Document:

EX-10.1

AMERIGROUP FLORIDA, INC. Medicaid HMO Contract

AHCA CONTRACT NO. FA523

AMENDMENT NO. 7

THIS CONTRACT, entered into between the STATE OF FLORIDA, AGENCY FOR
HEALTH CARE ADMINISTRATION, hereinafter referred to as the “Agency” and
AMERIGROUP FLORIDA, INC., hereinafter referred to as the “Vendor”, is hereby
amended as follows:

1. Standard Contract, Section ILA, Contract Amount, the first sentence is hereby amended
to now read:

To pay for contracted services according to the conditions of
Attachment I in an amount not to exceed $669,819,083.00, (an
increase of $895,473.00), subject to the availability of funds.

	 	2.	 	Upon execution of this amendment, Attachment I, section 90.0,
Payment and Authorized Enrollment Levels, Table 2 is hereby suspended
until further notice by the Agency.	 

	 	3.	 	Attachment I, section 90.0, Payment and Authorized Enrollment
Levels, Table 3 is hereby amended to now read as follows:	 

Table 3 Area

Age-banded Capitation Rates, Including Community Mental Health and
Mental Health Targeted Case Management

Table 3.

Areas 5, 6, 7, 8, 9, 10, and 11 Age-banded Capitation Rates, Including
Community Mental Health and Mental Health Targeted Case Management

Area 05 General Rates plus Mental Health Plan — 015005304(PASCO) 015005305(PINELLAS)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	<1 year	 	 	1-5	 	 	 	6-13	 	 	 	 	 	 	14-20 Male 14-20 Female 21-54 Male
	 	21-54Female	 	 	55-64	 	 	 	65+	 
	T1%NF/FC/80BRA
	 	 	345.77	 	 	 	79.28	 	 	 	51.94	 	 	 	57.32	 	 	 	114.37	 	 	 	139.01	 	 	 	210.44	 	 	 	291.84	 	 	 	291.84	 
	S81/No Medicare
	 	 	3265.63	 	 	 	429.24	 	 	 	240.86	 	 	 	235.59	 	 	 	235.59	 	 	 	628.37	 	 	 	628.37	 	 	 	594.95	 	 	 	594.95	 
	SSI/Part B
	 	 	266.87	 	 	 	266.87	 	 	 	266.87	 	 	 	266.87	 	 	 	266.87	 	 	 	266.87	 	 	 	266.87	 	 	 	266.87	 	 	 	266.87	 
	SSI/Part A & B
	 	 	318.72	 	 	 	318.72	 	 	 	318.72	 	 	 	318.72	 	 	 	318.72	 	 	 	318.72	 	 	 	318.72	 	 	 	318.72	 	 	 	225.77	 

Area 06 General Rates plus Mental Health Plan — 015005300(HILLSBOROUGH) 015005307(POLK)
015005318(MANATEE)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	<1 year	 	 	1-5	 	 	 	6-13	 	 	 	 	 	 	14-20 Male 14-20 Female 21-54 Male
	 	21-54Female	 	 	55-64	 	 	 	65+	 
	TANF/FC/SOBRA
	 	 	330.07	 	 	 	75.91	 	 	 	61.92	 	 	 	67.67	 	 	 	122.23	 	 	 	135.83	 	 	 	204.29	 	 	 	282.98	 	 	 	282.98	 
	SSI/No Medicare
	 	 	3017.05	 	 	 	371.69	 	 	 	265.72	 	 	 	243.82	 	 	 	243.82	 	 	 	647.81	 	 	 	647.81	 	 	 	587.26	 	 	 	587.26	 
	SSI/Part B
	 	 	242.29	 	 	 	242.29	 	 	 	242.29	 	 	 	242.29	 	 	 	242.29	 	 	 	242.29	 	 	 	242.29	 	 	 	242.29	 	 	 	242.29	 
	SSI/Part A a B
	 	 	288.09	 	 	 	288.09	 	 	 	288.09	 	 	 	288.09	 	 	 	288.09	 	 	 	288.09	 	 	 	288.09	 	 	 	288.09	 	 	 	202.64	 

