Exhibit 10.3

 
 

 
GENERAL SECURITY AGREEMENT
 
Dated as of September 2, 2011
 
between
 
THE GRANTORS REFERRED TO HEREIN
 
as Grantors
 
and
 
TANG CAPITAL PARTNERS, L.P.
 
as Agent
 
 

 
 

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GENERAL SECURITY AGREEMENT
 
This General Security Agreement dated as of September 2, 2011 (the “Agreement”)
between Genta Incorporated, a Delaware corporation (the “Company”), the other
Persons listed on the signature pages hereof as Grantors and the Additional
Grantors (as defined in Section 18) (the Company, the Persons so listed and the
Additional Grantors being, collectively, the “Grantors”) and Tang Capital
Partners, L.P., as agent (together with any successor agent, the “Agent”) for
the Purchasers (as defined in the Securities Purchase Agreement (as defined
below)).   
 
 
Preliminary Statements
 
A.           The Company has entered into that certain securities purchase
agreement dated as of September 2, 2011 (the “Securities Purchase Agreement”)
with the Purchasers.  For purposes of this Agreement, the term “Notes” shall
mean (i) the Senior Secured Convertible Promissory Notes representing
thirty-three percent (33%) of the total amount invested by the Purchasers issued
pursuant to the Securities Purchase Agreement, (ii) the Senior Cash
Collateralized Convertible Promissory Notes representing sixty-seven percent
(67%) of the total amount invested by the Purchasers, issued pursuant to the
Securities Purchase Agreement, (iii) any Senior Secured Convertible Promissory
Notes issued upon exercise of the Debt Warrants issued pursuant to the
Securities Purchase Agreement and (iv) any additional Senior Secured Convertible
Promissory Notes or Senior Secured Cash Collateralized Convertible Promissory
Notes issued in payment of accrued and unpaid interest on any of the promissory
notes described in clauses (i) through (iii) above.
 
B.           The Grantors are entering into this Agreement in order to grant to
the Agent for the ratable benefit of the Purchasers a security interest in all
of their right, title and interest in and to the Collateral (as defined herein)
now owned or hereafter acquired.
 
C.           The parties intend that all security interests granted pursuant to
this Agreement, shall be pari passu notwithstanding the date, order or method of
attachment or perfection of any such lien or security interest or the provisions
of any applicable law.
 
D.           Each Grantor is the owner of the shares (the “Initial Pledged
Shares”) of stock set forth opposite such Grantor’s name on and as otherwise
described in Part I of Schedule I hereto and issued by the corporations and
entities named therein and of the indebtedness (the “Initial Pledged Debt”) set
forth opposite such Grantor’s name on and as otherwise described in Part II of
Schedule I hereto and issued by the issuers named therein.
 
E.            It is a condition precedent to the purchase of the Notes by the
Purchasers pursuant to the Securities Purchase Agreement that the Grantors shall
have granted the assignment and security interest and made the pledge and
assignment contemplated by this Agreement.
 
F.            Each Grantor will derive substantial direct and indirect benefit
from the transactions contemplated by the Note Purchase Documents (as defined
below).
 
G.           Now, Therefore, in consideration of the premises and in order to
induce the Purchasers to purchase the Notes from the Company as set forth in the
Securities Purchase Agreement and for other good and valuable consideration,
each Grantor hereby agrees with the Agent for the ratable benefit of the
Purchasers as follows:
 
 
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Definitions
 
As used in this Agreement, the following terms shall have the meanings set forth
below. Terms used herein and not otherwise defined herein are used in this
Agreement as defined in the Securities Purchase Agreement and the Notes.
Further, unless otherwise defined in this Agreement or in the Securities
Purchase Agreement, terms defined in the UCC are used in this Agreement as such
terms are defined in the UCC.
 
“Debtor Relief Laws” means the Bankruptcy Code of the United States of America,
and all other liquidation, conservatorship, bankruptcy, assignment for the
benefit of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States of America or
other applicable jurisdictions from time to time in effect affecting the rights
of creditors generally.
 
“Governmental Authority” means (a) any international, foreign, federal, state,
county or municipal government, or political subdivision thereof, (b) any
governmental or quasi-governmental agency, authority, board, bureau, commission,
department, instrumentality, central bank or public body, or (c) any court,
administrative tribunal or public utility.
 
“Laws” or “Law” means all international, foreign, federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.
 
“Liabilities” means all advances to, and debts, liabilities, obligations,
covenants and duties of, Company or any other Grantor arising under any Note
Purchase Document, whether direct or indirect (including those acquired by
assumption), absolute or contingent, due or to become due, now existing or
hereafter arising and including interest that accrues after the commencement of
any proceeding under any Debtor Relief Laws by or against Company or any other
Grantor or any Subsidiary or Affiliate of Company or any other Grantor.
 
“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement (including in the nature of, cash collateral accounts or security
interests), encumbrance, lien (statutory or other), fixed or floating charge, or
other security interest of any kind or nature whatsoever (including any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of any financing statement under the Uniform Commercial Code or comparable Laws
of any jurisdiction), including the interest of a purchaser of accounts
receivable.
 
“Note Purchase Documents” means the Securities Purchase Agreement, the Notes and
the Security Documents, and each certificate, fee letter, and other instrument
or agreement from time to time executed by Company or any of its Subsidiaries
and delivered in connection with the Securities Purchase Agreement.
 
 
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“Permitted Liens” means the individual and collective reference to the
following: (a) Liens for taxes, assessments and other governmental charges or
levies not yet due or Liens for taxes, assessments and other governmental
charges or levies being contested in good faith and by appropriate proceedings
for which adequate reserves (in the good faith judgment of the management of the
Company) have been established in accordance with Generally Accepted Accounting
Principles (“GAAP”); (b) Liens imposed by law which were incurred in the
ordinary course of the Company’s business, such as carriers’, warehousemen’s and
mechanics’ Liens, statutory landlords’ Liens, and other similar Liens arising in
the ordinary course of the Company’s business, and which (x) do not individually
or in the aggregate materially detract from the value of such property or assets
or materially impair the use thereof in the operation of the business of the
Company and its consolidated subsidiaries or (y) are being contested in good
faith by appropriate proceedings, which proceedings have the effect of
preventing for the foreseeable future the forfeiture or sale of the property or
asset subject to such Lien; (c) encumbrances consisting of licenses of the
Grantors’ intellectual property that are created in connection with joint
ventures, collaborations, or partnership activities of Grantors and are approved
in advance in writing by the holders of 55% of the then outstanding principal
amount of the Notes; and (d) Liens granted pursuant to this Agreement.
 
“Requisite Purchasers” shall have the meaning assigned to such term in the
Securities Purchase Agreement.
 
“Security Documents” means this Agreement and the Intellectual Property Security
Agreement (as defined below).
 
“UCC” means the Uniform Commercial Code as in effect, from time to time, in the
State of New York, provided that, if perfection or the effect of perfection or
non-perfection or the priority of any security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than New York, “UCC” means the Uniform Commercial Code as in effect from time to
time in such other jurisdiction for purposes of the provisions hereof relating
to such perfection, effect of perfection or non-perfection or priority.
 

SECTION 1.   Grant of Security. Each Grantor hereby assigns and pledges to the
Agent for the ratable benefit of the Purchasers, and hereby grants to the Agent
for the ratable benefit of the Purchasers a security interest in, such Grantor’s
right, title and interest in and to the following, in each case, as to each type
of property described below, whether now owned or hereafter acquired by such
Grantor, wherever located, and whether now or hereafter existing or arising
(collectively, the “Collateral”):
 
(a)           all equipment in all of its forms, all fixtures and all parts
thereof and all accessions thereto (any and all such equipment, fixtures, parts
and accessions being the “Equipment”);
 
(b)           all inventory in all of its forms (including, but not limited to
raw materials and work in process therefor, finished goods thereof and materials
used or consumed in the manufacture, production, preparation or shipping
thereof, goods in which such Grantor has an interest in mass or a joint or other
interest or right of any kind (including, without limitation, goods in which
such Grantor has an interest or right as consignee) and goods that are returned
to or repossessed or stopped in transit by such Grantor), and all accessions
thereto and products thereof and documents therefor (any and all such inventory,
accessions, products and documents being the “Inventory”);
 
 
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(c)           all goods other than Equipment and Inventory and all accessions
thereto (any and all such goods and accessions being the “Other Goods”);
 
(d)           all accounts, chattel paper, instruments, deposit accounts,
documents, letter-of-credit rights, general intangibles and other obligations of
any kind, whether or not arising out of or in connection with the sale or lease
of goods or the rendering of services and whether or not earned by performance,
and all rights now or hereafter existing in and to all security agreements,
leases and other contracts securing or otherwise relating to any such accounts,
chattel paper, instruments, deposit accounts, documents, letter-of-credit
rights, general intangibles or obligations (any and all such accounts, chattel
paper, instruments, deposit accounts, documents, letter-of-credit rights,
general intangibles and obligations, to the extent not referred to in clause (e)
or (f) below, being the “Receivables”, and any and all such security agreements,
leases and other contracts being the “Related Contracts”);
 
(e)           the following (the “Security Collateral”):
 
(i)          the Initial Pledged Shares and the certificates, if any,
representing the Initial Pledged Shares, and all dividends, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Initial Pledged
Shares;
 
(ii)         the Initial Pledged Debt and the instruments, if any, evidencing
the Initial Pledged Debt, and all interest, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of the Initial Pledged Debt;
 
(iii)       all additional shares of stock from time to time acquired by such
Grantor in any manner (such shares, together with the Initial Pledged Shares,
being the “Pledged Shares”), and the certificates, if any, representing such
additional shares, and all dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such shares;
 
(iv)        all additional indebtedness from time to time owed to such Grantor
(such indebtedness, together with the Initial Pledged Debt, being the “Pledged
Debt”) and the instruments, if any, evidencing such indebtedness, and all
interest, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such indebtedness; and
 
(v)          all other investment property (including, without limitation, all
(A) securities, whether certificated or uncertificated, (B) security
entitlements, (C) securities accounts, (D) commodity contracts and (E) commodity
accounts in which such Grantor has now, or acquires from time to time hereafter,
any right, title or interest in any manner, and the certificates or instruments,
if any, representing or evidencing such investment property, and all dividends,
interest, distributions, value, cash, instruments and other property from time
to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such investment property;
 
 
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(f)           the following (collectively, the “Account Collateral”):
 
