLY ISSUED SEPTEMBER      , 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:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 11Exhibit 10.1

Callisto Pharmaceuticals, Inc.

420 Lexington Avenue, Suite 1609

New York, NY 10170

LETTER AGREEMENT

September 8, 2006

[Investor]

Dear                :

Callisto Pharmaceuticals, Inc., a Delaware corporation
(the “Company”), is offering shares of its common stock, par value $0.0001 per
share (the “Common Stock”) and warrants to purchase Common Stock (the “Warrants”)
to certain accredited investors (the “Investors”) that participated in a
private offering in February and April 2006 (the “Prior Offering”).

Investors may acquire one share and 2.35 five-year
non-callable warrants exercisable at $1.00 per share (described below) for each
five shares they acquired in the Prior Offering in exchange for

(i)                                     agreeing
to amend their Securities Purchase Agreement executed in connection with the
Prior Offering (“SPA”) to (a) delete mandatory registration rights
(substituting piggyback rights) and (b) waiving any and all penalties pursuant
to the liquidated damages provisions contained in Section 5.2(b); and

(ii)                                  enter
into a lock-up agreement in the form annexed hereto as Exhibit A.

As a further inducement for the Investors to acquire
the Shares and Warrants or the consideration described above, the Company will
agree to extend the expiration date of the Warrants issued in the Prior
Offering by 42 months and eliminate the call provision.

EACH INVESTOR IS FREE TO ACCEPT OR REJECT THIS OFFER,
HOWEVER, IT MAY ONLY BE ACCEPTED BY EACH INVESTOR AS TO ALL OF THE SHARES AND
WARRANTS ACQUIRED IN THE PRIOR OFFERING.

Please review the lock-up agreement and Amendment
Agreement annexed hereto as Exhibit B. 
If you accept the Company’s proposal, please execute this Letter
Agreement, lock-up agreement and Amendment Agreement and return it to the
undersigned by September 8, 2006 (the “Deadline”).  Certificates representing the new shares and
warrants will be issued to Investors accepting the offer within five business
days of the Deadline.  The Company may
accept or reject documents received from investors after the Deadline, in its
sole discretion.

 

The undersigned hereby represents and warrants that
the undersigned has full power and authority to enter into this Letter
Agreement. All authority herein conferred or agreed to be conferred and any
obligations of the undersigned shall be binding upon the successors, assigns,
heirs or personal representatives of the undersigned.

This Letter Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to the conflict of laws principles thereof.

	
  

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
    CALLISTO PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:  Gary S. Jacob

  	
   

  	
   

  
	
   

  	
   

  	
  Title:    Chief Executive
  Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Accepted as of the date first set forth above,
  September 8, 2006:

  
	
   

  
	
   

  	
   

  
	
  [Name of Person
  or Entity]

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}]]