Area 07 General Rates plus Mental Health Plan — 015005308(ORANGE) 015005313(SEMINOLE)
015005314(OSCEOLA)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	<1 year	 	 	1-5	 	 	 	6-13	 	 	 	 	 	 	14-20 Male 14-20 Female 21-54 Male
	 	21-54Female	 	 	55-64	 	 	 	65+	 
	TANF/FC/SOBRA
	 	 	337.20	 	 	 	76.92	 	 	 	58.07	 	 	 	59.10	 	 	 	114.69	 	 	 	136.45	 	 	 	206.32	 	 	 	287.87	 	 	 	287.87	 
	SSI/No Medicare
	 	 	3217.90	 	 	 	406.84	 	 	 	260.45	 	 	 	239.73	 	 	 	239.73	 	 	 	628.24	 	 	 	628.24	 	 	 	594.96	 	 	 	594.96	 
	SSI/Part 8
	 	 	266.03	 	 	 	266.03	 	 	 	266.03	 	 	 	266.03	 	 	 	266.03	 	 	 	266.03	 	 	 	266.03	 	 	 	266.03	 	 	 	266.03	 
	S8I/Part A 6 B
	 	 	293.59	 	 	 	293.59	 	 	 	293.59	 	 	 	293.59	 	 	 	293.59	 	 	 	293.59	 	 	 	'293.59	 	 	 	293.59	 	 	 	208.25	 

Area 08 General Rates plus Mental Health Plan — 015005302(LEE) 015005306(SARASOTA)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	<1 year	 	 	1-5	 	 	 	6-13	 	 	 	 	 	 	14-20 Male 14-20 Female 21-54 Male
	 	21-54Female	 	 	55-64	 	 	 	65+	 
	TANF/FC/SOBRA
	 	 	296.69	 	 	 	67.77	 	 	 	46.25	 	 	 	49.88	 	 	 	98.88	 	 	 	119.48	 	 	 	180.88	 	 	 	251.72	 	 	 	251.72	 
	S81/No Medicare
	 	 	3079.31	 	 	 	393.43	 	 	 	223.95	 	 	 	221.50	 	 	 	221.50	 	 	 	594.93	 	 	 	594.93	 	 	 	563.76	 	 	 	563.76	 
	SSI/Part B
	 	 	243.57	 	 	 	243.57	 	 	 	243.57	 	 	 	243.57	 	 	 	243.57	 	 	 	243.57	 	 	 	243.57	 	 	 	243.57	 	 	 	243.57	 
	SSI/Part A 6 B
	 	 	292.10	 	 	 	292.10	 	 	 	292.10	 	 	 	292.10	 	 	 	292.10	 	 	 	292.10	 	 	 	292.10	 	 	 	292.10	 	 	 	206.49	 

Area 09 General Rates plus Mental Health Plan — 015005310(PALM BEACH)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	<1 year	 	1-5	 	6-13	 	 	 	 	 	14-20 Male 14-20 Female 21-54 Male	 	21-54Female	 	55-64	 	65+
	TANF/FC/SOBRA	 	316.80	 	71.49	 	49.26	 	52.54	 	104.85	 	126.25	 	191.61	 	270.11	 	270.11
	8Si/No Medicare	 	3344.06	 	424.50	 	246.02	 	236.61	 	236.61	 	650.12	 	650.12	 	614.45	 	614.45
	S8I/Part B	 	267,44	 	267.44	 	261.44	 	267.44	 	267.44	 	267.44	 	267.44	 	267.44	 	267.44
	S8I/Part A 6 B
	 	 	331.80	 	 	 	331.80	 	 	 	331.80	 	 	 	331.80	 	 	 	331.80	 	 	 	331.80	 	 	 	331.80	 	 	 	331.80	 	 	 	235.67	 

AHCA Contract No. FA523, Amendment No. 7, Page 1 of 2

AHCA Form 2100-0002 (Rev. NOV03)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	AMERIGROUP FLORIDA, INC.	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Medicaid HMO Contract	 	 	 	 	 	 	 	 
	Area 10	 	 	 	 	 	 	 	 	 	 	 	 	 	General Rates plus Mental Health	 	Plan -	 	015005311(BROWARD)	 	 	 	 	 	 
	 	 	<1 year	 	1-5	 	6-13	 	14-20 Male	 	 	 	 	 	14-20 Female	 	21-54 Male	 	21-54 Female	 	55-64	 	65+
	TANF/FC/SOBRA	 	328.75	 	75.74	 	60.81	 	58.42	 	112.75	 	132.87	 	201.05	 	283.53	 	283.53	 	 
	SSI/No Medicare	 	4151.83	 	510.62	 	323.61	 	304.08	 	304.08	 	801.75	 	801.75	 	764.03	 	764.03	 	 
	SSI/Part B	 	290.18	 	290.18	 	290.18	 	290.18	 	290.18	 	290.18	 	290.18	 	290.18	 	290.18	 	 
	SSI/Part A 6 B	 	354.95	 	354.95	 	354.95	 	354.95	 	354.95	 	354.95	 	354.95	 	354.95	 	249.35	 	 
	Area 11	 	 	 	 	 	 	 	 	 	General Rates plus Mental Health	 	Plan -	 	015005312(DADE)	 	 	 	 	 	 	 	 
	 	 	<1 year	 	1-5	 	6-13	 	14-20 Male	 	 	 	 	 	14-20 Female	 	21-54 Male	 	21-54 Female	 	55-64	 	65+
	TANF/FC/SOBRA	 	409.17	 	92.76	 	69.70	 	69.26	 	136.84	 	161.91	 	246.27	 	343.39	 	343.39	 	 	 	 
	SSI/N0 Medicare	 	4551.56	 	561.51	 	358.04	 	331.22	 	331.22	 	876.41	 	876.41	 	832.73	 	832.73	 	 	 	 
	SSI/Part B	 	451.58	 	451.58	 	451.58	 	451.58	 	451.58	 	451.58	 	451.58	 	451.58	 	451.58	 	 	 	 
	SSI/Part A 6 B
	 	 	420.30	 	 	 	420.30	 	 	 	420.30	 	 	 	420.30	 	 	 	420.30	 	 	 	420.30	 	 	 	420.30	 	 	 	420.30	 	 	 	295.40	 	 	 	 	 