(i)          any cash collateral account of such Grantor, all financial assets
from time to time credited thereto (including, without limitation, all
investments from time to time credited thereto), and all dividends, interest,
cash, instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
financial assets;
 
(ii)         all deposit accounts or any other cash collateral of such Grantor
from time to time, all funds held therein and all certificates and instruments,
if any, from time to time representing or evidencing such deposit accounts;
 
(iii)       all notes, certificates of deposit, checks and other instruments
from time to time delivered to or otherwise possessed by the Agent for or on
behalf of such Grantor, including, without limitation, those delivered or
possessed in substitution for or in addition to any or all of the then existing
Account Collateral; and
 
(iv)        all interest, dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the then existing Account Collateral;
 
(g)           the following (collectively, the “Intellectual Property
Collateral”):
 
(i)          all United States, international and foreign patents, patent
applications and statutory invention registrations, including, without
limitation, the patents and patent applications set forth in Schedule IV hereto
(as such Schedule IV may be supplemented from time to time by supplements to
this Agreement, each such supplement being in substantially the form of Exhibit
C hereto (an “IP Security Agreement Supplement”), executed and delivered by such
Grantor to the Agent from time to time), together with all reissues, divisions,
continuations, continuations-in-part, extensions and reexaminations thereof, all
inventions therein, all rights therein provided by international treaties or
conventions and all improvements thereto, and all other rights of any kind
whatsoever of such Grantor accruing thereunder or pertaining thereto
(the “Patents”);
 
(ii)         all trademarks (including, without limitation, service marks),
certification marks, collective marks, trade dress, logos, domain names, product
configurations, trade names, business names, corporate names and other source
identifiers, whether or not registered, whether currently in use or not,
including, without limitation, all common law rights and registrations and
applications for registration thereof, including, without limitation, the
trademark registrations and trademark applications set forth in Schedule IV
hereto (as such Schedule IV may be supplemented from time to time by IP Security
Agreement Supplements executed and delivered by such Grantor to the Agent from
time to time), and all other marks registered in the U.S. Patent and Trademark
Office or in any office or agency of any State or Territory of the United States
or any foreign country, and all rights therein provided by international
treaties or conventions, all reissues, extensions and renewals of any of the
foregoing, together in each case with the goodwill of the business connected
therewith and symbolized thereby, and all rights corresponding thereto
throughout the world and all other rights of any kind whatsoever of such Grantor
accruing thereunder or pertaining thereto (the “Trademarks”);
 
 
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(iii)        all copyrights, copyright applications, copyright registrations and
like protections in each work of authorship, whether statutory or common law,
whether published or unpublished, any renewals or extensions thereof, all
copyrights of works based on, incorporated in, derived from, or relating to
works covered by such copyrights, including, without limitation, the copyright
registrations and copyright applications set forth in Schedule IV hereto (as
such Schedule IV may be supplemented from time to time by IP Security Agreement
Supplements executed and delivered by such Grantor to the Agent from time to
time), together with all rights corresponding thereto throughout the world and
all other rights of any kind whatsoever of such Grantor accruing thereunder or
pertaining thereto (the “Copyrights”);
 
(iv)         all confidential and proprietary information, including, without
limitation, know-how, trade secrets, manufacturing and production processes and
techniques, inventions, research and development information, technical data,
financial, marketing and business data, pricing and cost information, business
and marketing plans and customer and supplier lists and information (the “Trade
Secrets”);
 
(v)          all computer software programs and databases (including, without
limitation, source code, object code and all related applications and data
files), firmware, and documentation and materials relating thereto, and all
rights with respect to the foregoing, together with any and all options,
warranties, service contracts, program services, test rights, maintenance
rights, improvement rights, renewal rights and indemnifications and any
substitutions, replacements, additions or model conversions of any of the
foregoing (the “Computer Software”);
 
(vi)         all license agreements, permits, authorizations and franchises,
whether with respect to the Patents, Trademarks, Copyrights, Trade Secrets or
Computer Software, or with respect to the patents, trademarks, copyrights, trade
secrets, computer software or other proprietary right of any other Person,
including, without limitation, the material license agreements set forth in
Schedule IV hereto (as such Schedule IV may be supplemented from time to time by
IP Security Agreement Supplements executed and delivered by such Grantor to the
Agent from time to time), and all income, royalties and other payments now or
hereafter due and/or payable with respect thereto, subject, in each case, to the
terms of such license agreements, permits, authorizations and franchises,
(the“Licenses”); and
 
(vii)       any and all claims for damages for past, present and future
infringement, misappropriation or breach with respect to the Patents,
Trademarks, Copyrights, Trade Secrets, Computer Software or Licenses, with the
right, but not the obligation, to sue for and collect, or otherwise recover,
such damages;
 
(h)           any commercial tort claims of such Grantor more particularly
described on Schedule V hereto (the “Existing Commercial Tort Claims”); and
 
 
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(i)          all proceeds of, collateral for and supporting obligations relating
to, any and all of the Collateral (including, without limitation, proceeds,
collateral and supporting obligations that constitute property of the types
described in clauses (a) through (h) of this Section 1 and this clause (i)) and,
to the extent not otherwise included, all (i) payments under insurance (whether
or not the Agent is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Collateral and (ii) money.
 
Notwithstanding the foregoing provisions of this Section 1, the grant of a
security interest as provided herein shall not extend to, and the term
“Collateral” shall not include, as to any Grantor, (i) any intent to use
application at the U.S. Patent and Trademark Office with respect to intellectual
property to the extent an assignment for security purposes would void the same
and (ii) the collateral described in that certain financing statement No.
63105681 filed on September 7, 2006 with the Delaware Department of State (as in
effect on the date hereof) naming the Company as debtor and Dell Financial
Services, L.P. as secured party so long as such financing statement remains in
effect (provided that the grant of a security interest as provided herein shall
extend to, and the term “Collateral” shall include, such collateral from and
after such time as such financing statement is no longer in effect).
 
            If any Grantor shall at any time acquire a commercial tort claim,
such Grantor shall immediately notify the Agent in a writing signed by such
Grantor of the brief details thereof and grant to the Agent for the ratable
benefit of the Purchasers in such writing a security interest therein and in the
proceeds thereof, all upon the terms of this Agreement, with such writing to be
in form and substance satisfactory to the Agent.

SECTION 2.   Security for Obligations. This Agreement secures the payment and
performance of all Liabilities, together with the prompt payment of all
expenses, including, without limitation, reasonable attorney costs and
disbursements incurred by the Agent or the Purchasers incidental to the
collection of the Liabilities and the enforcement or protection of the Agent’s
security interest in the Collateral (collectively, the “Secured Obligations”).

SECTION 3.   Grantors Remain Liable. Anything herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under the contracts and
agreements included in such Grantor’s Collateral to the extent set forth therein
to perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Agent of any of
the rights hereunder shall not release any Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral and
(c) no Purchaser shall have any obligation or liability under the contracts and
agreements included in the Collateral by reason of this Agreement or any other
Note Purchase Document or any other agreement, nor shall any Purchaser be
obligated to perform any of the obligations or duties of any Grantor thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder.
 
SECTION 4.    Delivery and Control of Security Collateral.
 
(a)           All certificates or instruments representing or evidencing
Security Collateral shall be delivered to and held by or on behalf of the Agent
pursuant hereto and shall be in suitable form for transfer by delivery, or shall
be accompanied by duly executed instruments of transfer or assignment in blank,
all in form and substance satisfactory to the Agent. The Agent shall have the
right, upon the occurrence and during the continuance of an Event of Default, to
transfer to or to register in the name of the Agent or any of its nominees any
or all of the Security Collateral, subject only to the revocable rights
specified in Section 11(a). In addition, the Agent shall have the right, upon
the occurrence and during the continuance of an Event of Default, to exchange
certificates or instruments representing or evidencing Security Collateral for
certificates or instruments of smaller or larger denominations.
 
 
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(b)           With respect to any Security Collateral in which any Grantor has
any right, title or interest and that constitutes an uncertificated security
issued by a Subsidiary of such Grantor, such Grantor will cause the issuer
thereof either (i) to register the Agent as the registered owner, for the
purpose of security, of such security or (ii) to agree in an authenticated
record with such Grantor and the Agent that such issuer will comply with
instructions with respect to such security originated by the Agent without
further consent of such Grantor, such authenticated record to be in form and
substance reasonably satisfactory to the Agent. The Agent shall not provide any
directions to, or deliver any instructions or entitlement orders to any issuer
pursuant to this Section 4(b) unless an Event of Default has occurred and is
continuing.  Furthermore, the Agent shall promptly rescind such direction,
instruction or entitlement order and notify such parties at any time when no
Event of Default has occurred and is continuing.
 
SECTION 5.   Representations and Warranties. Each Grantor represents and
warrants as follows:
 
(a)           Such Grantor’s exact legal name, as defined in Section 9-503(a) of
the UCC, is correctly set forth on the signature pages of this Agreement. Such
Grantor is an organization of the type specified on the signature pages of this
Agreement and is organized under the laws of the jurisdiction specified on the
signature pages of this Agreement.
 
(b)           All of the Equipment and Inventory (other than Equipment and
Inventory constituting mobile goods and Equipment and Inventory in transit in
the ordinary course of business) of such Grantor are located at the places
specified therefor in Schedule II hereto, as such Schedule II may be amended
from time to time pursuant to Section 7(a). The chief executive office of such
Grantor and the original copies of each Related Contract to which such Grantor
is a party and all originals of all chattel paper that evidence Receivables of
such Grantor, are located at the address specified therefor in Schedule III
hereto, as such Schedule III may be amended from time to time pursuant to
Section 9(a). The Grantor is located (within the meaning of Section 9-307 of the
UCC) in the state or jurisdiction set forth in Schedule III hereto. Such
Grantor’s federal tax identification number is set forth opposite such Grantor’s
name in Schedule III hereto. All Security Collateral consisting of certificated
securities and instruments have been delivered to the Agent. All originals of
all chattel paper that evidence Receivables have been delivered to the Agent, in
each case to the extent that delivery thereof to the Agent is required under
Section 4. None of the Receivables are evidenced by a promissory note or other
instrument that has not been delivered to the Agent.
 
(c)           Such Grantor is the legal and beneficial owner of the Collateral
of such Grantor free and clear of any Lien, claim, option or right of others,
except for the security interests created under this Agreement and Permitted
Liens.  No effective financing statement or other instrument similar in effect
covering all or any part of such Collateral or listing such Grantor or any trade
name of such Grantor as debtor is on file in any recording office, except such
as may have been filed in favor of the Agent relating to the Note Purchase
Documents and Permitted Liens. Such Grantor has the trade names listed on
Schedule IV hereto.
 
