Unassociated Document


     

     

    Company
Name

    Street
Address

    City,
State Zip

    


    Re: Genta
Incorporated: Note Conversion and Amendment to Consent Agreement

    


    Ladies
and Gentlemen:

    


    The Board
of Directors of Genta Incorporated (the “Company”) deems it advisable
and in the best interests of the Company and its stockholders to encourage you
to convert a greater portion of the outstanding principal amount of your 2008
Note (as defined below) into shares of the Company’s Common Stock than you are
currently permitted to convert pursuant to the terms of the 2008
Note.  In order to authorize the conversion of the outstanding
principal amount of your 2008 Note and induce you to convert your 2008 Note, the
Company hereby proposes to amend the Consent Agreement (as defined below) to
remove certain limitations on conversion and make other changes as outlined
below.

    


    Background

    


    As you are aware, on June 5, 2008, the
Company entered into a securities purchase agreement (the “Securities Purchase
Agreement”), with certain accredited institutional investors (the “2008 Note Holders”) for a
private placement of senior secured convertible notes totaling in the aggregate
of up to $40 million in gross proceeds (the “2008
Financing”).  The Company closed on approximately $20 million
of such Notes on June 9, 2008.  On June 9, 2008, in connection with
the 2008 Financing, the Company issued a form of senior secured convertible
promissory note due June 9, 2010 to the 2008 Note Holders (the “2008 Note”). For purposes of
this letter agreement, references to the 2008 Note(s) refers to the 2008 Notes
issued in June 2008, and not the 2008 Notes issued as payment in kind in lieu of
cash interest payments (“2008
PIK Notes”).

    


    In addition, as you are also aware, on
April 2, 2009 the Company closed on a securities purchase agreement, with
certain accredited institutional investors listed on the signature page thereto
(the “2009 Note
Holders”), to place up to $12 million of senior secured convertible notes
and corresponding warrants to purchase common stock with such 2009 Note Holders
(the “2009
Financing”).  The Company closed with gross proceeds of
approximately $6 million of such notes and warrants.  In connection
with the 2009 Financing, the Company and each of the 2008 Note Holders entered
into a Consent Agreement, dated April 2, 2009 (the “Consent Agreement”), whereby
the 2008 Note Holders, for all purposes and in all respects under the Securities
Purchase Agreement, consented to the 2009 Financing and transactions
contemplated thereby.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Pursuant to Section 5(a) of the Consent
Agreement, no 2008 Note Holder may convert any of such holder’s 2008 Notes on
any day to the extent that, together with all prior conversions under such 2008
Notes following the Effective Date (as defined therein), the total amount of
such 2008 Notes that has been converted since the Effective Date exceeds (A) 10%
of the principal amount of such 2008 Notes on the Effective Date multiplied by
(B) the number of whole or partial calendar weeks since the Effective
Date.

    


    The
Company hereby requests your approval and consent as a 2008 Note Holder to
effect the proposal below.  However, if the consent of holders of at
least 95% in outstanding principal amount of the 2008 Notes (the “Requisite Approval”), is not
obtained, then your consent and the changes reflected in the proposal below
shall not be effective.

    


    Proposal

    


    1.           Subject
to the receipt of the Requisite Approval, by signing below, (except that the
conversion provisions of this Section 1 shall not apply to the June 2008
holdings of Dr. Raymond P. Warrell, Jr. and Dr. Loretta M. Itri), you
agree:

    


    a.           to
convert the entire outstanding principal amount of your 2008 Note, subject to
the limitations on conversion in Section 3.4 of your 2008 Notes and Section 5(b)
of the Consent Agreement, on May 22, 2009 (the “Initial Conversion
Date”).  You agree to deliver, concurrently with the delivery
of your signature to this letter, a Notice of Conversion in the form attached to
this letter as Exhibit A, which notice of conversion shall be irrevocable, shall
be effective as of May 22, 2009 and shall constitute your irrevocable
instruction to convert, on May 22, 2009, the entire outstanding principal amount
of your 2008 Notes, subject to the limitations on conversion in Section 3.4 of
your 2008 Notes and Section 5(b) of the Consent Agreement;

    


    b.           to
the extent any of the principal amount of your 2008 Note remains outstanding
following the Initial Conversion Date, to convert any additional outstanding
principal amount of your 2008 Notes, subject to the conversion limitations
contained in Section 3.4 and Section 5(b) of the Consent Agreement, on May 26,
2009.  You agree to deliver, concurrently with the delivery of your
signature to this letter, a Notice of Conversion in the form attached to this
letter as Exhibit B, which notice of conversion shall be irrevocable, shall be
effective as of May 26, 2009 and shall constitute your irrevocable instruction
to convert, on May 26, 2009, the entire outstanding principal amount of your
2008 Notes, subject to the limitations on conversion in Section 3.4 of your 2008
Notes and Section 5(b) of the Consent Agreement; and

    


    c.           not
to sell, assign or transfer any of the shares of Common Stock received upon
conversion of your 2008 Notes, or any interest therein, during the period
beginning on the effective date of this letter and ending at 11:59 pm EDT May
28, 2009.