	 	4.	 	Attachment I, Section 90.0, Payment and Authorized Enrollment Levels, Table
3, the second paragraph is hereby amended to now read:	 

Notwithstanding the payment amounts which may be computed with the above rate
table, the sum of total capitation payments under this contract shall not exceed
the total contract amount of $669,819,083.00, (an increase of $895,473.00),
expressed on page seven of this contract.

	 	5.	 	This amendment shall begin on June 1, 2005, or the date on which the
amendment has been signed by both parties, whichever is later.	 

All provisions in the Contract and any attachments thereto in conflict with
this amendment shall be and are hereby changed to conform with this amendment.

All provisions not in conflict with this amendment are still in effect and
are to be performed at the level specified in the Contract.

This amendment and all its attachments are hereby made a part of the Contract.

This amendment cannot be executed unless all previous amendments to this
Contract have been fully executed.

IN WITNESS WHEREOF, the parties hereto have caused this 2 page amendment
(including all attachments) to be executed by their officials thereunto duly
authorized.

	 	 	 	AMERIGROUP FLORIDA, INC. STATE OF FLORIDA, AGENCY FOR HEALTH CARE
ADMINISTRATION	 

	 	 	 	 	 
	SIGNED

BY: /s/ Don Gilmore

	 	SIGNED

BY: /s/ Alan Levine
	 	

	 
	 	 	 	 
	 	 	 

	 
	 	 	 	 
	NAME:Don Gilmore

	 	NAME: Alan Levine
	 	

	 
	 	 	 	 
	 	 	 

	 
	 	 	 	 
	TITLE: CEO

	 	TITLE: Secretary
	 	

	 
	 	 	 	 
	 	 	 

	 
	 	 	 	 
	DATE: 5/20/05

	 	DATE:
	 	5/25/05
	 

	 	 	 	 

	 	 	 	AHCA Contract No. FA523, Amendment No. 7, Page 2 of 2

AHCA Form 2100-0002 (Rev. NOV03)Extension and Severance Compensation Agreement between Callisto Pharmaceuticals,
      Inc. and Gary S. Jacob

    EXTENSION
      AND SEVERANCE COMPENSATION AGREEMENT

    

    AGREEMENT
      dated
      as of June 9, 2005 between Callisto Pharmaceuticals, Inc., a Delaware
      corporation (the “Company”) and Gary S. Jacob, Ph.D (the
“Executive”).

    

    The
      Company’s Board of Directors has determined, in light of the importance of the
      Executive’s continued services to the stability and continuity of management of
      the Company, it is appropriate and in the best interests of the Company and
      its
      stockholders to reinforce and encourage the Executive’s continued disinterested
      attention and undistracted dedication to his duties in the potentially
      disturbing circumstances of a possible change in control of the Company.
      Accordingly, the Company’s Board of Directors has determined that it is
      desirable to pay the Executive the severance compensation set forth below if
      the
      Executive’s employment with the Company terminates under the circumstances
      described below following a Change in Control of the Company (as defined
      below).

    

    NOW,
      THEREFORE, in consideration of the premises and the mutual covenants contained
      in this Agreement, it is agreed between the Company and the Executive as
      follows:

    

    0.         EXTENSION
      OF EMPLOYMENT AGREEMENT.
      

    

    (a)        The
      “Employment Term” defined in Section 1.2 of the agreement dated as of June 13,
      2003 between the Company and Executive (the “Employment Agreement”) is hereby
      extended to June 13, 2007, unless earlier terminated in accordance with Section
      4 of the Employment Agreement. 

    

    (b)        Except
      as modified by this Agreement all of the terms of the Employment Agreement
      shall
      continue in full force and effect. In the event of a discrepancy between the
      Employment Agreement and this Agreement, the terms of this Agreement shall
      be
      controlling.