 
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(d)           Such Grantor has exclusive possession and control of the Equipment
and Inventory other than Inventory or Equipment stored at any leased premises or
warehouse (which leased premises or warehouse is so indicated by an asterisk on
Schedule II hereto, as such Schedule II may be amended from time to time
pursuant to Section 7(a)).
 
(e)           The Pledged Shares pledged by such Grantor hereunder have been
duly authorized and validly issued and are fully paid and non assessable. The
Pledged Debt issued to any Grantor and pledged by such Grantor hereunder has
been duly authorized, authenticated or issued and delivered, is the legal, valid
and binding obligation of the obligor, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors’ rights
generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law, is evidenced by one or more
promissory notes (which notes have been delivered to the Agent), and is not in
default.
 
(f)           The Initial Pledged Shares constitute the percentage of the issued
and outstanding shares of stock of the issuers thereof indicated on Schedule I
hereto as of the date hereof. The Initial Pledged Debt constitutes all of the
outstanding indebtedness owed to such Grantor by the issuers thereof and is
outstanding, as of the date hereof, in the principal amount indicated on
Schedule I hereto as of the date hereof.
 
(g)           All of the investment property owned by such Grantor as of the
date hereof is listed on Schedule I hereto.
 
(h)           Other than the execution and delivery of deposit account control
agreements and securities account control agreements, and the delivery of the
original title certificates to motor vehicles, all filings and other actions
necessary or reasonably desirable to perfect and protect the security interest
in the Collateral of such Grantor created under this Agreement have been or are
concurrently herewith being duly made or taken and are in full force and effect,
and this Agreement creates in favor of the Agent for the benefit of the
Purchasers a valid and, together with such filings and other actions, perfected
first priority security interest in the Collateral of such Grantor, securing the
payment of the Secured Obligations.
 
(i)           Other than the execution and delivery of deposit account control
agreements and securities account control agreements, and the delivery of the
original title certificates to motor vehicles, no authorization or approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body or any other third party is required for (i) the grant by such
Grantor of the assignment, pledge and security interest granted hereunder or for
the execution, delivery or performance of this Agreement by such Grantor, (ii)
the perfection or maintenance of the assignment, pledge and security interest
created hereunder (including the first priority nature of such assignment,
pledge or security interest), except for the filing of financing and
continuation statements under the UCC, which financing statements upon due
filing will be in full force and effect, the recordation of the Intellectual
Property Security Agreements referred to in Section 10(f) with the U.S. Patent
and Trademark Office and the U.S. Copyright Office, and the actions described in
Section 4 with respect to the Security Collateral, or (iii) for the exercise by
the Agent of its voting or other rights provided for in this Agreement or the
remedies in respect of the Collateral pursuant to this Agreement, except as may
be required in connection with the disposition of any portion of the Security
Collateral by laws affecting the offering and sale of securities generally.
 
 
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(j)           The Inventory that has been produced or distributed by such
Grantor has been produced in compliance with all material requirements of
applicable law, including, without limitation, the Fair Labor Standards Act.
 
(k)           As to itself and its Intellectual Property Collateral:
 
(i)           To the best of such Grantor’s knowledge, the rights of such
Grantor in or to the Intellectual Property Collateral do not conflict with,
misappropriate or infringe upon the intellectual property rights of any third
party, and no written claim has been asserted that the use of such Intellectual
Property Collateral does or may infringe upon the intellectual property rights
of any third party.
 
(ii)          Such Grantor is the exclusive owner or non-exclusive licensee of
the entire and unencumbered right, title and interest in and to the Intellectual
Property Collateral and is entitled to use all such Intellectual Property
Collateral without limitation, subject only to the license terms of the
Licenses.
 
(iii)        The Intellectual Property Collateral set forth on Schedule IV
hereto includes all of the patents, patent registrations, patent applications,
trademark registrations and applications, copyright registrations and
applications and Licenses owned by such Grantor.
 
(iv)         The Intellectual Property Collateral is subsisting and has not been
adjudged invalid or unenforceable in whole or part, and to the best of such
Grantor’s knowledge, is valid and enforceable. Such Grantor is not aware of any
uses of any item of Intellectual Property Collateral that would reasonably be
expected to lead to such item becoming invalid or unenforceable.
 
(v)           Such Grantor has made or performed all filings, recordings and
other acts and has paid all required fees and taxes to maintain and protect its
interest in each and every item of Intellectual Property Collateral in full
force and effect, and to protect and maintain its interest therein including,
without limitation, recordations of any of its interests in the Patents and
Trademarks with the U.S. Patent and Trademark Office, except with respect to any
items of Intellectual Property Collateral which such Grantor, in the reasonable
exercise of its business judgment, deems not to be material to the ongoing
business of such Grantor. Such Grantor has used proper statutory notice in
connection with its use of each patent, trademark and copyright of the
Intellectual Property Collateral.
 
(vi)         No action, suit, investigation, litigation or proceeding has been
asserted or is pending or threatened against such Grantor (i) based upon or
challenging or seeking to deny or restrict the use of any of the Intellectual
Property Collateral, or (ii) alleging that any services provided by, processes
used by, or products manufactured or sold by, such Grantor infringe upon or
misappropriate any material item of patent, trademark, copyright or any other
proprietary right of any third party. To the best of such Grantor’s knowledge,
no Person is engaging in any activity that infringes upon or misappropriates the
Intellectual Property Collateral or upon the rights of such Grantor therein.
Except as set forth on Schedule IV hereto, such Grantor has not granted any
license, release, covenant not to sue, non-assertion assurance, or other right
to any Person with respect to any material part of the Intellectual Property
Collateral. The consummation of the transactions contemplated by the Note
Purchase Documents and other related documents will not result in the
termination or material impairment of any material item of the Intellectual
Property Collateral.
 
 
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(vii)           With respect to each License material to the business of such
Grantor: (A) such License is valid and binding and in full force and effect
against such Grantor and represents the entire agreement between the respective
licensor and licensee with respect to the subject matter of such License; (B)
such Grantor has not received any notice of termination or cancellation under
such License; (C) such Grantor has not received any notice of a breach or
default under such License, which breach or default has not been cured; (D) such
Grantor has not granted to any other third party any rights, adverse or
otherwise, under such License, other than pursuant to a License set forth in
Schedule IV hereto; and (E) neither such Grantor nor to the best of such
Grantor’s knowledge, any other party to such License is in breach or default of
such License in any material respect, and no event has occurred that, with
notice or lapse of time or both, would constitute such a breach or default or
permit termination, modification or acceleration under such License.
 
SECTION 6.    Further Assurances.
 
(a)           Each Grantor agrees that from time to time, at the expense of such
Grantor, such Grantor will promptly execute and deliver, or otherwise
authenticate, all further instruments and documents, and take all further
action, that may be necessary or reasonably desirable, or that the Agent may
request, in order to perfect and protect any pledge, assignment or security
interest granted or purported to be granted by such Grantor hereunder or to
enable the Agent to exercise and enforce its rights and remedies hereunder with
respect to any Collateral of such Grantor. Without limiting the generality of
the foregoing, each Grantor will promptly with respect to Collateral of such
Grantor: (i) at the reasonable request of the Agent, mark conspicuously each
chattel paper included in Receivables and each of its records pertaining to such
Collateral with a legend, in form and substance reasonably satisfactory to the
Agent, indicating that such chattel paper or Collateral is subject to the
security interest granted hereby; provided that no such legend shall be required
if such Collateral is delivered to the Agent pursuant to clause (ii) below; (ii)
if any such Collateral shall be evidenced by a promissory note or other
instrument or chattel paper, deliver and pledge to the Agent hereunder such note
or instrument or chattel paper duly indorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance reasonably
satisfactory to the Agent; (iii) execute or authenticate and file such financing
or continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or reasonably desirable, or as the Agent may
reasonably request, in order to perfect and preserve the security interest
granted or purported to be granted by such Grantor hereunder; (iv) deliver and
pledge to the Agent for benefit of the Purchasers certificates representing
Security Collateral that constitutes certificated securities, accompanied by
undated stock or bond powers executed in blank; and (v) deliver to the Agent
evidence that all other action that the Agent may deem reasonably necessary or
reasonably desirable in order to perfect and protect the security interest
created by such Grantor under this Agreement has been taken. Without limiting
the generality of the foregoing, each Grantor will, within 10 days after the
date hereof, enter into deposit account control agreements and securities
account control agreements in form and substance satisfactory to the Agent
relating to any Collateral of such Grantor.
 
 
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(b)           Each Grantor hereby authorizes the Agent to file one or more
financing or continuation statements, and amendments thereto, relating to all or
any part of the Collateral of such Grantor without the signature of such Grantor
where permitted by law. A photocopy or other reproduction of this Agreement or
any financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
 
(c)           Each Grantor will furnish to the Agent from time to time
statements and schedules further identifying and describing the Collateral of
such Grantor and such other reports in connection with such Collateral as the
Agent may reasonably request, all in reasonable detail.
 
(d)           With respect to any Related Contracts entered into after the date
hereof, with respect to which the account debtor is the United States or any
department, agency, or instrumentality of the United States, each Grantor party
to such Related Contract agrees to cause the security interest granted to the
Agent in such Related Contract to be duly acknowledged under the Assignment of
Claims Act of 1940 (31 U.S.C. 3727).
 
SECTION 7.    As to Equipment and Inventory.
 
(a)           Each Grantor will keep the Equipment and Inventory of such Grantor
(other than Inventory sold in the ordinary course of business, Equipment and
Inventory constituting mobile goods or Equipment and Inventory in transit in the
ordinary course of such Grantor’s business) at the places therefor specified in
Section 5(a) or, upon 30 days’ prior written notice to the Agent, at such other
places in a jurisdiction where all action required by Section 6 shall have been
taken with respect to such Equipment and Inventory (and, upon the taking of such
action in such jurisdiction, Schedule II hereto shall be automatically amended
to include such other places).
 
(b)           Each Grantor will cause the Equipment of such Grantor (other than
any Equipment not material to the business of such Grantor) to be maintained and
preserved in the same condition, repair and working order as when new, ordinary
wear and tear excepted, and in accordance with any manufacturer’s manual, and
will forthwith, or in the case of any loss or damage to any of such Equipment as
soon as practicable after the occurrence thereof, make or cause to be made all
repairs, replacements and other improvements in connection therewith that are
necessary or reasonably desirable to such end.
 