     

    
      
         

      

      
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    2.           Upon
the receipt of the Requisite Approval, the parties hereby agree as
follows:

    


    a.           Section
5(a) of the Consent Agreement is hereby deleted in its entirety and replaced
with the following:

    


    “(a)           [Intentionally
Omitted]”

    


    b.           Section
5(b) of the Consent Agreement is hereby deleted in its entirety and replaced
with the following:

    


    “(b)           that
until the earlier of (A) 105 days following the Effective Date and (B) the
Authorization Date (as defined in the Purchase Agreement) such Holder shall not
convert any 2008 PIK Notes into shares of Common Stock and shall not assert its
rights arising out of any event of default arising under Section 2.1(g) of the
2008 Note(s).” 

    


    c.           The
second sentence of Section 11 of the Consent Agreement is hereby deleted in its
entirety and replaced with the following sentence:

    


    “No
provision of this Agreement may be waived or amended other than by a written
instrument signed by the Company and the Holders of at least two-thirds of the
then outstanding and unexercised Purchase Rights and the then outstanding
principal amount of New Notes issued upon exercise of the Purchase Rights
(together, as one class).”

    


    3.           Dr. Warrell and Dr. Itri further agree
not to convert such portion of the 2008 Notes beneficially held by
each of them as necessary in order for the Company to
authorize and reserve a sufficient number of unissued shares to cover the
conversions set forth under Section 1 above and the conversion of all of the
2008 Notes, in each case, other than those held by Dr. Warrell and Dr.
Itri.

    


    4.           Except
as specifically stated above, all other terms and provisions of the Consent
Agreement shall remain in full force and effect.

    


    


    [Signature
Page Follows]

     

    
      
         

      

      
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    Please indicate your agreement to
convert the outstanding principal amount of your 2008 Note, and to amend the
Consent Agreement in accordance with the proposal set forth above, by
countersigning this letter and returning it to the undersigned.

    


    


    Very
truly yours,

    


    GENTA
INCORPORATED

    


    ___________________________________

    By:

    Name:

    Title:

    


    Date: May
[   ], 2009

    


    Acknowledged
and Agreed as of

    the date
first set forth above

    


    


    INVESTOR

    


    ___________________________________

    By:

    Name:

    Title:

    


    Date: May
[   ], 2009

     

    
      
         

      

      
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    Exhibit
A

     

    NOTICE OF
CONVERSION

     

    (To be
Executed by the Registered Holder in order to Convert the Note)

     

    The
undersigned hereby irrevocably elects to convert $ *see footnote________________
of the principal amount of the above Note No. ___ into shares of Common
Stock of Genta Incorporated (the “Maker”) according to the conditions hereof, as
of the date written below.

     

    Date of
Conversion      May 22,
2009

     

    Applicable
Conversion Price _______________________________________

     

    Number of
shares of Common Stock beneficially owned or deemed beneficially owned by the
Holder on the Date of Conversion: _________________________ ** see
footnote

     

    Signature___________________________________________________________________________________

     

    
      [Name]

    

     

    Address:____________________________________________________________________________________

     

    
      ___________________________________________________________________________________________

    

     

     

    *  The
undersigned hereby irrevocably elects to convert, on May 22, 2009, the entire
outstanding principal amount of the above-referenced Note held by the
undersigned, subject to the limitations on conversion in Section 3.4 of said
Note and Section 5(b) of the Consent Agreement dated April 2, 2009 by and among
the Company, the undersigned and the other parties thereto.

    


    **
Reflects ownership as of 5:30 pm EDT on May 21, 2009.  The undersigned
hereby undertakes to notify the Company if there is any change in the number of
shares of Common Stock held by the undersigned between May 21, 2009 and 5:30 pm
EDT on May 22, 2009, other than directly as a result of the conversion described
herein.

    


    
      
         

      

      
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    Exhibit
B

     

    NOTICE OF
CONVERSION

     

    (To be
Executed by the Registered Holder in order to Convert the Note)

     

    The
undersigned hereby irrevocably elects to convert $ _* see
footnote_______________ of the principal amount of the above Note No. ___
into shares of Common Stock of Genta Incorporated (the “Maker”) according to the
conditions hereof, as of the date written below.

     

    Date of
Conversion      May 26,
2009

     

    Applicable
Conversion Price _______________________________________

     

    Number of
shares of Common Stock beneficially owned or deemed beneficially owned by the
Holder on the Date of Conversion: _________________________  ** see
footnote

     

    
      Signature___________________________________________________________________________________

       

      
        [Name]

      

       

      Address:____________________________________________________________________________________

       

      
        ___________________________________________________________________________________________

      

       

       

    

    *  The
undersigned hereby irrevocably elects to convert, on May 26, 2009, the entire
outstanding principal amount of the above-referenced Note held by the
undersigned, subject to the limitations on conversion in Section 3.4 of said
Note and Section 5(b) of the Consent Agreement dated April 2, 2009 by and among
the Company, the undersigned and the other parties thereto.

    


    **
Reflects ownership as of 5:30 pm EDT on May 21, 2009.  The undersigned
hereby undertakes to notify the Company if there is any change in the number of
shares of Common Stock held by the undersigned between May 21, 2009 and 5:30 pm
EDT on May 26, 2009, other than directly as a result of the conversion described
herein and the conversion effected by the undersigned effective as of May 22,
2009.

    


    
      
         

      

      
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