    

    1.         TERM
      OF THIS AGREEMENT.

    

    This
      Agreement shall commence on the date hereof and shall terminate, except to
      the
      extent that any obligation of the Company under this Agreement remains
      unfulfilled as of such time, upon the earliest of (i) five years from the date
      hereof if a Change in Control of the Company has not occurred within such
      five-year period, (ii) the termination of the Executive’s employment with the
      Company as a result of death, Disability (as defined in Section 3(b)),
      Retirement (as defined in Section 3(c)) or Cause (as defined in Section 3(d))
      or
      (iii) two years from the date of Change in Control of the Company if the
      employment of the Executive has not terminated within such two-year
      period.

    

    2.         CHANGE
      IN CONTROL.

    

    No
      compensation shall be payable under this Agreement unless and until (a) there
      shall have been a Change in Control of the company while the Executive is an
      employee of the Company and (b) the Executive’s employment by the Company
      thereafter shall have terminated in accordance with Section 3 of this Agreement.
      For purposes of this Agreement, a “Change in Control” shall be deemed to have
      occurred if (i) there shall be consummated (A) any 

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    consolidation
      or merger of the Company in which the Company is not the continuing or surviving
      corporation or pursuant to which shares of the Company’s Common Stock would be
      converted into cash, securities or other property, other than a merger of the
      Company in which the holders of the Company’s Common Stock immediately prior to
      the merger
      have substantially the same proportionate ownership of common stock of the
      surviving corporation immediately after the merger, or (B) any sale, lease,
      exchange or other transfer (in one transaction or a series of related
      transactions) of all or substantially all the assets of the Company; or (ii)
      the
      stockholders of the Company shall approve any plan or proposal for the
      liquidation or dissolution of the Company, (ii) any person (as such term is
      used
      in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934 (the
      “Exchange Act”)), other than the Company or any employee benefit plan sponsored
      by the Company, shall become the beneficial owner (within the meaning of Rule
      13d-3 under the Exchange Act) of securities of the Company representing 20%
      or
      more of the combined voting power of the Company’s then outstanding securities
      ordinarily (and apart from rights accruing in special circumstances) having
      the
      right to vote in the election of directors, as a result of a tender or exchange
      offer, open market purchases, privately negotiated purchases or otherwise,
      or
      (iv) at any time during a period of two consecutive years, individuals who
      at
      the beginning of such period constituted the Board of Directors of the Company
      shall cease for any reason to constitute at least a majority thereof, unless
      the
      election or the nomination for election by the Company’s stockholders of each
      new director during such two-year period was approved by a vote of at least
      two-thirds of the directors then still in office who were directors at the
      beginning of such two-year period (or in the case that the Executive is the
      CEO
      of the Company, in addition if the Board appoints a new CEO during the term
      of
      this Agreement or substantially reduces the title and authority of the Executive
      without the Executive’s prior consent).

    

    3.        
      TERMINATION
      FOLLOWING CHANGE IN CONTROL.

    

    (a)        Circumstances
      In Which Severance Compensation is Payable.
      If a Change in Control of the Company shall have occurred while the Executive
      is
      an employee of the Company, the Executive shall be entitled to the compensation
      provided in Section 4 of this Agreement upon the subsequent termination of
      the
      Executive’s employment with the Company by either the Company, or the Executive
      pursuant to Section 3(e) of this Agreement, within two years of the date upon
      which the Change in Control shall have occurred, unless such termination is
      as a
      result of (i) the Executive’s death; (ii) the Executive’s Disability; (iii) the
      Executive’s Retirement; or (iv) the Executive’s termination for
      Cause.

    

    (b)        Disability.
      If, as a result of the Executive’s Incapacity due to physical or mental illness,
      the Executive shall be permanently and totally disabled within the meaning
      of
      Section 105(d)(4) of the Internal Revenue Code of 1986, as amended (the “Code”),
      the Company may terminate the Executive’s employment for “Disability” without
      the Executive being entitled to the compensation provided in Section
      4.

    