(c)           Each Grantor will pay promptly when due all property and other
taxes, assessments and governmental charges or levies imposed upon, and all
claims (including, without limitation, claims for labor, materials and supplies)
against, the Equipment and Inventory of such Grantor, except to the extent
payment thereof is not required by the Securities Purchase Agreement. In
producing its Inventory, each Grantor will comply with all requirements of
applicable law, including, without limitation, the Fair Labor Standards Act.
 
 
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SECTION 8.    Insurance.
 
(a)           Each Grantor will, at its own expense, maintain insurance with
respect to the Equipment and Inventory of such Grantor in such amounts, against
such risks, in such form and with such insurers, as is customary with companies
of a similar size and line of business and shall otherwise be reasonably
satisfactory to the Agent. Each policy of each Grantor for general liability
insurance shall provide for the Agent as additional insured, and each policy for
property damage insurance shall provide for all losses to be paid directly to
the Agent. Each such policy shall in addition (i) name such Grantor and the
Agent as insured parties thereunder (without any representation or warranty by
or obligation upon the Agent) as their interests may appear, (ii) contain the
agreement by the insurer that any loss thereunder shall be payable to the Agent,
(iii) provide that there shall be no recourse against the Agent for payment of
premiums or other amounts with respect thereto and (iv) provide that at least 30
days’ prior written notice of cancellation shall be given to the Agent by the
insurer. Each Grantor will, if so requested by the Agent, deliver to the Agent
original or duplicate policies or certificates of such insurance provided by the
insurance companies and, as often as the Agent may reasonably request, a report
of a reputable insurance broker with respect to such insurance. Further, each
Grantor will, at the request of the Agent, duly execute and deliver instruments
of assignment of such insurance policies to comply with the requirements of this
Section 8 and use reasonable efforts to cause the insurers to acknowledge notice
of such assignment.
 
(b)           Reimbursement under any liability insurance maintained by any
Grantor pursuant to this Section 8 may be paid directly to the Person who shall
have incurred liability covered by such insurance. In case of any loss involving
damage to Equipment or Inventory when subsection (c) of this Section 8 is not
applicable, the applicable Grantor will make or cause to be made the necessary
repairs to or replacements of such Equipment or Inventory, and any proceeds of
insurance properly received by or released to such Grantor shall be used by such
Grantor, except as otherwise required hereunder or by the Securities Purchase
Agreement, to pay or as reimbursement for the costs of such repairs or
replacements.
 
(c)           So long as no Event of Default shall have occurred and be
continuing, all insurance payments received by the Agent in connection with any
loss, damage or destruction of any Inventory or Equipment will be released by
the Agent to the applicable Grantor for the repair, replacement or restoration
thereof, subject to such terms and conditions with respect to the release
thereof as the Agent may reasonably require. To the extent that (i) the amount
of any such insurance payments exceeds the cost of any such repair, replacement
or restoration, or (ii) such insurance payments are not otherwise required by
the applicable Grantor to complete any such repair, replacement or restoration
required hereunder, the Agent will not be required to release the amount thereof
to such Grantor and may hold or continue to hold such amount as additional
security for the Secured Obligations of such Grantor (except that the Agent will
release to such Grantor any such amount if and to the extent that any prepayment
of the Notes is required under the Securities Purchase Agreement in connection
with the receipt of such amount and such prepayment has been made). Upon the
occurrence and during the continuance of any Event of Default, all insurance
payments in respect of such Equipment or Inventory shall be paid to the Agent
and shall, in the Agent’s sole discretion, (i) be released to the applicable
Grantor to be applied as set forth in the first sentence of this subsection (c)
or (ii) be held as additional Collateral hereunder or applied as specified in
Section 16(b).
 
 
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SECTION 9.    Place of Perfection; Records; Collection of Receivables.
 
(a)           No Grantor will change its name, type of legal entity, federal tax
identification number, organizational identification number or location from
those set forth in Section 5(a) and Section 5(b) without first giving at least
30 days’ advance written notice to the Agent and taking all action required by
the Agent for the purpose of perfecting or protecting the liens granted by this
Agreement. Each Grantor will also keep the originals of the Related Contracts to
which such Grantor is a party and all originals of all chattel paper that
evidence Receivables of such Grantor, at the location therefor specified in
Section 5(a) or, upon 30 days’ prior written notice to the Agent, at such other
location in a jurisdiction where all actions required by Section 6 shall have
been taken with respect to the Collateral of such Grantor (and, upon the taking
of such action in such jurisdiction, Schedule III hereto shall be automatically
amended to include such other location). Each Grantor will hold and preserve its
records relating to the Collateral, the Related Contracts and chattel paper and
will permit representatives of the Agent at any time during normal business
hours and with reasonable prior notice to inspect and make abstracts from such
records and other documents.
 
(b)           Except as otherwise provided in this subsection (b), each Grantor
will continue to collect, at its own expense, all amounts due or to become due
to such Grantor under the Receivables and the Related Contracts. In connection
with such collections, such Grantor may take (and, at the Agent’s direction upon
the occurrence and during the continuance of an Event of Default, will take)
such action as such Grantor or the Agent may deem reasonably necessary or
advisable to enforce collection of the Receivables and the Related Contracts;
provided that the Agent shall have the right at any time, upon the occurrence
and during the continuance of an Event of Default, to notify the obligors (each
individually, a “Contract Obligor” and collectively, the “Contract Obligors”)
under any Receivables or Related Contracts of the assignment of such Receivables
or Related Contracts to the Agent and to direct such Contract Obligors to make
payment of all amounts due or to become due to such Grantor thereunder directly
to the Agent and, upon such notification and at the expense of such Grantor, to
enforce collection of any such Receivables or Related Contracts, and to adjust,
settle or compromise the amount or payment thereof, in the same manner and to
the same extent as such Grantor might have done. Upon the occurrence and during
the continuance of an Event of Default, (i) all amounts and proceeds (including
instruments) received by such Grantor in respect of the Receivables and the
Related Contracts of such Grantor shall be received in trust for the benefit of
the Agent hereunder, shall be segregated from other funds of such Grantor and
shall be forthwith paid over to the Agent in the same form as so received (with
any necessary endorsement) to be held as cash collateral and shall be applied as
provided in Section 16(b) and (ii) such Grantor will not adjust, settle or
compromise the amount or payment of any Receivable, release wholly or partly any
Contract Obligor thereof, or allow any credit or discount thereon. No Grantor
will permit or consent to the subordination of its right to payment under any of
the Receivables or the Related Contracts to any other indebtedness or
obligations of the Contract Obligor thereof.
 
 
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SECTION 10.    As to Intellectual Property Collateral.
 
(a)           With respect to each item of its Intellectual Property Collateral
(except with respect to any items of Intellectual Property Collateral which such
Grantor, in its reasonable business judgment, deems not to be material to the
ongoing business of such Grantor), each Grantor agrees to take, at its expense,
all necessary steps, including, without limitation, in the U.S. Patent and
Trademark Office, the U.S. Copyright Office and any other governmental
authority, to (i) maintain the validity and enforceability of each such item of
Intellectual Property Collateral and maintain each such item of Intellectual
Property Collateral in full force and effect, and (ii) pursue the registration
and maintenance of each patent, trademark, or copyright registration or
application, now or hereafter included in the Intellectual Property Collateral
of such Grantor, including, without limitation, the payment of required fees and
taxes, the filing of responses to office actions issued by the U.S. Patent and
Trademark Office, the U.S. Copyright Office or other governmental authorities,
the filing of applications for renewal or extension, the filing of affidavits
under Sections 8 and 15 of the U.S. Trademark Act, the filing of divisional,
continuation, continuation-in-part, reissue and renewal applications or
extensions, the payment of maintenance fees and the participation in
interference, reexamination, opposition, cancellation, infringement and
misappropriation proceedings. Each Grantor shall give the Agent prompt written
notice of any applications or registrations of the Intellectual Property
Collateral of such Grantor filed with the U.S. Patent and Trademark Office,
including the date of such filing and the registration or application numbers,
if any, and each Grantor shall give the Agent not less than 30 days prior
written notice of the filing of any applications or registrations of the
Intellectual Property Collateral of such Grantor filed with the U.S. Copyright
Office, including the title of such Intellectual Property Collateral to be
registered, as such title will appear on such applications or registrations, and
the date such applications or registrations will be filed. No Grantor shall,
without the written consent of the Agent, discontinue use of or otherwise
abandon any Intellectual Property Collateral, or abandon any right to file an
application for letters patent, trademark, or copyright, unless such Grantor
shall have previously determined that such use or the pursuit or maintenance of
such Intellectual Property Collateral is no longer desirable in the conduct of
such Grantor’s business, in which case, such Grantor will give prompt notice of
any such abandonment to the Agent.
 
(b)           Except as provided in this Section regarding the discontinuation
of use or abandonment of any Intellectual Property Collateral, each Grantor
agrees promptly to notify the Agent if such Grantor learns (i) that any item of
the Intellectual Property Collateral may have become abandoned, placed in the
public domain, invalid or unenforceable, or of any adverse determination or
development regarding such Grantor’s ownership of any of the Intellectual
Property Collateral or its right to register the same or to keep and maintain
and enforce the same, or (ii) of any adverse determination or the institution of
any proceeding (including, without limitation, the institution of any proceeding
in the U.S. Patent and Trademark Office or any court) regarding any item of the
Intellectual Property Collateral.
 
(c)            In the event that any Grantor becomes aware that any item of the
Intellectual Property Collateral material to the business of such Grantor is
being infringed or misappropriated by a third party, such Grantor shall promptly
notify the Agent and shall take such actions, at its expense, as such Grantor or
the Agent deems reasonable and appropriate under the circumstances to protect
such Intellectual Property Collateral, including, without limitation, suing for
infringement or misappropriation and for an injunction against such infringement
or misappropriation.
 
 
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(d)           Each Grantor shall use proper statutory notice in connection with
its use of each item of its Intellectual Property Collateral. Except with
respect of any item of Intellectual Property Collateral, which such Grantor, in
the reasonable exercise of its business judgment, deems not to be material to
the ongoing business of such Grantor, no Grantor shall do or permit any act or
knowingly omit to do any act whereby any of its Intellectual Property Collateral
may lapse or become invalid or unenforceable or placed in the public domain.
 
