Unassociated Document


     

    




    


    


    May 22,
2009

    


    


    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.

    


    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, (other than
that the conversion provisions of this Proposal 1 shall not apply to the
2008 Notes beneficial held by Dr. Raymond P. Warrell, Jr. and Dr. Loretta M.
Itri), you agree:

    


    a.           to
convert the entire outstanding principal amount of your 2008 Notes, subject to
the limitations on conversion in Section 3.4 of your 2008 Notes, 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, 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.

    


    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)           [Intentionally
Omitted]”

    


    


    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 their respective portion of
the 2008 Notes beneficially held by each of them in order for the Company to
reserve a sufficient number of shares to cover the conversions set forth under
Section 1 above; provided, however, that in the event the Company has a
sufficient number of shares reserved to cover the conversions set forth under
Section 1 above and the conversions of Dr. Warrell’s and Dr. Itri’s respective
portion of the 2008 Notes, then Dr. Warrell and Dr. Itri shall be able to
convert their respective portion of the 2008 Notes.

    


    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]


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    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:  Raymond
P. Warrell, Jr.,M.D.

    Title:     Chairman
& Chief Executive Officer

    Date: May
21, 2009

    


    


    Acknowledged
and Agreed as of

    the date
first set forth above

    


    


    


    
      
        

      

    

    By:

    Name:

    Title:

    Date: May
[   ], 2009

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    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.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    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.