    (c)        Retirement.
      Termination by the Company or the Executive of the Executive’s employment based
      on “Retirement”, shall mean termination in accordance with the Company’s
      Retirement Plan applicable to its
      employees or in accordance with any other retirement arrangements which have
      been entered into with the Executive without the Executive being entitled to
      the
      compensation provided in Section 4.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    (d)        Cause.
      The Company may terminate the Executive’s employment for Cause without the
      Executive being entitled to the compensation provided in Section 4. For purposes
      of this Agreement, the Company shall have “Cause” to terminate the Executive’s
      employment only on the basis of (i) the Executive’s willful and continued
      failure substantially to perform his duties with the Company (other than any
      such failure resulting from his incapacity due to physical or mental illness
      or
      any such failure or anticipated failure after the issuance of an Executive
      Notice of Termination (as defined in Section 3(g) by the Executive) after a
      written demand for substantial performance is delivered to the Executive by
      the
      Chief Executive Officer (or, if the Executive is the Chief Executive Officer,
      by
      the Board of Directors) which specifically identifies the manner in which the
      Chief Executive Officer (or the Board of Directors if the Executive is the
      Chief
      Executive Officer) believes that the Executive has not substantially performed
      his duties, or (ii) the Executive’s willful engagement in gross misconduct
      materially and demonstrably injurious to the Company. For purposes of this
      subsection, no act or failure to act on the Executive’s part shall be considered
“willful” unless done, or omitted to be done, by the Executive not in good faith
      and without reasonable belief that his action or omission was in the best
      interest of the Company. The Executive shall not be deemed to have been
      terminated for Cause unless and until there shall have been delivered to the
      Executive a written statement of the Chief Executive Officer (or, if the
      Executive is the Chief Executive Officer, a copy of a resolution duly adopted
      by
      the affirmative vote of not less than two-thirds of the entire membership of
      the
      Board of Directors at a meeting of the Board of
      Directors called and held for the purpose), finding that in the good faith
      opinion of the Chief Executive Officer (or the Board of Directors if the
      Executive is the Chief Executive Officer) the Executive was guilty of conduct
      set forth in clause (i) or (ii) of the second sentence of this Section 3(d)
      and
      specifying the particulars thereof in detail.

    

    (e)        Good
      Reason.
      The Executive may terminate his or her employment for Good Reason within two
      years after a Change in Control of the Company and during the term of this
      Agreement and become entitled to the compensation provided in Section 4. For
      purposes of this Agreement “Good Reason” shall mean any of the following events
      unless it occurs with the Executive’s express prior written
      consent:

    

    
      	 	
              (i)
                

            	
              any
                assignment to the Executive by the Company of any duties inconsistent
                with, or any diminution of, the Executive’s position, duties, titles,
                offices, responsibilities and status with the Company immediately
                prior to
                a Change in Control of the Company, or any removal of the Executive
                from
                or any failure to reelect the Executive to any of such positions
                or
                offices, except in connection with the termination of the Executive’s
                employment for Disability, Retirement or Cause or as a result of
                the
                Executive’s death;

            

    

    

    
      	 	
              (ii)
                

            	
              any
                reduction by the Company in the Executive’s base salary as in effect on
                the date hereof or as the same may be increased from time to time
                during
                the term of this Agreement or the Company’s failure to increase (within 15
                months of the Executive’s last increase in base salary) the Executive’s
                base salary after a Change in Control of the Company in an amount
                which is
                at least equal, on a percentage basis, to the average percentage
                increase
                in base salary for all officers of the Company effected during the
                preceding 12 months;

            

    

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	
            	
              (iii)
                

            	
              any
                failure by the Company to continue in effect any benefit or incentive
                plan
                or arrangement (including,
                without limitation, the Company’s Retirement Plan, Stock Option Plan for
                Key Employees, Employees Stock Purchase Plan, 401(k) Savings Plan,
                group
                life insurance plan, medical, dental accident and disability insurance
                plans, annual bonus and contingent bonus arrangement, and any plan
                or
                arrangement to receive and exercise  stock
                appreciation rights, or to acquire stock or other securities of the
                Company) in which the Executive is participating at the time of a
                Change
                in Control of the Company (or to substitute and continue other plans
                providing the Executive with substantially similar benefits) hereinafter
                referred to as “Benefit Plans”), the taking of any action by the Company
                which would adversely affect the Executive’s participation in or
                materially reduce the Executive’s benefits under any such Benefit Plan or
                deprive the Executive of any material employee benefit enjoyed by
                the
                Executive at the time of a Change in Control of the Company, or any
                failure by the Company to provide the Executive with the number of
                paid
                vacation days to which the Executive is entitled in accordance with
                the
                vacation policies in effect at the time of a Change of Control of
                the
                Company;

            

    

     

    
      	 	
              (iv)

            	
              a
                relocation of the Company’s principal executive offices from or the
                Executive’s relocation to any place other than the location at which the
                Executive performed the Executive’s duties immediately prior to a Change
                in Control of the Company;

            

    

    

    
      	 	
              (v)
                

            	
              a
                substantial increase in business travel obligations of the Executive
                over
                such obligations as they existed at the time of a Change in Control
                of the
                Company;

            

    

    

    
      	 	
              (vi)

            	
              any
                material breach by the Company of any provision of this
                Agreement;

            

    

    

    
      	 	
              (vii)

            	
              any
                failure by the Company to obtain the assumption of this Agreement
                by any
                successor or assign of the Company;
                or

            

    

    

    
      	 	
              (viii)
                

            	
              any
                purported termination of the Executive’s employment after a Change in
                Control which is not effected pursuant to a Company Notice of Termination
                satisfying the requirements of Section 3(f), and, for purposes of
                this
                Agreement, no such purported termination shall be
                effective.