(e)           Except with respect to any item of Intellectual Property
Collateral, which such Grantor, in the reasonable exercise of its business
judgment, deems not to be material to the ongoing business of such Grantor, each
Grantor shall take all steps which it or the Agent deems reasonable and
appropriate under the circumstances to preserve and protect each item of its
Intellectual Property Collateral, including, without limitation, maintaining the
quality of any and all products or services used or provided in connection with
any of the Trademarks, consistent with the quality of the products and services
as of the date hereof, and taking all steps necessary to ensure that all
licensed users of any of the Trademarks use such consistent standards of
quality.
 
(f)           With respect to its Intellectual Property Collateral, each Grantor
agrees to execute an agreement, in substantially the form set forth in Exhibit B
hereto (an “Intellectual Property Security Agreement”), for recording the
security interest granted hereunder to the Agent in such Intellectual Property
Collateral with the U.S. Patent and Trademark Office, the U.S. Copyright Office
and any other governmental authorities necessary to perfect the security
interest hereunder in such Intellectual Property Collateral.
 
(g)           Each Grantor agrees that, should it obtain an ownership interest
in any item of the type set forth in Section 1(g) which is not on the date
hereof a part of the Intellectual Property Collateral (the “After-Acquired
Intellectual Property”), (i) the provisions of Section 1 shall automatically
apply thereto, (ii) any such After-Acquired Intellectual Property and, in the
case of trademarks, the goodwill of the business connected therewith or
symbolized thereby, shall automatically become part of the Intellectual Property
Collateral subject to the terms and conditions of this Agreement with respect
thereto, (iii) such Grantor shall give prompt written notice thereof to the
Agent in accordance herewith and (iv) such Grantor shall execute and deliver to
the Agent an IP Security Agreement Supplement covering such After-Acquired
Intellectual Property as “Additional Collateral” thereunder and as defined
therein, and shall record such IP Security Agreement Supplement with the U.S.
Patent and Trademark Office, the U.S. Copyright Office and any other
governmental authorities necessary to perfect the security interest hereunder in
such After-Acquired Intellectual Property.
 
SECTION 11.    Voting Rights; Dividends; Etc.
 
(a)          So long as no Event of Default shall have occurred and be
continuing:
 
(i)           Each Grantor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Security Collateral of such Grantor or
any part thereof for any purpose; provided that such Grantor will not exercise
or refrain from exercising any such right if such action would have a material
adverse effect on the value of the Security Collateral or any part thereof.
 
 
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(ii)           Each Grantor shall be entitled to receive and retain any and all
dividends, interest and other distributions paid in respect of the Security
Collateral of such Grantor if and to the extent that the payment thereof is not
otherwise prohibited by the terms of the Note Purchase
Documents; provided that any and all dividends, interest and other distributions
paid or payable other than in cash in respect of, and instruments and other
property received, receivable or otherwise distributed in respect of, or in
exchange for, any Security Collateral received after the date hereof, shall be,
and shall be forthwith delivered to the Agent to hold as, Security Collateral
and shall, if received by such Grantor, be received in trust for the benefit of
the Agent, be segregated from the other property or funds of such Grantor and be
forthwith delivered to the Agent as Security Collateral in the same form as so
received (with any necessary endorsement).
 
(iii)           The Agent will execute and deliver (or cause to be executed and
delivered) to each Grantor all such proxies and other instruments as such
Grantor may reasonably request for the purpose of enabling such Grantor to
exercise the voting and other rights that it is entitled to exercise pursuant to
paragraph (i) above and to receive the dividends or interest payments that it is
authorized to receive and retain pursuant to paragraph (ii) above.
 
(b)           Upon the occurrence and during the continuance of an Event of
Default:
 
(i)           All rights of each Grantor (x) to exercise or refrain from
exercising the voting and other consensual rights that it would otherwise be
entitled to exercise pursuant to Section 11(a)(i) shall, upon notice to such
Grantor by the Agent, cease and (y) to receive the dividends, interest and other
distributions that it would otherwise be authorized to receive and retain
pursuant to Section 11(a)(ii) shall automatically cease, and all such rights
shall thereupon become vested in the Agent, which shall thereupon have the sole
right to exercise or refrain from exercising such voting and other consensual
rights and to receive and hold as Security Collateral such dividends, interest
and other distributions.
 
(ii)           All dividends, interest and other distributions that are received
by any Grantor contrary to the provisions of paragraph (i) of this Section 11(b)
shall be received in trust for the benefit of the Agent, shall be segregated
from other funds of such Grantor and shall be forthwith paid over to the Agent
as Security Collateral in the same form as so received (with any necessary
endorsement).
 
SECTION 12.    Transfers and Other Liens; Additional Shares.
 
(a)            Each Grantor agrees that, except as permitted pursuant to Section
4.1(e) of the Notes, it will not (i) sell, assign or otherwise dispose of, or
grant any option with respect to, any of the Collateral, other than sales,
assignments and other dispositions of Collateral, and options relating to
Collateral, permitted under the terms of the Securities Purchase Agreement and
the Notes, or (ii) create or suffer to exist any Lien upon or with respect to
any of the Collateral of such Grantor except for the pledge, assignment and
security interest created under this Agreement and Permitted Liens.
 
 
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(b)           Each Grantor agrees that it will (i) cause each issuer of the
Pledged Shares pledged by such Grantor not to issue any stock or other
securities in addition to or in substitution for the Pledged Shares issued by
such issuer, except to such Grantor, and (ii) pledge hereunder, immediately upon
its acquisition (directly or indirectly) thereof, any and all additional shares
of stock or other securities.
 
SECTION 13.   Agent Appointed Attorney in Fact. Each Grantor hereby irrevocably
appoints the Agent such Grantor’s attorney in fact, with full authority in the
place and stead of such Grantor and in the name of such Grantor or otherwise,
from time to time, upon the occurrence and during the continuance of an Event of
Default, in the Agent’s discretion, to take any action and to execute any
instrument that the Agent may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation:
 
(a)           to obtain and adjust insurance required to be paid to the Agent
pursuant to Section 8,
 
(b)           to ask for, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral,
 
(c)           to receive, endorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) or (b) above, and
 
(d)           to file any claims or take any action or institute any proceedings
that the Agent may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the rights of the Agent with respect to any
of the Collateral.
 
SECTION 14.   Agent May Perform. If any Grantor fails to perform any agreement
contained herein, the Agent may, as the Agent deems necessary to protect the
security interest granted hereunder in the Collateral or to protect the value
thereof, but without any obligation to do so and without notice, itself perform,
or cause performance of, such agreement, and the expenses of the Agent incurred
in connection therewith shall be payable by such Grantor under Section 17(b).
 
SECTION 15.    The Agent’s Duties.
 
(a)           The powers conferred on the Agent hereunder are solely to protect
the Purchasers’ interest in the Collateral and shall not impose any duty upon it
to exercise any such powers. Except for the safe custody of any Collateral in
its possession and the accounting for moneys actually received by it hereunder,
the Agent shall have no duty as to any Collateral, as to ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Collateral, whether or not any Purchaser has or is
deemed to have knowledge of such matters, or as to the taking of any necessary
steps to preserve rights against any parties or any other rights pertaining to
any Collateral. The Agent shall be deemed to have exercised reasonable care in
the custody and preservation of any Collateral in its possession if such
Collateral is accorded treatment substantially equal to that which it accords
its own property.
 
 
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(b)           Anything contained herein to the contrary notwithstanding, the
Agent may from time to time, when the Agent deems it to be necessary, appoint
one or more subagents (each a “Subagent”) for the Agent hereunder with respect
to all or any part of the Collateral. In the event that the Agent so appoints
any Subagent with respect to any Collateral, (i) the assignment and pledge of
such Collateral and the security interest granted in such Collateral by each
Grantor hereunder shall be deemed for purposes of this Agreement to have been
made to such Subagent, in addition to the Agent, for the ratable benefit of the
Purchasers, as security for the Secured Obligations of such Grantor, (ii) such
Subagent shall automatically be vested, in addition to the Agent, with all
rights, powers, privileges, interests and remedies of the Agent hereunder with
respect to such Collateral, and (iii) the term “Agent,” when used herein in
relation to any rights, powers, privileges, interests and remedies of the Agent
with respect to such Collateral, shall include such Subagent; provided that no
such Subagent shall be authorized to take any action with respect to any such
Collateral unless and except to the extent expressly authorized in writing by
the Agent.
 
SECTION 16.   Remedies.  If any Event of Default shall have occurred and be
continuing:
 
(a)           The Agent may exercise in respect of the Collateral, in addition
to other rights and remedies provided for herein or otherwise available to it,
all the rights and remedies of a Purchaser upon default under the UCC and also
may: (i) require each Grantor to, and each Grantor hereby agrees that it will at
its expense and upon request of the Agent forthwith, assemble all or part of the
Collateral as directed by the Agent and make it available to the Agent at a
place and time to be designated by the Agent that is reasonably convenient to
both parties; (ii) without notice except as specified below, sell the Collateral
or any part thereof in one or more parcels at public or private sale, at any of
the Agent’s offices or elsewhere, for cash, on credit or for future delivery,
and upon such other terms as the Agent may deem commercially reasonable; (iii)
occupy any premises owned or leased by any of the Grantors where the Collateral
or any part thereof is assembled or located for a reasonable period in order to
effectuate its rights and remedies hereunder or under law, without obligation to
such Grantor in respect of such occupation; and (iv) exercise any and all rights
and remedies of any of the Grantors under or in connection with the Receivables
and the Related Contracts or otherwise in respect of the Collateral, including,
without limitation, any and all rights of such Grantor to demand or otherwise
require payment of any amount under, or performance of any provision of, the
Receivables and the Related Contracts. Each Grantor agrees that, to the extent
notice of sale shall be required by law, at least ten days’ notice to such
Grantor of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. The Agent
shall not be obligated to make any sale of Collateral regardless of notice of
sale having been given. The Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned.
 