            

    

    

    (f)        Notice
      of Termination by the Company.
      Any termination by the Company pursuant to Section 3(b), 3(c) or 3(d) shall
      be
      communicated to the Executive by a Company Notice of Termination. For purposes
      of this Agreement, a “Company Notice of Termination” shall mean a written notice
      which shall indicate the specific termination provision in this Agreement relied
      upon and which sets forth in reasonable detail the facts and circumstances
      claimed to provide a basis for termination of the Executive’s employment under
      the provision so indicated. For purposes of this Agreement, no such purported
      termination by the Company shall be effective without such Company Notice of
      Termination.

    

    (g)        Notice
      of Termination by the
      Executive.
      Any termination by the Executive pursuant to Section 3(e) shall be communicated
      to the Company by a written letter addressed to 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    the
      Board of Directors (“Executive Notice of Termination”). If the
      Executive terminates his employment pursuant to Section 3(e), such Executive
      Notice of Termination shall specify the facts and circumstances claimed to
      provide a basis for termination.

     

    (h)        Date
      of Termination.
      “Date of Termination” shall mean
      (a) if the Executive’s employment is terminated by the Company for Disability,
      30 days after a Company Notice of Termination is given to the Executive
      (provided that the Executive shall not have returned to the performance of
      the
      Executive’s duties on a full-time basis during such 30-day period) or (b) if the
      Executive’s employment is terminated for any other reason, the date on which
      either a Company Notice of Termination or Executive Notice of Termination is
      given.

    

    4.        
      SEVERANCE
      COMPENSATION UPON TERMINATION.

    

    (a)        If
      the Executive’s employment by the Company is terminated (x) by the Company
      pursuant to Section 3(b), 3(c) or 3(d) or by reason of death, or (y) by the
      Executive after a Change in Control for other than Good Reason, the Executive
      shall not be entitled to any severance compensation under this Agreement, but
      the absence of the Executive’s entitlement to any severance compensation under
      this Agreement shall not prejudice the Executive’s right to the full realization
      of any and all other benefits to which the Executive shall be entitled pursuant
      to the terms of any employment contract, any Benefit Plans or other programs,
      policies or agreements of the Company, in which the Executive is a participant
      or to which the Executive is a party.

    

    (b)        If
      the Executive’s employment by the company is terminated (x) by the Company other
      than pursuant to Section 3(b), 3(c) or 3(d) or by reason of death or (y) by
      the
      Executive pursuant to Section 3 (e), then the Executive shall be entitled to
      the
      severance compensation and other benefits below:

    

    
      	 	
              (i)

            	
              In
                lieu of any further salary payments to the Executive for periods
                subsequent to the Date of Termination, the Company shall pay the
                Executive
                as a severance payment in a lump sum, an amount equal to the compensation
                due to the Executive for the Employment Term under the Employment
                Agreement, as extended by Seciton 0 of this Agreement, for the time
                remaining of such Employment Term, plus all earned but unpaid compensation
                to the Termination Date. Such payments will be made no later than
                the
                tenth business date after the Termination
                Date.

            

    

    

    
      	 	
              (ii)

            	
              All
                unvested stock options shall immediately and irrevocably vest and
                the
                exercise period of such options shall be automatically extended to
                the
                later of the longest period permitted by the Company’s stock option plans
                or ten years following the Termination
                Date.

            

    

     

    
      	 	
              (iii)
                

            	
              The
                severance compensation provided for in subsection (b)(i) above shall
                be
                paid not later than the tenth day following the Date of Termination;
                provided,
                however, that
                if the amount of such compensation cannot be finally determined on
                or
                before such day, the Company shall pay to the Executive on such day
                an
                estimate, as determined in good faith by the Company but subject
                to the
                provisions of Section 

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    
      	
               

               

               

               

            	
               

            	
              4(c),
                of the minimum amount of such compensation and shall pay the remainder
                of
                such compensation (together with interest at the Federal short-term
                rate
                provided in Section 1274(d)(7)(C)(1) of the Code) as soon as the
                amount
                thereof can be determined but in no event later than the thirtieth
                day
                after the Date of Termination. In the event the amount of the estimated
                payment exceeds the amount subsequently determined to have been due,
                such
                excess shall constitute a loan by the Company to the Executive payable
                on
                the fifth day after demand by the Company (together with interest
                at the
                Federal short-term rate provided in Section 1274(d)(7)(C)(1) of the
                Code).

            

    

     

    (c)        If
      the payment of the Total Payments (as defined below) will be subject to the
      tax
      (the “Excise Tax”) imposed by Section 4999 of the Code, the Company shall pay
      the Executive on or before the tenth day following the Date of Termination,
      an
      additional amount (the “Gross-Up Payment”) such that the net amount retained by
      the Executive, after deduction of any Excise Tax on Total Payments and any
      federal and state and local income tax and Excise Tax upon the payment provided
      for by this paragraph, shall be equal to the Total Payments. For purposes of
      determining whether any of the payments will be subject to the Excise Tax and
      the amount of such Excise Tax, (i) any payments or benefits received or to
      be
      received by the Executive in connection with a Change in Control of the Company
      or the Executive’s termination of employment, whether payable pursuant to the
      terms of Section 4 of this Agreement or
      any other plan, arrangement or agreement with the company, its successors,
      any
      person whose actions result in a Change in Control of the company or any
      corporation affiliated (or which, as a result of the completion of transaction
      causing such a Change in control, will become affiliated) with the company
      within the meaning of Section 1504 of Code (the “Total Payments”) shall be
      treated as “parachute payments” within the meaning of Section 28OG(b)(2) of the
      Code, and all “excess parachute payments” within the meaning of Section
      28OG(b)(1) shall be treated as subject to the Excise Tax, unless in the opinion
      of tax counsel selected by the Company’s independent auditors and acceptable to
      the Executive the Total Payments (in whole or in part) do no constitute
      parachute payments, or such excess parachute payments (in whole or in part)
      represent reasonable compensation for services actually rendered within the
      meaning of Section 28OG(b)(4) of the Code either in their entirety or in excess
      of the base amount within the meaning of Section 28OG(b)(3) of the Code, or
      are
      otherwise not subject to the Excise Tax, (ii) the amount of the Total Payments
      that shall be treated as subject to the Excise Tax shall be equal to the lesser
      of (A) the total amount of the Total Payments or (B) the amount of excess
      parachute payments or benefit shall be determined by the Company’s independent
      auditors in accordance with the principles of Section 28OG(d)(3) and (4) of
      the
      Code. For purposes of determining the amount of the Gross-Up Payment, the
      Executive shall be deemed to pay federal income taxes at the highest marginal
      rate of federal income taxation in the calendar year in which the Gross-Up
      Payment is to be made and state and local income taxes at the highest marginal
      rate of taxation in the state and locality of the Executive’s residence an the
      Date of Termination, net of the maximum reduction in federal income taxes which
      could be obtained from deduction of such state and local taxes. In the event
      the
      Excise Tax is subsequently determined to be less than the amount into account
      hereunder at the time of termination of the Executive’s employment, the
      Executive shall repay to the Company at the time the amount of such reduction
      in
      Excise Tax is finally determined the portion of the Gross-Up Payment that can
      be
      repaid such that the Executive remains whole on an after-tax basis following
      such repayment (taking into account any reduction in income or excise taxes
      to
      the Executive from such repayment) plus interest on the

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    amount
      of such repayment at the Federal short-term rate provided in Section
      1274(d)(1)(C)(i) of the Code. In the event the Excise Tax is determined to
      exceed the amount taken into account hereunder at the time of the termination
      of
      the Executive’s employment (including by reason of any payment the existence or
      amount of which cannot be determined at the time of the Gross-Up Payment),
      the
      Company shall make an additional gross-up payment in respect of such excess
      (plus any interest payable with respect to such excess) at the time that the
      amount of such excess is finally determined.

     

    5.        
NO
      OBLIGATION
      TO MITIGATE DAMAGES: NO EFFECT ON OTHER CONTRACTUAL RIGHTS,

     

    (a)        The
      Executive shall not be required to mitigate damages or the amount of any payment
      provided for under this Agreement by seeking other employment or otherwise,
      nor
      (except to the extent provided in Section 4(b)(iii)) shall the amount of any
      payment provided for under this Agreement be reduced by any compensation earned
      by the Executive as a result of employment by another employer after the
      termination of the Executive’s employment, or otherwise.

    

    (b)        The
      provisions of this Agreement, and any payment provided for hereunder, shall
      not
      reduce any amounts otherwise payable, or in any way
      diminish the Executive’s existing rights, or rights which would accrue solely as
      a result of the passage of time, under any Benefit Plan, employment agreement
      or
      other contract, plan or arrangement of the Company or any of its subsidiaries
      of
      which the Executive shall be a beneficiary.

    

    (c)        This
      Agreement shall have no effect on the enforceability of Sections 3.1 and 3.2
      of
      the Employment Agreement between the Company and the Executive dated June 13,
      2003, as amended.