(b)           Any cash held by or on behalf of the Agent and all cash proceeds
received by or on behalf of the Agent in respect of any sale of, collection
from, or other realization upon all or any part of the Collateral may, in the
discretion of the Agent, be held by the Agent as collateral for, and/or then or
at any time thereafter applied (after payment of any amounts payable to the
Agent pursuant to Section 17) in whole or in part by the Agent for the ratable
benefit of the Purchasers against, all or any part of the Secured Obligations,
in the following manner:
 
 
20

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(i)           first, to the Agent for any amounts as shall be required to
reimburse the Agent for all reasonable costs and expenses incidental to the
collection of the Liabilities and the enforcement or protection of the Agent’s
security interest in the Collateral; and
 
(ii)         second, to the payment in full of the other Secured Obligations, in
each case equally and ratably in accordance with their respective amounts
thereof then due and owing or as the Purchasers (including the Agent in respect
of its Notes) holding the same may otherwise agree.

 
Any surplus of such cash or cash proceeds held by or on the behalf of the Agent
and remaining after payment in full of all the Secured Obligations shall be paid
over to the applicable Grantor or to whosoever may be lawfully entitled to
receive such surplus.
 
(c)           All payments received by any Grantor in respect of the Collateral
shall be received in trust for the benefit of the Agent, shall be segregated
from other funds of such Grantor and shall be forthwith paid over to the Agent
in the same form as so received (with any necessary endorsement).
 
(d)           The Agent may, without notice to any Grantor except as required by
law and at any time or from time to time, charge, set off and otherwise apply
all or any part of the Secured Obligations against any funds held in any deposit
account of such Grantor.
 
(e)           In the event of any sale or other disposition of any of the
Intellectual Property Collateral of any Grantor, the goodwill of the business
connected with and symbolized by any Trademarks subject to such sale or other
disposition shall be included therein, and such Grantor shall supply to the
Agent or its designee such Grantor’s know-how and expertise, and documents and
things relating to any Intellectual Property Collateral subject to such sale or
other disposition, and such Grantor’s customer lists and other records and
documents relating to such Intellectual Property Collateral and to the
manufacture, distribution, advertising and sale of products and services of such
Grantor.
 
 
21

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(f)           If the Agent shall determine to exercise its right to sell all or
any of the Security Collateral of any Grantor pursuant to this Section 16, such
Security Collateral or the part thereof to be sold shall not, for any reason
whatsoever, be effectively registered under Securities Act of 1933, as amended
(as so amended the “Act”), the Agent may, in its discretion (subject only to
applicable requirements of law), sell such Security Collateral or part thereof
by private sale in such manner and under such circumstances as the Agent may
deem necessary or advisable, but subject to the other requirements of this
Section 16(f), and shall not be required to effect such registration or cause
the same to be effected. Without limiting the generality of the foregoing, in
any such event the Agent may, in its sole discretion, (i) in accordance with
applicable securities laws, proceed to make such private sale notwithstanding
that a registration statement for the purpose of registering such Security
Collateral or part thereof could be or shall have been filed under the Act; (ii)
approach and negotiate with a single possible purchaser to effect such sale; and
(iii) restrict such sale to a purchaser who will represent and agree that such
purchaser is purchasing for its own account, for investment, and not with a view
to the distribution or sale of such Security Collateral or part thereof. In
addition to a private sale as provided above in this Section 16(f), if any of
such Security Collateral shall not be freely distributable to the public without
registration under the Act at the time of any proposed sale hereunder, then the
Agent shall not be required to effect such registration or cause the same to be
effected but may, in its sole discretion (subject only to applicable
requirements of law), require that any sale hereunder (including a sale at
auction) be conducted subject to such restrictions as the Agent may, in its sole
discretion, deem necessary or appropriate in order that such sale
(notwithstanding any failure so to register) may be effected in compliance with
the Debtor Relief Laws and other laws affecting the enforcement of creditors’
rights and the Act and all applicable state securities laws.
 
SECTION 17.    Indemnity and Expenses.
 
(a)           Each Grantor agrees to indemnify, defend and save and hold
harmless the Agent and each other Purchaser and each of their respective
Affiliates and their respective officers, directors, employees, agents, trustees
and advisors (each, an “Indemnified Party”) from and against, and shall pay on
demand, any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of counsel) that
may be incurred by or asserted or awarded against any Indemnified Party, in each
case arising out of or in connection with or resulting from this Agreement,
except to the extent such claim, damage, loss, liability or expense resulted
from such Indemnified Party’s gross negligence or willful misconduct.
 
(b)           Each Grantor will upon demand pay to the Agent the amount of any
and all reasonable expenses, including, without limitation, the reasonable fees
and expenses of its counsel and of any experts and agents, that the Agent may
incur in connection with (i) the administration of this Agreement, (ii) the
custody, preservation, use or operation of, or the sale of, collection from or
other realization upon, any of the Collateral of such Grantor, (iii) the
exercise or enforcement of any of the rights of the Agent or the other
Purchasers hereunder or (iv) the failure by such Grantor to perform or observe
any of the provisions hereof.
 
SECTION 18.    Amendments; Waivers; Additional Grantors; Etc.
 
(a)           No amendment or waiver of any provision of this Agreement, and no
consent to any departure by any Grantor herefrom, shall in any event be
effective unless the same shall be in writing and signed by the Agent, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given. No failure on the part of the Agent or any
other Purchaser to exercise, and no delay in exercising any right hereunder,
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise of
any other right.
 
 
22

--------------------------------------------------------------------------------

 
(b)           Upon the execution and delivery by any Person of a security
agreement supplement in substantially the form of Exhibit A hereto (each a
“Security Agreement Supplement”), (i) such Person shall be referred to as an
“Additional Grantor” and shall be and become a Grantor hereunder and each
reference in this Agreement and the other Note Purchase Documents to “Grantor”
shall also mean and be a reference to such Additional Grantor, and (ii) the
supplemental schedules I, II, III, IV, and V attached to each Security Agreement
Supplement shall be incorporated into and become a part of and supplement
Schedules I, II, III, IV, and V, respectively, hereto, and the Agent may attach
such supplemental schedules to such Schedules; and each reference to such
Schedules shall mean and be a reference to such Schedules as supplemented
pursuant to each Security Agreement Supplement.
 
SECTION 19.   Notices; Etc. All notices and other communications provided for
hereunder shall be in writing and mailed, telecopied, e-mailed, or delivered to
its address, telecopier number or e-mail address set forth opposite such
Grantor’s or the Agent’s name on the signature pages hereto or on the signature
page to the Security Agreement Supplement pursuant to which it became a party
hereto; or, as to any party, at such other address, telecopier number or e-mail
address as shall be designated by such party in a written notice to the other
parties. All such notices and other communications shall, when mailed,
telecopied, e-mailed, or delivered, be effective when deposited in the mails or
telecopied, sent by e-mail, or delivered, respectively, addressed as aforesaid;
except that notices and other communications to the Agent shall not be effective
until received by the Agent. Delivery by telecopier or by e-mail of an executed
counterpart of any amendment or waiver of any provision of this Agreement or of
any Security Agreement Supplement or Schedule hereto shall be effective as
delivery of an original executed counterpart thereof.
 
SECTION 20.   Continuing Security Interest; Assignments under the Securities
Purchase Agreement. This Agreement shall create a continuing security interest
in the Collateral and shall (a) remain in full force and effect until the
payment in full of the Secured Obligations, (b) be binding upon each Grantor,
its successors and assigns and (c) inure, together with the rights and remedies
of the Agent hereunder, to the benefit of the Purchasers and their respective
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (c), any Purchaser may assign or otherwise transfer all or any
portion of its rights and obligations under the Securities Purchase Agreement as
permitted thereunder to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to such Purchaser
herein or otherwise, in each case as provided in the Securities Purchase
Agreement.
 
SECTION 21.   Termination. Upon the payment in full of the Secured Obligations,
the pledge, assignment and security interest granted hereby shall terminate and
all rights to the Collateral shall revert to the applicable Grantor. Upon any
such termination, the Agent will, at the applicable Grantor’s expense, execute
and deliver to such Grantor such documents as such Grantor shall reasonably
request to evidence such termination.
 
SECTION 22.   Security Interest Absolute. The obligations of each Grantor under
this Agreement are independent of the Secured Obligations or any other
obligations of any other Grantor under or in respect of the Note Purchase
Documents, and a separate action or actions may be brought and prosecuted
against each Grantor to enforce this Agreement, irrespective of whether any
action is brought against any other Grantor or whether such other Grantor is
joined in any such action or actions. All rights of the Agent and the other
Purchasers and the pledge, assignment and security interest hereunder, and all
obligations of each Grantor hereunder, shall be irrevocable, absolute and
unconditional irrespective of, and each Grantor hereby irrevocably waives (to
the maximum extent permitted by applicable law) any defenses it may now have or
may hereafter acquire in any way relating to, any or all of the following:
 
 
23

--------------------------------------------------------------------------------

 
(a)           any lack of validity or enforceability of any Note Purchase
Document or any other agreement or instrument relating thereto;
 
(b)           any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations or any other obligations of
any other Grantor under or in respect of the Note Purchase Documents or any
other amendment or waiver of or any consent to any departure from any Note
Purchase Document, including, without limitation, any increase in the Secured
Obligations resulting from the extension of additional credit to Company or
otherwise;
 
(c)           any taking, exchange, release or non perfection of any Collateral
or any other collateral, or any taking, release or amendment or waiver of or
consent to departure from any guaranty, for all or any of the Secured
Obligations;
 
(d)           any manner of application of any Collateral or any other
collateral, or proceeds thereof, to all or any of the Secured Obligations, or
any manner of sale or other disposition of any Collateral or any other
collateral for all or any of the Secured Obligations;
 
(e)           any change, restructuring or termination of the corporate
structure or existence of any Grantor;
 
(f)           any failure of any Purchaser to disclose to any Grantor any
information relating to the business, condition (financial or otherwise),
operations, performance, assets, nature of assets, liabilities or prospects of
any other Grantor now or hereafter known to such Purchaser (each Grantor waiving
any duty on the part of the Purchasers to disclose such information);
 
(g)           the failure of any other Person to execute this Agreement or any
other Note Purchase Document, guaranty or agreement or the release or reduction
of liability of any Grantor or any guarantor or surety with respect to the
Secured Obligations; or
 
(h)           any other circumstance (including, without limitation, any statute
of limitations) or any existence of or reliance on any representation by any
Purchaser that might otherwise constitute a defense available to, or a discharge
of, such Grantor or any other Grantor or a third party grantor of a security
interest.
 
This Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Secured Obligations is rescinded or
must otherwise be returned by any Purchaser or by any other Person upon the
insolvency, bankruptcy or reorganization of any Grantor or otherwise, all as
though such payment had not been made.
 