    

    6.        
      SUCCESSOR
      TO THE COMPANY.

    

    (a)        The
      Company will require any successor or assign (whether direct or indirect, by
      purchase, merger, consolidation or otherwise) to all or substantially all the
      business and/or assets of the Company, by agreement in form and substance,
      satisfactory to the Executive, to assume and agree to perform this Agreement
      in
      the same manner and to the same extent that the Company would be required to
      perform it if no such succession or assignment had taken place. Any failure
      of
      the Company to obtain such agreement prior to the effectiveness of any such
      succession or assignment shall be a material breach of this Agreement and in
      such case the Executive shall have the right to terminate his or her employment
      for Good Reason and become fully entitled to the benefits of Section 4 of this
      Agreement. As used in this Agreement, “Company” shall mean the Company as
      hereinbefore defined and any successor assign to its business and/or assets
      as
      aforesaid which executes and delivers the agreement provided for in this Section
      6 or which otherwise becomes bound by all the terms and provisions of this
      Agreement by operation of law.

    

    (b)        This
      Agreement shall inure to the benefit of and be enforceable by the Executive’s
      personal and legal representatives, executors, administrators, successors,
      heirs, distributees, devisees and legatees. If the Executive should die while
      any amounts are still payable to the 

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    Executive
      hereunder, all such amounts, unless otherwise provided
      herein, shall be paid in accordance with the
      terms of this Agreement to the Executive’s devisee, legatee, or other designee
      or, if there be no such designee, to the Executive’s estate.

     

    7.        
      NOTICE.
      

    

    For
      purposes of this Agreement, notices and all other communications provided for
      in
      this Agreement shall be in writing and shall be deemed to have been duly given
      when delivered or mailed by United States registered mail, return receipt
      requested, postage prepaid, as follows:

    

    if
      to the Company:

    

    Callisto
      Pharmaceuticals, Inc.

    420
      Lexington Avenue, Suite 1609

    New
      York, New York 10070

    

    or
      such other address as either party may have furnished to the other in writing
      in
      accordance herewith, except that notices of change of address shall be effective
      only upon receipt.

    

    8.        
      MISCELLANEOUS.
      

    

    No
      provisions of this Agreement may be modified, waived or discharged unless such
      waiver, modification or discharge is agreed to in a writing signed by the
      Executive and the Company. No waiver by either party hereto at any time of
      any
      breach by the other party hereto of, or compliance with, any condition or
      provision of this Agreement to be performed by such other party shall be deemed
      a waiver of similar or dissimilar provisions or conditions at the same or at
      any
      prior to subsequent time. No agreements or representations, oral or otherwise,
      express or implied, with respect to the subject matter hereof have been made
      by either
      party which are not set forth expressly in this Agreement. This Agreement shall
      be governed by and construed in accordance with the laws of
      Delaware.

    

    9.        
      EMPLOYMENT.
      

    

    The
      Executive agrees to be bound by the terms and conditions of this Agreement
      and
      to remain in the employ of the Company during any
      period following any public announcement of any proposed transaction or
      transactions which, if effected, would result in a Change in Control of the
      Company until a Change in Control of the Company has taken place or, in the
      opinion of the Board of Directors such person has abandoned or terminated its
      efforts to effect a Change in Control of the Company. Subject to the foregoing,
      nothing contained in this Agreement shall impair or interfere in any way with
      the right of the Executive to terminate the Executive’s employment or the right
      of the Company to terminate the employment of the Executive with or without
      cause prior to a Change in Control of the Company. Nothing contained in this
      Agreement shall be construed as a contract of employment between the Company
      and
      the Executive or as a right of the Executive to continue in the employ of the
      Company, or as a limitation of the right of the Company to discharge the
      Executive with or without cause prior to a Change in Control of the
      Company.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    

    10.       VALIDITY.
      

    

    The
      invalidity or enforceability of any provi-sions of this Agreement shall not
      affect the validity or enforce-ability of any other provision of this Agreement,
      which shall remain in full force and effect.

    

    11.       COUNTERPARTS.
      

    

    This
      Agreement may be executed in one or more counterparts, each of which shall
      be
      deemed to be an original but all of which together will constitute one and
      same
      instrument.

    

    12.       LEGAL
      FEES AND EXPENSES.
      

    

    The
      Company or one of its subsidiaries shall pay all legal fees and expenses which
      the Executive may incur as a result of the Company’s contesting the validity,
      enforceability or the Executive’s interpretation of, or determinations under,
      this Agreement.

    

    13.       CONFIDENTIALITY.
      

    

    The
      Executive shall retain in confidence any and all confidential information known
      to the
      Executive concerning the Company and its business so long as such information
      is
      not otherwise publicly disclosed.

     

     

    
      	 	 	 
	 	CALLISTO
              PHARMACEUTICALS, INC.,
	 
 	 
 	 
 
	 	By:  	/s/
              Gabriele M. Cerrone
	 	
              

            
	 	
              Name:
                Gabriele M. Cerrone

              Title:
                Chairman

            
	 	
            	 
	 	
            	 
	 	 
	 	/s/ Gary S. Jacob
	 	
              

            
	 	
              Gary
                S. Jacob, Ph.D.

            

    

     

     

    9

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