 
24

--------------------------------------------------------------------------------

 

SECTION 23.   Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of an original executed
counterpart of this Agreement.
 
SECTION 24.   Governing Law. This Agreement shall be governed by, and construed
in accordance with, the law of the State of New York without regard to
principles thereof regarding conflict of laws.
 
 

 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
 
 
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In Witness Whereof, each Grantor has caused this Agreement to be duly executed
and delivered by its officer thereunto duly authorized as of the date first
above written.
 

 
Genta Incorporated,
    A Delaware corporation          
 
By:
/s/        Name:        Title:          

Address for Notices:
 
Genta Incorporated
200 Connell Drive
Berkeley Heights, NJ 07922
Attention: Raymond P. Warrell, Jr., M.D.
Telephone No.: (908) 286-9800
Telecopy No.: (908) 286-3966
 
[Email:       ]
 
 
  SECURITY AGREEMENT
 

--------------------------------------------------------------------------------

 
 
 
In Witness Whereof, the Agent has caused this Agreement to be duly executed and
delivered by its officer thereunto duly authorized as of the date first above
written.
 

 
Tang Capital Partners, L.P.,
   
as Agent
         
 
By:
/s/        Name:        Title:        

 
Address for Notices:
c/o Tang Capital Management, LLC
4401 Eastgate Mall
San Diego, CA 92121
[Telephone No.: (858) 200-3412]
[Telecopy No.:  ]
 
[Email:  ]

SECURITY AGREEMENT

 
 

--------------------------------------------------------------------------------

 

Schedules
 

 Schedule I  -  Pledged Shares and Pledged Debt  Schedule II   -  Locations of
Equipment and Inventory  Schedule III      -  Chief Executive Office and Federal
Tax Identification Number  Schedule IV   -  Patents, Trademarks and Trade Names,
Copyrights and Licenses  Schedule V    -  Existing Commercial Tort Claims

Exhibits
 
 

Exhibit A - Form of Security Agreement Supplement Exhibit B - Form of
Intellectual Property Security Agreement Exhibit C - Form of Intellectual
Property Security Agreement Supplement      

                     

SECURITY AGREEMENT

 
 

--------------------------------------------------------------------------------

 

Schedule I to the
Security Agreement
 
PLEDGED SHARES AND PLEDGED DEBT
 
Part I
 
Grantor
 
Stock Issuer
 
Class of
Stock
 
Par
Value
 
Stock
Certificate
 No(s)
 
Number of
Shares
 
Percentage
of
Outstanding
Shares
                         

 

 

Schedule I to Security Agreement
 
 

--------------------------------------------------------------------------------

 

Part II
 
Grantor
 
Debt Issuer
 
Description
 
Maturity
 
Outstanding
Principal
Amount
                 

Schedule I to Security Agreement
 
 

--------------------------------------------------------------------------------

 

                                                                                                            Schedule
II to the
Security Agreement
 
LOCATIONS OF EQUIPMENT AND INVENTORY
 
Grantor(s)
 
Locations of Equipment:
 
Locations of Inventory:
Genta Incorporated
 
200 Connell Drive, Berkeley Heights, NJ 07922
 
Almac, 4204 Technology Drive, Durham NC 27704
                 
Chesapeake Biological Laboratory, 1111 South Paca Street, Baltimore MD 21230
                 
Southern Testing, 3809 Airport Drive, Wilson NC 27896
                 
Halls Warehouse Corp, 501 Kentile Road, South Plainfield NJ 07080
                 
Cardinal Health, SPS, 15 Ingram Blvd, Suite 100, La Vergne, TN 37086
                 
Aptuit Europe Limited, Tenth Avenue, Deeside Industrial Park, Deeside,
Flintshire CH5 2VA United Kingdom

 

 

 
 
 
 

SCHEDULE II TO SECURITY AGREEMENT
 
 

--------------------------------------------------------------------------------

 

 
Schedule III to the
Security Agreement
 
CHIEF EXECUTIVE OFFICE, LOCATION
AND FEDERAL TAX IDENTIFICATION NUMBER
 
Grantor
 
Location
 
Chief Executive
Office
 
Federal Tax
Identification
Number
Genta Incorporated
 
200 Connell Drive, Berkeley Heights, NJ 07922
 
Raymond P. Warrell, Jr., M.D.
 
33-0326866

 

 
 

SCHEDULE III TO SECURITY AGREEMENT

 
 

--------------------------------------------------------------------------------

 

 
Schedule IV to the
Security Agreement
 
PATENTS, TRADEMARKS AND
TRADE NAMES, COPYRIGHTS AND LICENSES
 
PATENTS
 
Grantor
 
Patents
 
Country
 
Applic. No.
 
Filing Date
                 

 
See attached.
 
FEDERAL TRADEMARKS
 
Grantor
 
Trademarks
 
Serial No.
 
Reg. No.
 
Filing Date
 
Reg. Date
                     

 
See attached.
 
STATE TRADEMARKS
 
Grantor
 
Trademark
 
State
 
Reg. No
 
Reg. Date
                 

 
See attached.
 
FOREIGN TRADEMARKS
 
Grantor
 
Trademark
 
Country
 
Reg. No
 
Filing Date
                 

 
See attached.
 
TRADE NAMES
 
Grantor
 
Trade Name
 
State/Country
 
Reg. No
 
Issue Date
                 

 
See attached.
 

 
 
 

--------------------------------------------------------------------------------

 
 
 
COPYRIGHTS
 
Grantor
 
Copyrights
 
Country
 
Reg. No
 
Reg. Date
                 

 
See attached.
 
MATERIAL LICENSES
 
Grantor
 
Licenses
 
Title
 
Date
 
Parties
                 

 
See attached.
 
EXCEPTION PURSUANT TO SECTION 5(K)(VI) OF THE SECURITY AGREEMENT
 
Grantor
 
Title
 
Date
 
Parties
             

 

 
 
 

SCHEDULE IV TO SECURITY AGREEMENT
 
 

--------------------------------------------------------------------------------

 

 
Schedule V to the
Security Agreement
 
EXISTING COMMERCIAL TORT CLAIMS
 
None.
 

 
 

SCHEDULE V TO SECURITY AGREEMENT

 
 

--------------------------------------------------------------------------------

 

 
Exhibit A to the
Security Agreement
 
FORM OF SECURITY AGREEMENT SUPPLEMENT
 
___________, 200_
 
 
Tang Capital Partners, L.P.,

 
as the Agent for the

 
Purchasers referred to in the

 
Securities Purchase Agreement referred to below

 
 
_______________________________

 
 
_______________________________

 
 
Attn:  __________________________

 
GENTA INCORPORATED
 
Ladies and Gentlemen:
 
Reference is made to (i) the Securities Purchase Agreement dated as of September
2, 2011 (as amended, amended and restated, supplemented or otherwise modified
from time to time, the “Securities Purchase Agreement”), among Genta
Incorporated, a Delaware corporation, as the Company, the Purchasers party
thereto, and Tang Capital Partners, L.P., as Agent, and (ii) the General
Security Agreement dated as of September 2, 2011 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the “Security
Agreement”) between the Grantors from time to time party thereto and the Agent
for the Purchasers. Terms defined in the Securities Purchase Agreement or the
Security Agreement and not otherwise defined herein are used herein as defined
in the Securities Purchase Agreement or the Security Agreement.
 

SECTION 1.  Grant of Security. The undersigned hereby assigns and pledges to the
Agent for the ratable benefit of the Purchasers, and hereby grants to the Agent
for the ratable benefit of the Purchasers, a security interest in, all of its
right, title and interest in and to all of the Collateral of the undersigned,
whether now owned or hereafter acquired by the undersigned, wherever located and
whether now or hereafter existing or arising, including, without limitation, the
property and assets of the undersigned set forth on the attached supplemental
schedules to the Schedules to the Security Agreement.
 
SECTION 2.  Security for Obligations. The pledge and assignment of, and the
grant of a security interest in, the Collateral by the undersigned under this
Security Agreement Supplement and the Security Agreement secures the payment and
performance of all Liabilities, together with the prompt payment of all
expenses, including, without limitation, reasonable attorney costs and
disbursements incurred by the Agent or the Purchasers incidental to the
collection of the Liabilities and the enforcement or protection of the Agent’s
security interest in the Collateral.
 
SECTION 3.   Supplements to Security Agreement Schedules. The undersigned has
attached hereto supplemental Schedules I, II, III, IV, and V to Schedules I, II,
III, IV, and V, respectively, to the Security Agreement, and the undersigned
hereby certifies, as of the date first above written, that such supplemental
schedules have been prepared by the undersigned in substantially the form of the
equivalent Schedules to the Security Agreement and are complete and correct in
all material respects.
 
SECURITY AGREEMENT SUPPLEMENT
 

--------------------------------------------------------------------------------

 
SECTION 4.  Representations and Warranties. The undersigned hereby makes each
representation and warranty set forth in Section 5 of the Security Agreement (as
supplemented by the attached supplemental schedules) to the same extent as each
other Grantor.
 
SECTION 5.   Obligations Under the Security Agreement. The undersigned hereby
agrees, as of the date first above written, to be bound as a Grantor by all of
the terms and provisions of the Security Agreement to the same extent as each of
the other Grantors. The undersigned further agrees, as of the date first above
written, that each reference in the Security Agreement to an “Additional
Grantor” or a “Grantor” shall also mean and be a reference to the undersigned.
 
SECTION 6.   Governing Law. This Security Agreement Supplement shall be governed
by, and construed in accordance with, the law of the State of New York without
regard to principles thereof regarding conflict of laws.
 

SECURITY AGREEMENT SUPPLEMENT
 
 

--------------------------------------------------------------------------------

 

 
Very truly yours,
 
   
[Name Of Additional Grantor]
           
 
By:
 /s/          Title:                 Address for Notices:                      
                 

 

SECURITY AGREEMENT SUPPLEMENT
 
 

--------------------------------------------------------------------------------

 

 
Exhibit B to the
Security Agreement
 
FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT
 
This Intellectual Property Security Agreement (as amended, amended and restated,
supplemented or otherwise modified from time to time, the “IP Security
Agreement”) dated as of ___________, 2011, is made by the Persons listed on the
signature pages hereof (collectively, the “Grantors”) in favor of Tang Capital
Partners, L.P., as Agent (the “Agent”) for the Purchasers (as defined in the
Securities Purchase Agreement referred to below).

WHEREAS, Genta Incorporated, a Delaware corporation, has entered into a
Securities Purchase Agreement dated as of September 2, 2011 (as amended, amended
and restated, supplemented or otherwise modified from time to time, the
“Securities Purchase Agreement”), among Genta Incorporated, as the Company, the
Purchasers party thereto, and Tang Capital Partners, L.P., as Agent. Terms
defined in the Securities Purchase Agreement and not otherwise defined herein
are used herein as defined in the Securities Purchase Agreement.

WHEREAS, as a condition precedent to the purchase of the Notes by the Purchasers
under the Securities Purchase Agreement, each Grantor has executed and delivered
that certain General Security Agreement dated as of September 2, 2011 between
the Grantors and the Agent (as amended, amended and restated, supplemented or
otherwise modified from time to time, the “Security Agreement”).

WHEREAS, under the terms of the Security Agreement, the Grantors have granted a
security interest in, among other property, certain intellectual property of the
Grantors to the Agent for the ratable benefit of the Purchasers, and have agreed
as a condition thereof to execute this IP Security Agreement covering such
intellectual property for recording with the U.S. Patent and Trademark Office,
the United States Copyright Office and other governmental authorities. The
parties intend that all security interests granted pursuant to this IP Security
Agreement, (including those granted under the Original IP Security Agreement)
shall be pari passu notwithstanding the date, order or method of attachment or
perfection of any such lien or security interest or the provisions of any
applicable law.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, each Grantor agrees as follows:

SECTION 1.  Grant of Security. Each Grantor hereby grants to the Agent for the
ratable benefit of the Purchasers a security interest in and to all of such
Grantor’s right, title and interest in and to the following (the “Collateral”):

(i)           the United States, international, and foreign patents, patent
applications and patent licenses set forth in Schedule A hereto (as such
Schedule A may be supplemented from time to time by supplements to the Security
Agreement and this IP Security Agreement, each such supplement being in
substantially the form of Exhibit C to the Security Agreement (an “IP Security
Agreement Supplement”), executed and delivered by such Grantor to the Agent from
time to time), together with all reissues, divisions, continuations,
continuations-in-part, extensions and reexaminations thereof, and all rights
therein provided by international treaties or conventions (the “Patents”);
 
 
 

--------------------------------------------------------------------------------

 
(ii)         the United States and foreign trademark and service mark
registrations, applications, and licenses set forth in Schedule B hereto (as
such Schedule B may be supplemented from time to time by IP Security Agreement
Supplements executed and delivered by such Grantor to the Agent from time to
time) (the “Trademarks”);
 
(iii)        the copyrights, United States and foreign copyright registrations
and applications and copyright licenses set forth in Schedule C hereto (as such
Schedule C may be supplemented from time to time by IP Security Agreement
Supplements executed and delivered by such Grantor to the Agent from time to
time) (the “Copyrights”);
 
(iv)         any and all claims for damages for past, present and future
infringement, misappropriation or breach with respect to the Patents, Trademarks
and Copyrights, with the right, but not the obligation, to sue for and collect,
or otherwise recover, such damages; and
 
(v)          any and all proceeds of the foregoing.
 
SECTION 2.  Security for Obligations. The pledge and assignment of, and the
grant of a security interest in, the Collateral by each Grantor under this IP
Security Agreement secures the payment of the Secured Obligations (as defined in
the Security Agreement) now or hereafter existing, whether direct or indirect,
absolute or contingent, and whether for principal, reimbursement obligations,
interest (including any interest that accrues after the commencement of
bankruptcy), premiums, penalties, fees, indemnifications, contract causes of
action, costs, expenses or otherwise.
 
SECTION 3.  Recordation. Each Grantor authorizes and requests that the Register
of Copyrights, the Commissioner of Patents and Trademarks and any other
applicable government officer record this IP Security Agreement.
 
SECTION 4.  Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
 
SECTION 5.  Grants, Rights and Remedies. This IP Security Agreement has been
entered into in conjunction with the provisions of the Security Agreement. Each
Grantor does hereby acknowledge and confirm that the grant of the security
interest hereunder to, and the rights and remedies of, the Agent with respect to
the Collateral are more fully set forth in the Security Agreement, the terms and
provisions of which are incorporated herein by reference as if fully set forth
herein.
 
SECTION 6.  Governing Law. This IP Security Agreement shall be governed by, and
construed in accordance with, the law of the State of New York without regard to
principles thereof regarding conflict of laws.
 
 
 

--------------------------------------------------------------------------------

 

 
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly executed
and delivered by its officer thereunto duly authorized as of the date first
above written.
 

 
Genta Incorporated,
    A Delaware corporation          
 
By:
/s/        Name:        Title:

 
Address for Notices:
 
Genta Incorporated
200 Connell Drive
Berkeley Heights, NJ 07922
Attention: Raymond P. Warrell, Jr., M.D.
Telephone No.: (908) 286-9800
 
 

SECURITY AGREEMENT SUPPLEMENT
 
 

--------------------------------------------------------------------------------

 

In Witness Whereof, the Agent has caused this Agreement to be duly executed and
delivered by its officer thereunto duly authorized as of the date first above
written.
 

 
Tang Capital Partners, L.P.,
   
as Agent
         
 
By:
/s/        Name:        Title:        

 
 
Address for Notices:
 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

INTELLECTUAL PROPERTY SECURITY AGREEMENT 
 
 
 

--------------------------------------------------------------------------------

 

 
Schedule A to the
IP Security Agreement
 
PATENTS
 
Grantor
 
Patents
 
Country
 
Applic. No.
 
Filing Date
 
See attached.
                 

 
 

INTELLECTUAL PROPERTY SECURITY AGREEMENT
SCHEDULE A
 
 

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Schedule B to the
IP Security Agreement
 
FEDERAL TRADEMARKS
 
Grantor
 
Trademarks
 
Serial
No.
 
Reg. No.
 
Filing
Date
 
Reg.
Date
 
See attached.
                     

 
 

 

INTELLECTUAL PROPERTY SECURITY AGREEMENT
SCHEDULE B
 
 
 

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Schedule C to the
IP Security Agreement
 
COPYRIGHTS
 
Grantor
 
Copyrights
 
Country
 
Reg. No
 
Reg. Date
 
See attached.
                 

 
 

INTELLECTUAL PROPERTY SECURITY AGREEMENT
SCHEDULE C
 
 
 

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Exhibit C to the
Security Agreement
 
FORM OF INTELLECTUAL PROPERTY
SECURITY AGREEMENT SUPPLEMENT
 
This Intellectual Property Security Agreement Supplement (this “IP Security
Agreement Supplement”) dated as of ___________, 2011, is made by the Person
listed on the signature page hereof (the “Grantor”) in favor of Tang Capital
Partners, L.P., as Agent (the “Agent”) for the Purchasers (as defined in the
Securities Purchase Agreement referred to below).

Whereas, Genta Incorporated, a Delaware corporation, has entered into a
Securities Purchase Agreement dated as of September 2, 2011 (as amended, amended
and restated, supplemented or otherwise modified from time to time, the
“Securities Purchase Agreement”), among Genta Incorporated, as the Company, the
Purchasers party thereto, and Tang Capital Partners, L.P., as Agent. Terms
defined in the Securities Purchase Agreement and not otherwise defined herein
are used herein as defined in the Securities Purchase Agreement.

Whereas, pursuant to the Securities Purchase Agreement, the Grantor and certain
other Persons have executed and delivered that certain General Security
Agreement dated as of September 2, 2011 between the Grantor, such other Persons
and the Agent (as amended, amended and restated, supplemented or otherwise
modified from time to time, the “Security Agreement”). To create a short form
version of the Security Agreement covering certain intellectual property of the
Grantor and such other Persons for recording with the U.S. Patent and Trademark
Office, the United States Copyright Office and other governmental authorities,
the Grantor and such other Persons have executed and delivered that certain
Intellectual Property Security Agreement made by the Grantor and such other
Persons to the Agent dated as of September 2, 2011 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the “IP Security
Agreement”).

Whereas, under the terms of the Security Agreement and the IP Security
Agreement, the Grantor has granted a security interest in the Additional
Collateral (as defined in Section 1 below) of the Grantor to the Agent for the
ratable benefit of the Purchasers and has agreed as a condition thereof to
execute this IP Security Agreement Supplement for recording with the U.S. Patent
and Trademark Office, the United States Copyright Office and other governmental
authorities.

Now, Therefore, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Grantor agrees as follows:

SECTION 1.  Confirmation of Grant of Security. The Grantor hereby acknowledges
and confirms the grant of a security interest to the Agent for the ratable
benefit of the Purchasers under the Security Agreement and the IP Security
Agreement in and to all of the Grantor’s right, title and interest in and to the
following (the “Additional Collateral”):

(i)           The United States, international, and foreign patents, patent
applications, and patent licenses set forth in Schedule A hereto, together with
all reissues, divisions, continuations, continuations-in-part, extensions and
reexaminations thereof, and all rights therein provided by international
treaties or conventions (the “Patents”);
 
(ii)           The United States and foreign trademark and service mark
registrations, applications, and licenses set forth in Schedule B hereto (the
“Trademarks”);
 
(iii)           The copyrights, United States and foreign copyright
registrations and applications and copyright licenses set forth in Schedule C
hereto (the “Copyrights”);
 
(iv)           any and all claims for damages for past, present and future
infringement, misappropriation or breach with respect to the Patents, Trademarks
and Copyrights, with the right, but not the obligation, to sue for and collect,
or otherwise recover, such damages; and
 
(v)           any and all proceeds of the foregoing.
 
SECTION 2.  Supplement to Security Agreement and IP Security
Agreement.  Schedule IV to the Security Agreement and Schedules A, B and C to
the IP Security Agreement are each, effective as of the date hereof, hereby
supplemented to add to such Schedules the Additional Collateral.
 
SECTION 3.  Recordation. The Grantor authorizes and requests that the Register
of Copyrights, the Commissioner of Patents and Trademarks and any other
applicable government officer to record this IP Security Agreement Supplement.
 
SECTION 4.  Governing Law. This IP Security Agreement Supplement shall be
governed by, and construed in accordance with, the law of the State of New York
without regard to principles thereof regarding conflict of laws.
 

 

INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT
 
 
 

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In Witness Whereof, the Grantor has caused this Agreement to be duly executed
and delivered by its officer thereunto duly authorized as of the date first
above written.
 

 
[Name Of Grantor]
               
 
By:
/s/        Name:        Title:

Address for Notices:
 

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INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT