Document:

THIS
WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).  THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO SUCH SECURITIES UNDER THE ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.

     

    FORM
OF COMMON STOCK PURCHASE WARRANT

     

    GENTA
INCORPORATED

     

    
      
        	
                Warrant
      Shares: [__]

              	
                Initial
      Exercise Date: [__], 20101

              
	 
      	
                Issue
      Date: [__], 2009

              

      

    

     

    THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies
that, for value received, [__] (the “Holder”) is entitled,
upon the terms and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time on or after [Insert date that is six months
after Issue Date], 2010 (the “Initial Exercise
Date”) and on or prior to the close of business on the two (2) year
anniversary of the Initial Exercise Date (the “Termination Date”)
but not thereafter, to subscribe for and purchase from Genta Incorporated, a
Delaware corporation (the “Company”), up to [__]
shares (the “Warrant
Shares”) of Common Stock.  The purchase price of one share of
Common Stock under this Warrant shall be equal to the Exercise Price, as defined
in Section 2(b).

     

       Section
1.          Definitions.  Capitalized
terms used and not otherwise defined herein shall have the meanings set forth in
that certain Securities Purchase Agreement (the “Purchase Agreement”),
dated [__], 2009, among the Company and the purchasers signatory thereto, as the
same may be amended from time to time.

     

       Section
2.          Exercise.

     

    (a)          Exercise of
Warrant.  Exercise of the purchase rights represented by this
Warrant may be made, in whole or in part, at any time or times on or after the
Initial Exercise Date and on or before the Termination Date by delivery to the
Company of a duly executed facsimile copy of the Notice of Exercise annexed
hereto (or such other office or agency of the Company as it may designate by
notice in writing to the registered Holder at the address of the Holder
appearing on the books of the Company); and, within 3 Trading Days of the date
said Notice of Exercise is delivered to the Company, the Company shall have
received payment of the aggregate Exercise Price of the shares thereby purchased
by wire transfer or cashier’s check drawn on a United States
bank.  Notwithstanding anything herein to the contrary, the Holder
shall not be required to physically surrender this Warrant to the Company until
the Holder has purchased all of the Warrant Shares available hereunder and the
Warrant has been exercised in full, in which case, the Holder shall surrender
this Warrant to the Company for cancellation within 3 Trading Days of the date
the final Notice of Exercise is delivered to the Company.  Partial
exercises of this Warrant resulting in purchases of a portion of the total
number of Warrant Shares available hereunder shall have the effect of lowering
the outstanding number of Warrant Shares purchasable hereunder in an amount
equal to the applicable number of Warrant Shares purchased.  The
Holder and the Company shall maintain records showing the number of Warrant
Shares purchased and the date of such purchases.  The Company shall
deliver any objection to any Notice of Exercise within 1 business day of receipt
of such notice.  In the event of any dispute or discrepancy, the
records of the Holder shall be controlling and determinative in the absence of
manifest error. The Holder and any assignee, by acceptance of this Warrant,
acknowledge and agree that, by reason of the provisions of this paragraph,
following the purchase of a portion of the Warrant Shares hereunder, the number
of Warrant Shares available for purchase hereunder at any given time may be less
than the amount stated on the face hereof.

     

    
      
        

      

    

    
      1 Six
months following the issue date.

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    (b)          Exercise
Price.  The exercise price per share of the Common Stock under
this Warrant shall be $0.02 per share, subject to adjustment hereunder (the
“Exercise
Price”).

     

    (c)          Cashless
Exercise.  If at any time after 6 months from the Issue Date,
there is no effective Registration Statement registering, or no current
prospectus available for, the resale of the Warrant Shares by the Holder, then
this Warrant may also be exercised at such time by means of a “cashless
exercise” in which the Holder shall be entitled to receive a certificate for the
number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)]
by (A), where:

     

    
      	
               
      

            	
              (A)
      =

            	
              the
      Daily VWAP (as defined in the Senior Secured Convertible Promissory Notes
      issued pursuant to the Purchase Agreement, as the same may be amended from
      time to time (the “Notes”)) on the
      Trading Day immediately preceding the date of such
    election;

            

    

     

    
      	
               
      

            	
              (B)
      =

            	
              the
      Exercise Price of this Warrant, as adjusted;
and

            

    

     

    
      	
               
      

            	
              (X)
      =

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

            

    

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (d)          Exercise
Limitations.

    (i)           Holder’s
Restrictions.  The Company shall not effect any exercise of
this Warrant, and a Holder shall not have the right to exercise any portion of
this Warrant, pursuant to Section 2 or otherwise, to the extent that after
giving effect to such issuance after exercise as set forth on the applicable
Notice of Exercise, such Holder (together with such Holder’s Affiliates, and any
other person or entity acting as a group together with such Holder or any of
such Holder’s Affiliates), would beneficially own in excess of the Beneficial
Ownership Limitation (as defined below).  For purposes of the foregoing
sentence, the number of shares of Common Stock beneficially owned by such Holder
and its Affiliates shall include the number of shares of Common Stock issuable
upon exercise of this Warrant with respect to which such determination is being
made, but shall exclude the number of shares of Common Stock which would be
issuable upon (A) exercise of the remaining, nonexercised portion of this
Warrant beneficially owned by such Holder or any of its Affiliates and (B)
exercise or conversion of the unexercised or nonconverted portion of any other
securities of the Company (including, without limitation, any other Common Stock
Equivalents) subject to a limitation on conversion or exercise analogous to the
limitation contained herein beneficially owned by such Holder or any of its
affiliates.  Except as set forth in the preceding sentence, for purposes of
this Section 2(c)(i), beneficial ownership shall be calculated in accordance
with Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder, it being acknowledged by the Holder that the Company is not
representing to such Holder that such calculation is in compliance with Section
13(d) of the Exchange Act and such Holder is solely responsible for any
schedules required to be filed in accordance therewith.  To the extent
that the limitation contained in this Section 2(d)(i) applies, the determination
of whether this Warrant is exercisable (in relation to other securities owned by
such Holder together with any Affiliates) and of which portion of this Warrant
is exercisable shall be in the sole discretion of the Holder, and the submission
of a Notice of Exercise shall be deemed to be the Holder’s determination of
whether this Warrant is exercisable (in relation to other securities owned by
such Holder together with any Affiliates) and of which portion of this Warrant
is exercisable, in each case subject the Beneficial Ownership Limitation, and
the Company shall have no obligation to verify or confirm the accuracy of such
determination.  In addition, a determination as to any group status as
contemplated above shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated
thereunder.  For purposes of this Section 2(d)(i), in determining the
number of outstanding shares of Common Stock, a Holder may rely on the number of
outstanding shares of Common Stock as reflected in (x) the Company’s most recent
Annual Report on Form 10-K or Quarterly Report on Form 10-Q, or such
similar form, as the case may be, or (y) any other notice provided by the
Company or the Company’s Transfer Agent at least 30 days prior to the date of
the submission of the Notice of Exercis setting forth the number of shares of
Common Stock outstanding.  Upon the written or oral request of a Holder,
the Company shall within two Trading Days confirm orally and in writing to such
Holder the number of shares of Common Stock then outstanding.  In any case,
the number of outstanding shares of Common Stock shall be determined after
giving effect to the conversion or exercise of securities of the Company,
including this Warrant, by such Holder or its Affiliates since the date as of
which such number of outstanding shares of Common Stock was
reported.  The “Beneficial Ownership
Limitation” shall be 4.999% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common
Stock issuable upon exercise of this Warrant.  The provisions of this
paragraph shall be construed and implemented in a manner otherwise than in
strict conformity with the terms of this Section 2(d)(i) to correct this
paragraph (or any portion hereof) which may be defective or inconsistent with
the intended Beneficial Ownership Limitation herein contained or to make changes
or supplements necessary or desirable to properly give effect to such
limitation. The limitations contained in this paragraph shall apply to a
successor holder of this Warrant.

    
      
         

      

      
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    (e)          Mechanics of
Exercise.

     

    (i)           Delivery of Certificates
Upon Exercise.  Certificates for shares purchased hereunder
shall be transmitted by the transfer agent of the Company to the Holder by
crediting the account of the Holder’s prime broker with the Depository Trust
Company through its Deposit Withdrawal Agent Commission (“DWAC”) system if the
Company is a participant in such system and there is an effective Registration
Statement permitting the resale of the Warrant Shares by the Holder, and
otherwise by physical delivery to the address specified by the Holder in the
Notice of Exercise within three (3) Trading Days from the receipt by the Company
of the Notice of Exercise, surrender of this Warrant and payment of the
aggregate Exercise Price as set forth above (“Warrant Share Delivery
Date”).  This Warrant shall be deemed to have been exercised on
the date the Exercise Price is received by the Company, if such date is after
Notice of Exercise and this Warrant are received by the Company.  The
Warrant Shares shall be deemed to have been issued, and the Holder or any other
person so designated to be named therein shall be deemed to have become a holder
of record of such shares for all purposes, as of the date the Warrant has been
exercised by payment to the Company of the Exercise Price (or by cashless
exercise, if permitted) and all taxes required to be paid by the Holder, if any,
pursuant to Section 2(e)(vi) prior to the issuance of such shares, have been
paid.

     

    (ii)          Delivery of New Warrants
Upon Exercise.  If this Warrant shall have been exercised in
part, the Company shall, at the request of a Holder and upon surrender of this
Warrant certificate, at the time of delivery of the certificate or certificates
representing Warrant Shares, deliver to Holder a new Warrant evidencing the
rights of Holder to purchase the unpurchased Warrant Shares called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant.

     

    (iii)         Rescission
Rights.  If the Company fails to cause its transfer agent to
transmit to the Holder a certificate or certificates representing the Warrant
Shares pursuant to this Section 2(e)(iii) by the second Trading Day immediately
following the Warrant Share Delivery Date, then the Holder will have the right
to rescind such exercise.

     

    (iv)         Compensation for Buy-In on
Failure to Timely Deliver Certificates Upon Exercise.  In
addition to any other rights available to the Holder, if the Company fails to
cause its transfer agent to transmit to the Holder a certificate or certificates
representing the Warrant Shares pursuant to an exercise on or before the Warrant
Share Delivery Date, and if after such date the Holder is required by its broker
to purchase (in an open market transaction or otherwise) or the Holder’s
brokerage firm otherwise purchases, shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Warrant Shares which the Holder
anticipated receiving upon such exercise (a “Buy-In”), then the
Company shall (1) pay in cash to the Holder the amount by which (x) the Holder’s
total purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the
number of Warrant Shares that the Company was required to deliver to the Holder
in connection with the exercise at issue times (B) the price at which the sell
order giving rise to such purchase obligation was executed, and (2) at the
option of the Holder, either reinstate the portion of the Warrant and equivalent
number of Warrant Shares for which such exercise was not honored or deliver to
the Holder the number of shares of Common Stock that would have been issued had
the Company timely complied with its exercise and delivery obligations
hereunder.  For example, if the Holder purchases Common Stock having a
total purchase price of $11,000 to cover a Buy-In with respect to an attempted
exercise of shares of Common Stock with an aggregate sale price giving rise to
such purchase obligation of $10,000, under clause (1) of the immediately
preceding sentence the Company shall be required to pay the Holder $1,000. The
Holder shall provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In and, upon request of the Company,
evidence of the amount of such loss.  Nothing herein shall limit a
Holder’s right to pursue any other remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (v)           No Fractional Shares or
Scrip.  No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant.  As to any
fraction of a share which Holder would otherwise be entitled to purchase upon
such exercise, the Company shall at its election, either pay a cash adjustment
in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price or round up to the next whole share.

     

    (vi)           Charges, Taxes and
Expenses.  Issuance of certificates for Warrant Shares shall be
made without charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificate, all of which
taxes and expenses shall be paid by the Company, and such certificates shall be
issued in the name of the Holder or in such name or names as may be directed by
the Holder; provided, however, that in the
event certificates for Warrant Shares are to be issued in a name other than the
name of the Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder;
and the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.

     

    (f)           Closing of
Books.  The Company will not close its stockholder books or
records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.

     

       Section
3.           Certain
Adjustments.

     

    (a)       
    Stock Dividends and
Splits. If the Company, at any time while this Warrant is outstanding:
(A) pays a stock dividend or otherwise make a distribution or distributions on
shares of its Common Stock or any other equity or equity equivalent securities
payable in shares of Common Stock (which, for avoidance of doubt, shall not
include any shares of Common Stock issued by the Company upon exercise of this
Warrant), (B) subdivides outstanding shares of Common Stock into a larger number
of shares, (C) combines (including by way of reverse stock split) outstanding
shares of Common Stock into a smaller number of shares, or (D) issues by
reclassification of shares of the Common Stock any shares of capital stock of
the Company, then in each case the Exercise Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding immediately before such event
and of which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event and the number of shares issuable upon
exercise of this Warrant shall be proportionately adjusted such that the
aggregate Exercise Price of this Warrant shall remain unchanged.  Any
adjustment made pursuant to this Section 3(a) shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or
re-classification.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    (b)           Pro Rata
Distributions.  If the Company, at any time while this Warrant
is outstanding, shall distribute to all holders of Common Stock (and not to
Holders of the Warrants) evidences of its indebtedness or assets (including cash
and cash dividends) or rights or warrants to subscribe for or purchase any
security other than the Common Stock, then in each such case the Exercise Price
shall be adjusted by multiplying the Exercise Price in effect immediately prior
to the record date fixed for determination of stockholders entitled to receive
such distribution by a fraction of which the denominator shall be the Daily VWAP
determined as of the record date mentioned above, and of which the numerator
shall be such Daily VWAP on such record date less the then per share fair market
value at such record date of the portion of such assets or evidence of
indebtedness so distributed applicable to one outstanding share of the Common
Stock (determined by dividing the amount distributed by the then issued and
outstanding shares of Common Stock) as determined by the Board of Directors in
good faith.  In either case the adjustments shall be described in a
statement provided to the Holder of the portion of assets or evidences of
indebtedness so distributed or such subscription rights applicable to one share
of Common Stock.  Such adjustment shall be made whenever any such
distribution is made and shall become effective immediately after the record
date mentioned above.

     

    (c)           Fundamental
Transaction. If, at any time while this Warrant is outstanding, (A) the
Company effects any merger or consolidation of the Company with or into another
Person, (B) the Company effects any sale of all or substantially all of its
assets in one or a series of related transactions, (C) any tender offer or
exchange offer (whether by the Company or another Person) is completed pursuant
to which holders of Common Stock are permitted to tender or exchange their
shares for other securities, cash or property, or (D) the Company effects any
reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property (each “Fundamental
Transaction”), then, upon any subsequent exercise of this Warrant, the
Holder shall have the right to receive, for each Warrant Share that would have
been issuable upon such exercise immediately prior to the occurrence of such
Fundamental Transaction, the number of shares of Common Stock of the successor
or acquiring corporation or of the Company, if it is the surviving corporation,
and any additional consideration (the “Alternate
Consideration”) receivable as a result of such merger, consolidation or
disposition of assets by a holder of the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such event. For purposes
of any such exercise, the determination of the Exercise Price shall be
appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration.  If holders of Common Stock are given any choice as to
the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental
Transaction.  To the extent necessary to effectuate the foregoing
provisions, any successor to the Company or surviving entity in such Fundamental
Transaction shall issue to the Holder a new warrant consistent with the
foregoing provisions and evidencing the Holder’s right to exercise such warrant
into Alternate Consideration. The terms of any agreement pursuant to which a
Fundamental Transaction is effected shall include terms requiring any such
successor or surviving entity to comply with the provisions of this Section 3(c)
and insuring that this Warrant (or any such replacement security) will be
similarly adjusted upon any subsequent transaction analogous to a Fundamental
Transaction.

    
      
         

      

      
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    (d)          Calculations. All
calculations under this Section 3 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of this Section 3,
the number of shares of Common Stock deemed to be issued and outstanding as of a
given date shall be the sum of the number of shares of Common Stock (excluding
treasury shares, if any) issued and outstanding at the close of the Trading Day
on or, if not applicable, most recently preceding, such given date.

     

    (e)          Reserved.

     

    (f)           Notice to
Holder.

     

    
      	
               
      

            	
              (i)

            	
              Adjustment to Exercise
      Price. Whenever the Exercise Price is adjusted pursuant to any
      provision of this Section 3, the Company shall promptly mail to the Holder
      a notice setting forth the Exercise Price after such adjustment and
      setting forth a brief statement of the facts requiring such
      adjustment.

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Notice to Allow
      Exercise by Holder. If (A) the Company shall declare a dividend (or
      any other distribution in whatever form) on the Common Stock; (B) the
      Company shall declare a special nonrecurring cash dividend on or a
      redemption of the Common Stock; (C) the Company shall authorize the
      granting to all holders of the Common Stock rights or warrants to
      subscribe for or purchase any shares of capital stock of any class or of
      any rights; (D) the approval of any stockholders of the Company shall be
      required in connection with any reclassification of the Common Stock, any
      consolidation or merger to which the Company is a party, any sale or
      transfer of all or substantially all of the assets of the Company, of any
      compulsory share exchange whereby the Common Stock is converted into other
      securities, cash or property; (E) the Company shall authorize the
      voluntary or involuntary dissolution, liquidation or winding up of the
      affairs of the Company; then, in each case, the Company shall cause to be
      mailed to the Holder at its last address as it shall appear upon the
      Warrant Register of the Company, at least 20 calendar days prior to the
      applicable record or effective date hereinafter specified, a notice
      stating (x) the date on which a record is to be taken for the purpose of
      such dividend, distribution, redemption, rights or warrants, or if a
      record is not to be taken, the date as of which the holders of the Common
      Stock of record to be entitled to such dividend, distributions,
      redemption, rights or warrants are to be determined or (y) the date on
      which such reclassification, consolidation, merger, sale, transfer or
      share exchange is expected to become effective or close, and the date as
      of which it is expected that holders of the Common Stock of record shall
      be entitled to exchange their shares of the Common Stock for securities,
      cash or other property deliverable upon such reclassification,
      consolidation, merger, sale, transfer or share exchange; provided that the
      failure to mail such notice or any defect therein or in the mailing
      thereof shall not affect the validity of the corporate action required to
      be specified in such notice.  Subject to applicable law, the
      Holder is entitled to exercise this Warrant during the period commencing
      on the date of such notice to the effective date of the event triggering
      such notice.  Notwithstanding the foregoing, the delivery of the
      notice described in this Section 3(f) is not intended to and shall not
      bestow upon the Holder any voting rights whatsoever with respect to
      outstanding unexercised
Warrants.

            

    

    
      
         

      

      
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    Section
4.          Transfer of
Warrant.

     

     (a)          Transferability.  Subject
to compliance with any applicable securities laws and the conditions set forth
in Section 4(d) hereof, this Warrant and all rights hereunder are transferable,
in whole or in part, upon surrender of this Warrant at the principal office of
the Company or its designated agent, together with a written assignment of this
Warrant substantially in the form attached hereto duly executed by the Holder or
its agent or attorney and funds sufficient to pay any transfer taxes payable
upon the making of such transfer.  Upon such surrender and, if
required, such payment, the Company shall execute and deliver a new Warrant or
Warrants in the name of the assignee or assignees and in the denomination or
denominations specified in such instrument of assignment, and shall issue to the
assignor a new Warrant evidencing the portion of this Warrant not so assigned,
and this Warrant shall promptly be cancelled.  A Warrant, if properly
assigned, may be exercised by a new holder for the purchase of Warrant Shares
without having a new Warrant issued.

     

     (b)          New Warrants. This
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney.  Subject to compliance
with Section 4(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice. All Warrants issued on transfers or exchanges shall be dated
the original Issue Date and shall be identical with this Warrant except as to
the number of Warrant Shares issuable pursuant thereto.

     

     (c)          Warrant Register. The
Company shall register this Warrant, upon records to be maintained by the
Company for that purpose (the “Warrant Register”),
in the name of the record Holder hereof from time to time.  The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the
contrary.

    
      
         

      

      
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     (d)          Transfer
Restrictions. If, at the time of the surrender of this Warrant in
connection with any transfer of this Warrant, the transfer of this Warrant shall
not be registered pursuant to an effective registration statement under the
Securities Act and under applicable state securities or blue sky laws, the
Company may require, as a condition of allowing such transfer, that the Holder
or transferee of this Warrant, as the case may be, furnish to the Company a
written opinion of counsel satisfactory to the Company (which opinion shall be
in form, substance and scope customary for opinions of counsel in comparable
transactions) to the effect that such transfer may be made without registration
under the Securities Act and under applicable state securities or blue sky laws,
(ii) that the transferor or transferee execute and deliver to the Company an
investment letter in form and substance acceptable to the Company and (iii) that
the transferee be an “accredited investor” as defined in Rule 501(a)(1), (a)(2),
(a)(3), (a)(7), or (a)(8) promulgated under the Securities Act or a qualified
institutional buyer as defined in Rule 144A(a)(1) promulgated under the
Securities Act.

     

    Section
5.          Investment Intent; Limited
Transferability.

     

     (a)          By
accepting this Warrant, the Holder represents to the Company that it understands
that this Warrant has not been, and any securities obtainable upon exercise of
this Warrant may not have not been registered for sale under the Securities Act
or any state securities or “blue sky” laws and are being offered and sold to the
Holder pursuant to one or more exemptions from the registration requirements of
the Securities Act and applicable State securities or “blue sky”
laws.  In the absence of an effective registration of such securities
or an exemption therefrom, any certificates for such securities shall bear a
legend substantially similar to the legend set forth in the Purchase
Agreement.  The Holder understands that it may have to bear the
economic risk of its investment in this Warrant and any securities obtainable
upon exercise of this Warrant for an indefinite period of time, until such
securities have been registered under the Securities Act and any applicable
state securities or “blue sky” laws and therefore cannot be sold unless
subsequently registered under such laws, or an exemption from such registration
is available.  The Holder further represents to the Company, by
accepting this Warrant, that it has full power and authority to accept this
Warrant and make the representations set forth herein.

     

     (b)          The
Holder agrees and acknowledges that this Warrant may not be sold, transferred,
assigned or hypothecated by the Holder except in compliance with the provisions
of the Securities Act and any applicable State securities or “blue sky”
laws.

     

    Section
6.          Miscellaneous.

     

     (a)          No Rights as Stockholder
Until Exercise.  This Warrant does not entitle the Holder to
any voting rights or other rights as a stockholder of the Company prior to the
exercise hereof.  Upon the surrender of this Warrant and the payment
of the aggregate Exercise Price, the Warrant Shares so purchased shall be and be
deemed to be issued to such Holder as the record owner of such shares as of the
close of business on the later of the date of such surrender and
payment.

     

     (b)          Loss, Theft, Destruction or
Mutilation of Warrant. The Company covenants that upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant or any stock certificate relating to
the Warrant Shares, and in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it (which, in the case of the Warrant, shall
not include the posting of any bond), and upon surrender and cancellation of
such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    (c)          Saturdays, Sundays,
Holidays, etc.  If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall not
be a business day, then such action may be taken or such right may be exercised
on the next succeeding business day.

     

    (d)          Authorized
Shares.

     

    The
Company covenants that during the period the Warrant is outstanding and
exercisable, it will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of the Warrant Shares
upon the exercise of any purchase rights under this Warrant.  The
Company further covenants that its issuance of this Warrant shall constitute
full authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the Warrant
Shares upon the exercise of the purchase rights under this
Warrant.  The Company will take all such reasonable action as may be
necessary to assure that such Warrant Shares may be issued as provided herein
without violation of any applicable law or regulation, or of any requirements of
the Trading Market (as defined in the Notes) upon which the Common Stock may be
listed.  The Company covenants that all Warrant Shares which may be
issued upon the exercise of the purchase rights represented by this Warrant
will, upon exercise of the purchase rights represented by this Warrant, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges created by the Company in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously with
such issue).

     

    The
Company shall not by any action, including, without limitation, amending its
certificate of incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of Holder as set forth in this
Warrant against impairment.  Without limiting the generality of the
foregoing, the Company will (a) not increase the par value of any Warrant Shares
above the amount payable therefor upon such exercise immediately prior to such
increase in par value, (b) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use
commercially reasonable efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this
Warrant.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    Before
taking any action which would result in an adjustment in the number of Warrant
Shares for which this Warrant is exercisable or in the Exercise Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.

     

    (e)           Jurisdiction. All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be determined in accordance with the provisions of the
Purchase Agreement.

     

    (f)           Restrictions.  The
Holder acknowledges that the Warrant Shares acquired upon the exercise of this
Warrant, if not registered, will have restrictions upon resale imposed by state
and federal securities laws:

     

    THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES OR “BLUE SKY” LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE
TRANSFEROR REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF
WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY, IF REQUESTED BY THE
COMPANY.  THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

     

    (g)           Nonwaiver and
Expenses.  No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of
such right or otherwise prejudice Holder’s rights, powers or remedies,
notwithstanding the fact that all rights hereunder terminate on the Termination
Date.  If the Company willfully and knowingly fails to comply with any
provision of this Warrant, which results in any material damages to the Holder,
the Company shall pay to Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys’ fees,
including those of appellate proceedings, incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights, powers
or remedies hereunder.

     

    (h)           Notices.  Any
notice, request or other document required or permitted to be given or delivered
to the Holder by the Company shall be delivered in accordance with the notice
provisions of the Purchase Agreement.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    (i)           Limitation of
Liability.  No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant to purchase Warrant
Shares, and no enumeration herein of the rights or privileges of Holder, shall
give rise to any liability of Holder for the purchase price of any Common Stock
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.

     

    (j)           Remedies.  Holder,
in addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Warrant.  The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of the provisions of this Warrant and hereby agrees to waive and not to assert
the defense in any action for specific performance that a remedy at law would be
adequate.

     

    (k)           Successors and
Assigns.  Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit of
and be binding upon the successors of the Company and the successors and
permitted assigns of Holder.  The provisions of this Warrant are
intended to be for the benefit of all Holders from time to time of this Warrant
and shall be enforceable by any such Holder or holder of Warrant
Shares.

     

    (l)           Amendment.  This
Warrant may be modified or amended or the provisions hereof waived with the
written consent of the Company and the Holder.

     

    (m)           Severability.  Wherever
possible, each provision of this Warrant shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Warrant shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Warrant.

     

    (n)           Headings.  The
headings used in this Warrant are for the convenience of reference only and
shall not, for any purpose, be deemed a part of this Warrant.

     

    **  **  **  **  **

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized as of the date first above
indicated.

    

    
      
        
          	 
      	
                  GENTA
      INCORPORATED

                
	 
      	 
      
	 
      	
                  By:

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

                
	 
      	 
      	
                  Title:  Chief
      Executive Officer

                

        

      

    

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    

    NOTICE
OF EXERCISE

    

    TO:           [_______________________

    

    1.           The
undersigned hereby elects to purchase ________ Warrant Shares of the Company
pursuant to the terms of the attached Warrant (only if exercised in full), and
tenders herewith payment of the exercise price in full, together with all
applicable transfer taxes, if any.

     

    2.           Payment
shall be made in lawful money of the United States.

     

    3.           Please
issue a certificate or certificates representing said Warrant Shares in the name
of the undersigned or in such other name as is specified below:

     

    _______________________________

    

    

    The
Warrant Shares shall be delivered by physical delivery of a certificate
to:

    

    _______________________________

    

    _______________________________

    

    _______________________________

    

    (4)  Accredited
Investor.  The undersigned is an “accredited investor” as
defined in Regulation D promulgated under the Securities Act of 1933, as
amended.

    

    [SIGNATURE
OF HOLDER]

    

    Name of
Investing Entity:
________________________________________________________________________

    Signature of Authorized Signatory of
Investing Entity:
_________________________________________________

    Name of
Authorized Signatory:
___________________________________________________________________

    Title of
Authorized Signatory:
____________________________________________________________________

    Date:
________________________________________________________________________________________

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    ASSIGNMENT
FORM

    

    (To
assign the foregoing warrant, execute

    this form
and supply required information.

    Do not
use this form to exercise the warrant.)

    

    FOR VALUE
RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all
rights evidenced thereby are hereby assigned to

    

    _______________________________________________
whose address is

    

    _______________________________________________________________.

    

    

    _______________________________________________________________

    

    Dated:  ______________,
_______

    

    

    Holder’s
Signature:             _____________________________

    

    Holder’s
Address:               _____________________________

    

    _____________________________

    

    Signature
Guaranteed:  ___________________________________________

    

    NOTE:  The
signature to this Assignment Form must correspond with the name as it appears on
the face of the Warrant, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank or trust
company.  Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.SECURITIES
PURCHASE

     

    AGREEMENT

     

    Dated
as of July [___], 2009

     

    by
and among

     

    GENTA
INCORPORATED

     

    and

     

    THE
PURCHASERS LISTED ON EXHIBIT A

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    SECURITIES
PURCHASE AGREEMENT

     

    This
SECURITIES PURCHASE AGREEMENT dated as of July [___], 2009 (this “Agreement”) by and
among Genta Incorporated, a Delaware corporation (the “Company”), and each
of the purchasers of the unsecured subordinated convertible promissory note and
shares of common stock of the Company whose names are set forth on Exhibit A attached
hereto (each a “Purchaser” and
collectively, the “Purchasers”).

     

    The
parties hereto agree as follows:

    

    ARTICLE
1

     

    PURCHASE
AND SALE OF NOTES

     

    1.1         Purchase and Sale of Notes
and Common Stock. 

     

    (a)           Upon
the following terms and conditions, the Company shall issue and sell to the
Purchasers, and the Purchasers shall purchase from the Company, units (each, a
“Unit”), in an aggregate amount equal to $10,000,000, consisting of (i) 8.00%
unsecured subordinated convertible promissory notes in the aggregate principal
amount of $7,000,000, convertible into shares of Common Stock (as defined
below), in substantially the form attached hereto as Exhibit B (the
“Notes”), and
(ii) shares of the Company’s common stock, par value $0.001 per share (the
“Common
Stock”), in an aggregate amount of $3,000,000, at a price per share equal
to 25% of the VWAP (as defined below) for the five Trading Days (as defined
below) immediately preceding each Closing, subject to a minimum price per share
of $0.002 (which price is set before the reverse stock split announced by the
Company in June of 2009 and shall be adjusted to reflect such stock split) (the
“Per Share Purchase
Price”).  The Per Share Purchase Price for the First Closing
shall be $0.002.  At each Closing (as defined below), the Company
shall deliver to each Purchaser  (i) a Note in the principal amount
equal to 70%  of the portion of the Purchase Price paid by such
Purchaser for such Unit and (ii) shares of Common Stock, the purchase price of
which  equals 30% of the portion of the Purchase Price paid by such
Purchaser for such Unit.

     

    (b)           The
Company and the Purchasers are executing and delivering this Agreement in
accordance with and in reliance upon the exemption from securities registration
afforded by Section 4(2) of the U.S. Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder (the “Securities Act”),
including Regulation D (“Regulation D”),
and/or upon such other exemption from the registration requirements of the
Securities Act as may be available with respect to any or all of the investments
to be made hereunder.  For purposes of this Section 1.1, “VWAP” means, for any
date, (i) the volume weighted average price of the Common Stock for such date on
the principal Trading Market for the Common Stock as reported by Bloomberg
Financial L.P. (based on a Trading Day from 9:30 a.m. Eastern Time to 4:02 p.m.
Eastern Time); (ii) if the Common Stock is not then listed or quoted on a
Trading Market and if prices for the Common Stock are then reported in the “Pink
Sheets” published by the Pink Sheets, LLC (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per
share of the Common Stock so reported; or (iii) in all other cases, the
fair market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the Purchaser and reasonably acceptable to
the Company.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    1.2         Purchase Price and
Closing. Subject to the terms and conditions hereof, the Company agrees
to issue and sell to the Purchasers and, in consideration of and in express
reliance upon the representations, warranties, covenants, terms and conditions
of this Agreement, the Purchasers, severally but not jointly, agree to purchase
the Securities (as defined below) for an aggregate purchase price of $10,000,000
(the “Purchase
Price”). At each Closing (as defined below) under this Agreement, each
Purchaser shall deliver the applicable portion of the Purchase Price by wire
transfer of immediately available funds to the Company.

     

    (a)           The
first Closing under this Agreement (the “First Closing”) shall
take place on or before July 6, 2009 (the “First Closing Date”),
provided, that
all of the conditions set forth in Article IV hereof and applicable to the First
Closing have been fulfilled or waived in accordance herewith. The Closing shall
take place at the offices of Tang Capital Partners LP (the “Lead Purchaser”),
4401 Eastgate Mall, First Floor, San Diego, CA 92121 at 1:00 p.m. Pacific
Standard Time, or at such other time and place as the parties may
agree.  Subject to the terms and conditions of this Agreement, at the
First Closing the Purchasers shall purchase and the Company shall issue and
deliver or cause to be delivered to each Purchaser Securities for the applicable
amounts set forth opposite the name of such Purchaser on Exhibit A
hereto.

     

    (b)           At
an additional closing (the “Additional Closing”,
and along with the First Closing, each a “Closing”), which
shall occur on August 6, 2009 or at such other time at which the Company and the
Purchasers shall mutually agree, the Purchasers shall purchase, and the Company
shall issue, additional Notes and shares of Common Stock in the amount set forth
opposite such Purchaser’s name on Exhibit A; provided, however, that if the
Additional Closing does not occur prior to the Expiration Date, such Additional
Closing shall be automatically terminated and neither the Purchasers nor the
Company shall have the right to such Additional Closing.  The issuance
of such additional Securities at the Additional Closing, shall be made on the
terms and conditions set forth in this Agreement, and the representations and
warranties of the Company set forth in Article 2 and the representations and
warranties of the Purchasers in Article 3 hereof shall speak as of the date of
such Additional Closing. Any Notes, shares of Common Stock and Warrants issued
pursuant to this Section 1.3 shall be deemed to be “Notes,” “Common Stock,”
and “Warrants” for all purposes under this Agreement.  For purposes of
this Agreement, “Expiration Date”
shall mean the date the Company consummates a public offering and issues
registered Notes and registered shares of Common Stock pursuant to the S-1
registration statement (File No. 333-153278) in an aggregate amount of at least
$7,000,000.  

     

    1.3         Conversion
Shares.  On and after the Closing Date, the Company shall at
all times reserve (and hereby covenants to continue to reserve), free of
preemptive rights and other similar contractual rights, a number of its
authorized but unissued shares of Common Stock equal to 125% of the aggregate
number of shares of Common Stock then issuable upon conversion or exercise of or
otherwise in respect of the Notes (including any Notes issued in payment of
interest thereunder) and Warrants. Any shares of Common Stock issuable upon
conversion or otherwise in respect of the Notes or exercise of the Warrants are
herein referred to as the “Conversion
Shares”.  The Notes, the Common Stock and the Warrants are
sometimes collectively referred to herein as the “Securities”.

    
      
         

      

      
        3.

        
          

        

      

      
         

      

    

    1.4         Warrants.  At
each Closing, the Company shall issue to each purchaser a two-year warrant to
purchase a number of shares of Common Stock, equal to 25% of the number of
shares of Common Stock underlying the principal amount of the Notes purchased at
each Closing, the exercise price of which is equal to $0.02 per share,
substantially in the form attached hereto as Exhibit
C.  For purposes of clarity, Warrants shall only be issued with
respect to the principal amount for the Notes purchased pursuant to this
Agreement and shall not be issued with respect to any convertible notes issued
as interest payments for the Notes issued pursuant to this
Agreement.

     

    1.5         Acknowledgment.
Notwithstanding that the Company has filed an amendment to its certificate of
incorporation effecting a reverse stock split under Delaware law, the Purchasers
and the Company acknowledge and agree that the terms and conditions set forth in
this Agreement and the other Transaction Documents, including, but not limited
to, the Per Share Purchase Price and the Conversion Price set forth in the Note,
are pre-reverse stock split terms and do not reflect a reverse stock split that
is contemplated to be effected for trading purposes on the OTC Bulletin Board
following the First Closing.  The reverse stock split shall be applied
to the Per Share Purchase Price, the Conversion Price in the Note, the minimum
Per Share Purchase Price and all other terms of this agreement as of the
effectiveness of such reverse stock split.

     

    ARTICLE
2

     

    REPRESENTATIONS
AND WARRANTIES

     

    2.1         Representations and
Warranties of the Company. The Company hereby represents and warrants to
the Purchasers, as of each Closing Date (except as set forth in the Public
Filings (as defined below) or on the Schedule of Exceptions attached hereto with
each numbered Schedule corresponding to the section number herein), as
follows:

     

    (a)           Organization, Good Standing
and Power. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and has
the requisite corporate power to own, lease and operate its properties and
assets and to conduct its business as it is now being conducted. The Company
does not have any direct or indirect Subsidiaries (as defined in Section 2.1(g))
or own securities of any kind in any other entity except as set forth on Schedule 2.1(g)
hereto. The Company and each such Subsidiary (as defined in Section 2.1(g)) is
duly qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary except for any jurisdiction(s)
(alone or in the aggregate) in which the failure to be so qualified will not
have a Material Adverse Effect. For the purposes of this Agreement, “Material Adverse
Effect” means any material adverse effect on the business, operations,
properties, prospects, or financial condition of the Company and its
Subsidiaries and/or any condition, circumstance, or situation that would
prohibit or otherwise materially interfere with the ability of the Company to
perform any of its obligations under this Agreement or any of the Transaction
Documents in any material respect.

    
      
         

      

      
        4.

        
          

        

      

      
         

      

    

    (b)           Authorization;
Enforcement. Each of the Company and its Subsidiaries (as applicable) has
the requisite corporate power and authority to enter into and perform this
Agreement, the Notes, the Warrants, the Officer’s Certificate to be delivered by
the Company, dated as of the Closing Date, substantially in the form of Exhibit D attached
hereto (the “Officer’s
Certificate”) (collectively, the “Transaction
Documents”) and to issue and sell the Securities in accordance with the
terms hereof. The execution, delivery and performance of the Transaction
Documents by the Company and each Subsidiary of the Company party thereto and
the consummation by it of the transactions contemplated thereby have been duly
and validly authorized by all necessary corporate action, and, except as set
forth on Schedule
2.1(b), no further consent or authorization of the Company, any
Subsidiary or their respective Boards of Directors or stockholders is required.
When executed and delivered by the Company and each Subsidiary of the Company
party thereto, each of the Transaction Documents shall constitute a valid and
binding obligation of the Company and each Subsidiary, as applicable,
enforceable against the Company and each Subsidiary, as applicable, in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, reorganization, moratorium, liquidation, conservatorship,
receivership or similar laws relating to, or affecting generally the enforcement
of, creditor’s rights and remedies or by other equitable principles of general
application.

     

    (c)           Capitalization. The
authorized capital stock and the issued and outstanding shares of capital stock
of the Company as of the Closing Date is set forth on Schedule 2.1(c)
hereto. All of the outstanding shares of the Common Stock and any other
outstanding security of the Company have been duly and validly authorized.
Except as set forth in this Agreement, the Public Filings (as defined in Section
2.1(f)) or as set forth on Schedule 2.1(c)
hereto, no shares of Common Stock or any other security of the Company are
entitled to preemptive rights or registration rights and there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company. Furthermore,
except as set forth in this Agreement and as set forth on Schedule 2.1(c)
hereto, there are no equity plans, contracts, commitments, understandings, or
arrangements by which the Company is or may become bound to issue additional
shares of the capital stock of the Company or options, securities or rights
convertible into shares of capital stock of the Company. Except for customary
transfer restrictions contained in agreements entered into by the Company in
order to sell restricted securities or as provided on Schedule 2.1(c)
hereto, the Company is not a party to or bound by any agreement or understanding
granting registration or anti-dilution rights to any person with respect to any
of its equity or debt securities. Except as set forth on Schedule 2.1(c), the
Company is not a party to, and it has no knowledge of, any agreement or
understanding restricting the voting or transfer of any shares of the capital
stock of the Company. The Company has not made any representations regarding
equity incentives to any officer, employee, director or consultant that are not
disclosed in the Public Filings.

     

    (d)           Issuance of
Securities.  The Securities to be issued at the Closing have
been duly authorized by all necessary corporate action and, when paid for or
issued in accordance with the terms hereof, the Securities shall be validly
issued and outstanding, free and clear of all liens, encumbrances and rights of
refusal of any kind.  When the Conversion Shares are issued in
accordance with the terms of this Agreement and as set forth in the Notes, such
shares will be duly authorized by all necessary corporate action and validly
issued and outstanding, fully paid and nonassessable, free and clear of all
liens, encumbrances and rights of refusal of any kind and the holders shall be
entitled to all rights accorded to a holder of Common Stock.

     

    
      
         

      

      
        5.

        
          

        

      

      
         

      

    

     

    (e)           No Conflicts. The
execution, delivery and performance of the Transaction Documents by the Company
and its Subsidiaries (as applicable), the performance by the Company of its
obligations under the Notes and Warrants, and the consummation by the Company
and its Subsidiaries of the transactions contemplated hereby and thereby, and
the issuance of the Securities as contemplated hereby, do not and will not (i)
violate or conflict with any provision of the Company’s Certificate of
Incorporation (the “Certificate”) or
Bylaws (the “Bylaws”), each as
amended to date, or any Subsidiary’s comparable charter documents, subject to
the filing of an amendment to the Certificate to increase the authorized shares,
(ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, mortgage, deed of trust, indenture, note, bond, license, lease
agreement, instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries’
respective properties or assets are bound, (iii) result in a violation of any
federal, state, local or foreign statute, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations) applicable
to the Company or any of its Subsidiaries or by which any property or asset of
the Company or any of its Subsidiaries are bound or affected, or (iv) create or
impose a lien, mortgage, security interest, charge or encumbrance of any nature
on any property or asset of the Company or its Subsidiaries under any agreement
or any commitment to which the Company or any of its Subsidiaries is a party or
by which the Company or any of its Subsidiaries is bound or by which any of
their respective properties or assets are bound, except, in the case of clause
(ii), for such conflicts, defaults, terminations, amendments, acceleration,
cancellations and violations as would not, individually or in the aggregate,
have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries
is required under federal, state, foreign or local law, rule or regulation to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under the Transaction Documents, issue
and sell the Securities in accordance with the terms hereof (other than the
filing of a Form D pursuant to Regulation D and counterpart filings under
applicable state securities laws, rules or regulations). The business of the
Company and its Subsidiaries is not being conducted in violation of any laws,
ordinances or regulations of any governmental entity.

     

    (f)           Commission Documents,
Financial Statements. The Common Stock of the Company is registered
pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as
amended (the “Exchange
Act”), and the Company has timely filed all reports, schedules, forms,
statements and other documents required to be filed by it with the Securities
Exchange Commission (“SEC”) pursuant to the
reporting requirements of the Exchange Act (all of the foregoing including
filings incorporated by reference therein being referred to herein as the “Commission
Documents”). At the times of their respective filings, the Form 10-K for
the fiscal year ended December 31, 2008 (the “Form 10-K”, and
together with any other report, schedule, form, statement or other document
filed by the Company with the SEC pursuant to the reporting requirements of the
Exchange Act subsequent to the filing of the Form 10-K and prior to the date of
this Agreement, the “Public Filings”)
complied in all material respects with the requirements of the Exchange Act and
the rules and regulations of the SEC promulgated thereunder and other federal,
state and local laws, rules and regulations applicable to such documents, and
the Form 10-K did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.  As of their respective dates, the financial
statements of the Company included in the Commission Documents complied as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with generally accepted accounting principles (“GAAP”) applied on a
consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements), and fairly present in all material
respects the financial position of the Company and its Subsidiaries as of the
dates thereof and the results of operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).

     

    
      
         

      

      
        6.

        
          

        

      

      
         

      

    

     

    (g)           Subsidiaries. Schedule 2.1(g)
hereto sets forth each Subsidiary of the Company, showing the jurisdiction of
its incorporation or organization and showing the percentage of each person’s
ownership of the outstanding stock or other interests of such Subsidiary. For
the purposes of this Agreement, “Subsidiary” shall
mean any corporation or other entity of which at least a majority of the
securities or other ownership interest having ordinary voting power (absolutely
or contingently) for the election of directors or other persons performing
similar functions are at the time owned directly or indirectly by the Company
and/or any of its other Subsidiaries. All of the outstanding shares of capital
stock of each Subsidiary have been duly authorized and validly issued, and are
fully paid and nonassessable. Except as set forth on Schedule 2.1(g)
hereto, there are no outstanding preemptive, conversion or other rights,
options, warrants or agreements granted or issued by or binding upon any
Subsidiary for the purchase or acquisition of any shares of capital stock of any
Subsidiary or any other securities convertible into, exchangeable for or
evidencing the rights to subscribe for any shares of such capital stock. Neither
the Company nor any Subsidiary is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of the
capital stock of any Subsidiary or any convertible securities, rights, warrants
or options of the type described in the preceding sentence except as set forth
on Schedule
2.1(g) hereto. Neither the Company nor any Subsidiary is party to, nor
has any knowledge of, any agreement restricting the voting or transfer of any
shares of the capital stock of any Subsidiary. None of the Subsidiaries owns any
assets or conduct any operations.

     

    (h)           No Material Adverse
Change. Since December 31, 2008, the Company has not experienced or
suffered any Material Adverse Effect, except as disclosed on Schedule 2.1(h)
hereto.

     

    (i)           No Undisclosed
Liabilities. Except as disclosed on Schedule 2.1(i)
hereto, neither the Company nor any of its Subsidiaries has incurred any
liabilities, obligations, claims or losses (whether liquidated or unliquidated,
secured or unsecured, absolute, accrued, contingent or otherwise) other than
those incurred in the ordinary course of the Company’s or its Subsidiaries’
respective businesses or which, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect.

     

    
      
         

      

      
        7.

        
          

        

      

      
         

      

    

    (j)           No Undisclosed Events or
Circumstances. Since December 31, 2008, except as disclosed on Schedule 2.1(j)
hereto, no event or circumstance has occurred or exists with respect to the
Company or its Subsidiaries or their respective businesses, properties,
prospects, operations or financial condition, which, under applicable law, rule
or regulation, requires public disclosure or announcement by the Company but
which has not been so publicly announced or disclosed.

     

    (k)           Indebtedness. Schedule 2.1(k)
hereto sets forth as of the Closing Date all outstanding secured and unsecured
Indebtedness of the Company or any Subsidiary, or for which the Company or any
Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness”
shall include, without limitation, (a) any liabilities for borrowed money or
other amounts owed, (b) all guaranties, endorsements and other contingent
obligations in respect of Indebtedness of others, whether or not the same are or
should be reflected in the Company’s balance sheet (or the notes thereto),
except guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business; and (c)
all leases required to be capitalized in accordance with GAAP. Neither the
Company nor any Subsidiary is in default with respect to any
Indebtedness.

     

    (l)           Title to Assets. Each
of the Company and the Subsidiaries has good and valid title to all of its real
and personal property reflected in the Public Filings, free and clear of any
mortgages, pledges, charges, liens, security interests or other encumbrances,
except for those indicated on Schedule 2.1(l)
hereto or such that, individually or in the aggregate, do not cause a Material
Adverse Effect. Any leases of the Company and each of its Subsidiaries are valid
and subsisting and in full force and effect.

     

    (m)           Actions Pending.
There is no action, suit, claim, investigation, arbitration, alternate dispute
resolution proceeding or other proceeding pending or, to the knowledge of the
Company, threatened against the Company or any Subsidiary which questions the
validity of this Agreement or any of the other Transaction Documents or any of
the transactions contemplated hereby or thereby or any action taken or to be
taken pursuant hereto or thereto. Except as set forth in the Public Filings or
on Schedule
2.1(m) hereto, there is no action, suit, claim, investigation,
arbitration, alternate dispute resolution proceeding or other proceeding pending
or, to the knowledge of the Company, threatened against or involving the
Company, any Subsidiary or any of their respective properties or assets, which
individually or in the aggregate, would reasonably be expected, if adversely
determined, to have a Material Adverse Effect. There are no outstanding orders,
judgments, injunctions, awards or decrees of any court, arbitrator or
governmental or regulatory body against the Company or any Subsidiary or any
officers or directors of the Company or Subsidiary in their capacities as such,
which individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

     

    (n)           Compliance with Law.
The Company and its Subsidiaries have been and are presently conducting their
respective businesses in accordance with all applicable federal, state and local
governmental laws, rules, regulations and ordinances, except such that,
individually or in the aggregate, the noncompliance therewith could not
reasonably be expected to have a Material Adverse Effect. The Company and each
of its Subsidiaries have all franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals necessary for the
conduct of its business as now being conducted by it unless the failure to
possess such franchises, permits, licenses, consents and other governmental or
regulatory authorizations and approvals, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.

     

    
      
         

      

      
        8.

        
          

        

      

      
         

      

    

     

    (o)           Taxes. The Company
and each of the Subsidiaries has accurately prepared and filed all federal,
state and other tax returns required by law to be filed by it, has paid or made
provisions for the payment of all taxes shown to be due and all additional
assessments, and adequate provisions have been and are reflected in the
financial statements of the Company and the Subsidiaries for all current taxes
and other charges to which the Company or any Subsidiary is subject and which
are not currently due and payable. Except as disclosed on Schedule 2.1(o)
hereto or in the Public Filings, to the best of the Company’s knowledge, none of
the federal income tax returns of the Company or any Subsidiary have been
audited by the Internal Revenue Service. Except as disclosed on Schedule 2.1(o)
hereto or in the Public Filings, the Company has no knowledge of any additional
assessments, adjustments or contingent tax liability (whether federal or state)
of any nature whatsoever, whether pending or threatened against the Company or
any Subsidiary for any period, nor of any basis for any such assessment,
adjustment or contingency.

     

    (p)           Certain Fees. Except
as set forth on Schedule 2.1(p)
hereto, the Company has not employed any broker or finder or incurred any
liability for any brokerage or investment banking fees, commissions, finders’
structuring fees, financial advisory fees or other similar fees in connection
with the Transaction Documents.

     

    (q)           Disclosure. Except
for the information concerning the transactions contemplated by this Agreement,
the Company confirms that neither it nor any other person acting on its behalf
has provided any of the Purchasers or their agents or counsel with any
information that constitutes or might constitute material, nonpublic
information. To the best of the Company’s knowledge, neither this Agreement or
the Schedules hereto nor any other documents, certificates or instruments
furnished to the Purchasers by or on behalf of the Company or any Subsidiary in
connection with the transactions contemplated by this Agreement contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made herein or therein, in the light of the
circumstances under which they were made herein or therein, not
misleading.

     

    (r)           Operation of
Business. Except as set forth on Schedule 2.1(r)
hereto, the Company and each of the Subsidiaries owns or possesses the rights to
all patents, trademarks, domain names (whether or not registered) and any
patentable improvements or copyrightable derivative works thereof, websites and
intellectual property rights relating thereto, service marks, trade names,
copyrights, licenses and authorizations which are necessary for the conduct of
its business as now conducted without any conflict with the rights of
others.

     

    
      
         

      

      
        9.

        
          

        

      

      
         

      

    

    (s)           Environmental
Compliance. The Company and each of its Subsidiaries have obtained all
material approvals, authorization, certificates, consents, licenses, orders and
permits or other similar authorizations of all governmental authorities, or from
any other person, that are required under any Environmental Laws. “Environmental
Laws” shall mean all applicable laws relating to the protection of the
environment including, without limitation, all requirements pertaining to
reporting, licensing, permitting, controlling, investigating or remediating
emissions, discharges, releases or threatened releases of hazardous substances,
chemical substances, pollutants, contaminants or toxic substances, materials or
wastes, whether solid, liquid or gaseous in nature, into the air, surface water,
groundwater or land, or relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of hazardous
substances, chemical substances, pollutants, contaminants or toxic substances,
material or wastes, whether solid, liquid or gaseous in nature. The Company has
all necessary governmental approvals required under all Environmental Laws as
necessary for the Company’s business or the business of any of its subsidiaries.
To the best of the Company’s knowledge, the Company and each of its subsidiaries
are also in compliance with all other limitations, restrictions, conditions,
standards, requirements, schedules and timetables required or imposed under all
Environmental Laws. Except for such instances as would not individually or in
the aggregate have a Material Adverse Effect, there are no past or present
events, conditions, circumstances, incidents, actions or omissions relating to
or in any way affecting the Company or its Subsidiaries that violate or may
violate any Environmental Law after each Closing Date or that may give rise to
any environmental liability, or otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, study or investigation (i) under any
Environmental Law, or (ii) based on or related to the manufacture, processing,
distribution, use, treatment, storage (including without limitation underground
storage tanks), disposal, transport or handling, or the emission, discharge,
release or threatened release of any hazardous substance.

     

    (t)           Books and Records; Internal
Accounting Controls. The records and documents of the Company and its
Subsidiaries accurately reflect in all material respects the information
relating to the business of the Company and the Subsidiaries, the location and
collection of their assets, and the nature of all transactions giving rise to
the obligations or accounts receivable of the Company or any Subsidiary. The
Company is in material compliance with all provisions of the Sarbanes-Oxley Act
of 2002 which are applicable to it as of each Closing Date. The Company and its
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Company has established disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
Company and designed such disclosure controls and procedures to ensure that
information required to be disclosed by the Company in the reports it files or
submits under the Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the SEC’s rules and forms. The Company’s
certifying officers have evaluated the effectiveness of the Company’s disclosure
controls and procedures as of the end of the period covered by the Company’s
most recently filed periodic report under the Exchange Act (such date, the
“Evaluation
Date”). The Company presented in its most recently filed periodic report
under the Exchange Act the conclusions of the certifying officers about the
effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. Since the Evaluation Date, there have
been no changes in the Company’s internal control over financial reporting (as
such term is defined in the Exchange Act) that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over
financial reporting.

     

    
      
         

      

      
        10.

        
          

        

      

      
         

      

    

     

    (u)           Material Agreements.
Except as disclosed in the Public Filings or as set forth on Schedule 2.1(u)
hereto, or as would not be reasonably likely to have a Material Adverse Effect,
(i) the Company and each of its Subsidiaries have performed all obligations
required to be performed by them to date under any written or oral contract,
instrument, agreement, commitment, obligation, plan or arrangement, filed or
required to be filed with the SEC (the “Material
Agreements”), (ii) neither the Company nor any of its Subsidiaries has
received any notice of default under any Material Agreement and, (iii) to the
best of the Company’s knowledge, neither the Company nor any of its Subsidiaries
is in default under any Material Agreement now in effect.

     

    (v)           Transactions with
Affiliates. Except as set forth on Schedule 2.1(v)
hereto or in the Public Filings and otherwise contemplated by this Agreement,
there are no loans, leases, agreements, contracts, royalty agreements,
management contracts or arrangements or other continuing transactions between
(a) the Company, any Subsidiary or any of their respective customers or
suppliers on the one hand, and (b) on the other hand, any officer, employee,
consultant or director of the Company, or any of its Subsidiaries, or any person
owning at least 5% of the outstanding capital stock of the Company or any
Subsidiary or any member of the immediate family of such officer, employee,
consultant, director or stockholder or any corporation or other entity
controlled by such officer, employee, consultant, director or stockholder, or a
member of the immediate family of such officer, employee, consultant, director
or stockholder which, in each case, is required to be disclosed in the
Commission Documents or in the Company’s most recently filed definitive proxy
statement on Schedule 14A, that is not so disclosed in the Commission Documents
or in such proxy statement.

     

    (w)           Securities Act of
1933. The Company has complied and will comply with all applicable
federal and state securities laws in connection with the offer, issuance and
sale of the Securities hereunder. Neither the Company nor anyone acting on its
behalf, directly or indirectly, has or will sell, offer to sell or solicit
offers to buy any of the Securities or similar securities to, or solicit offers
with respect thereto from, or enter into any negotiations relating thereto with,
any person, or has taken or will take any action so as to bring the issuance and
sale of any of the Securities under the registration provisions of the
Securities Act and applicable state securities laws, and neither the Company nor
any of its affiliates, nor any person acting on its or their behalf, has engaged
in any form of general solicitation or general advertising (within the meaning
of Regulation D under the Securities Act) in connection with the offer or sale
of any of the Securities.

     

    (x)           Employees. Neither
the Company nor any Subsidiary has any collective bargaining arrangements or
agreements covering any of its employees, except as set forth on Schedule 2.1(x)
hereto. Except as set forth on Schedule 2.1(x)
hereto or in the Public Filings, neither the Company nor any Subsidiary has any
employment contract, agreement regarding proprietary information,
non-competition agreement, non-solicitation agreement, confidentiality
agreement, or any other similar contract or restrictive covenant, relating to
the right of any officer, employee or consultant to be employed or engaged by
the Company or such Subsidiary required to be disclosed in the Commission
Documents that is not so disclosed. No officer, consultant or key employee of
the Company or any Subsidiary whose termination, either individually or in the
aggregate, would be reasonably likely to have a Material Adverse Effect, has
terminated or, to the knowledge of the Company, has any present intention of
terminating his or her employment or engagement with the Company or any
Subsidiary.

     

    
      
         

      

      
        11.

        
          

        

      

      
         

      

    

     

    (y)          Absence of Certain
Developments. Except as set forth in the Public Filings or provided on
Schedule 2.1(y)
hereto or as otherwise contemplated by this Agreement, since December 31, 2008,
neither the Company nor any Subsidiary has:

     

    (i)           issued
any stock, bonds or other corporate securities or any right, options or warrants
with respect thereto;

     

    (ii)         borrowed
any amount in excess of $10,000 or incurred or become subject to any other
liabilities in excess of $10,000 (absolute or contingent) except current
liabilities incurred in the ordinary course of business which are comparable in
nature and amount to the current liabilities incurred in the ordinary course of
business during the comparable portion of its prior fiscal year, as adjusted to
reflect the current nature and volume of the business of the Company and its
Subsidiaries;

     

    (iii)        discharged
or satisfied any lien or encumbrance in excess of $10,000 or paid any obligation
or liability (absolute or contingent) in excess of $10,000, other than current
liabilities paid in the ordinary course of business;

     

    (iv)         declared
or made any payment or distribution of cash or other property to stockholders
with respect to its stock, or purchased or redeemed, or made any agreements so
to purchase or redeem, any shares of its capital stock, in each case in excess
of $5,000 individually or $10,000 in the aggregate;

     

    (v)          sold,
assigned or transferred any other tangible assets, or canceled any debts or
claims, in each case in excess of $10,000, except in the ordinary course of
business;

     

    (vi)         sold,
assigned or transferred any patent rights, trademarks, trade names, copyrights,
trade secrets or other intangible assets or intellectual property rights in
excess of $10,000, or disclosed any proprietary confidential information to any
person except to customers in the ordinary course of business or to the
Purchasers or their representatives;

     

    (vii)        suffered
any material losses or waived any rights of material value, whether or not in
the ordinary course of business, or suffered the loss of any material amount of
prospective business;

     

    (viii)      made
any changes in employee compensation except in the ordinary course of business
and consistent with past practices;

     

    (ix)         made
capital expenditures or commitments therefor that aggregate in excess of
$10,000;

     

    (x)          entered
into any material transaction, whether or not in the ordinary course of
business;

     

    (xi)         made
charitable contributions or pledges in excess of $5,000;

     

    
      
         

      

      
        12.

        
          

        

      

      
         

      

    

     

    (xii)       suffered
any material damage, destruction or casualty loss, whether or not covered by
insurance;

     

    (xiii)      experienced
any material problems with labor or management in connection with the terms and
conditions of their employment; or

     

    (xiv)       entered
into an agreement, written or otherwise, to take any of the foregoing
actions.

     

    (z)          Investment Company Act
Status. The Company is not, and as a result of and immediately upon each
Closing will not be, an “investment company” or a company “controlled” by an
“investment company,” within the meaning of the Investment Company Act of 1940,
as amended.

     

    (aa)        Independent Nature of
Purchasers. The Company acknowledges that the obligations of each
Purchaser under the Transaction Documents are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in any
way for the performance of the obligations of any other Purchaser under the
Transaction Documents. The Company acknowledges that the decision of each
Purchaser to purchase Securities pursuant to this Agreement has been made by
such Purchaser independently of any other purchase and independently of any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company or of its Subsidiaries
which may have made or given by any other Purchaser or by any agent or employee
of any other Purchaser, and no Purchaser or any of its agents or employees shall
have any liability to any Purchaser (or any other person) relating to or arising
from any such information, materials, statements or opinions. The Company
acknowledges that nothing contained herein, or in any Transaction Document, and
no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to
constitute the Purchasers as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Purchasers are in any
way acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents. The Company acknowledges
that for reasons of administrative convenience only, the Transaction Documents
have been prepared by counsel for one of the Purchasers and such counsel does
not represent all of the Purchasers but only such Purchaser and the other
Purchasers have retained their own individual counsel with respect to the
transactions contemplated hereby. The Company acknowledges that it has elected
to provide all Purchasers with the same terms and Transaction Documents for the
convenience of the Company and not because it was required or requested to do so
by the Purchasers. The Company acknowledges that such procedure with respect to
the Transaction Documents in no way creates a presumption that the Purchasers
are in any way acting in concert or as a group with respect to the Transaction
Documents or the transactions contemplated hereby or thereby. The Company
acknowledges that each Purchaser shall be entitled to independently protect and
enforce its rights, including without limitation, the rights arising out of this
Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.

     

    
      
         

      

      
        13.

        
          

        

      

      
         

      

    

     

    (bb)        No Integrated
Offering. Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf, has directly or indirectly made any offers or
sales of any security or solicited any offers to buy any security under
circumstances that would cause the offering of the Securities pursuant to this
Agreement to be integrated with prior offerings by the Company for purposes of
the Securities Act which would prevent the Company from selling the Securities
pursuant to Regulation D and Rule 506 thereof under the Securities Act nor will
the Company or any of its affiliates or subsidiaries take any action or steps
that would cause the offering of the Securities to be integrated with other
offerings if to do so would prevent the Company from selling Securities pursuant
to Regulation D and Rule 506 thereof under the Securities Act or otherwise
prevent a completed offering of Securities hereunder.  Except as set
forth on Schedule
2.1(bb) hereto, the Company does not have any registration statement
pending before the SEC or currently under the SEC’s review and since December
31, 2008, the Company has not offered or sold any of its equity securities or
debt securities convertible into shares of Common Stock.

     

    (cc)        Dilutive Effect. The
Company understands and acknowledges that its obligation to issue Conversion
Shares upon conversion of the Notes in accordance with this Agreement and the
Notes is absolute and unconditional regardless of the dilutive effect that such
issuance may have on the ownership interest of other stockholders of the
Company.

     

    (dd)        DTC Status. Except as
set forth on Schedule
2.1(dd) hereto, the Company’s transfer agent is a participant in and the
Common Stock is eligible for transfer pursuant to the Depository Trust Company
Automated Securities Transfer Program. The name, address, telephone number, fax
number, contact person and email of the Company transfer agent is set forth
on Schedule
2.1(dd) hereto.

     

    (ee)        Governmental
Approvals. Except for the filing of any notice prior or subsequent to
each Closing that may be required under applicable state and/or federal
securities laws (which if required, shall be filed on a timely basis) and the
declaration of the effectiveness of any registration statements filed by the
Company pursuant to the Transaction Documents, no authorization, consent,
approval, license, exemption of, filing or registration with any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, is or will be necessary for, or in connection with, the
execution or delivery of the Conversion Shares, or for the performance by the
Company of its obligations under the Transaction Documents.

     

    (ff)          Insurance. The
Company and each of its Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in the businesses
in which the Company and its Subsidiaries are engaged. Neither the Company nor
any such Subsidiary has been refused any insurance coverage sought or applied
for and neither the Company nor any such Subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not have a Material
Adverse Effect.

     

    
      
         

      

      
        14.

        
          

        

      

      
         

      

    

     

    (gg)        Trading
Activities.  It is understood and acknowledged by the Company
that none of the Purchasers have been asked to agree, nor has any Purchaser
agreed, to desist from purchasing or selling, long and/or short, securities of
the Company, or “derivative” securities based on securities issued by the
Company or to hold the Securities for any specified term.  The Company
further understands and acknowledges that one or more Purchasers may engage in
hedging and/or trading activities at various times during the period that the
Securities are outstanding, including, without limitation, during the periods
that the value of the Conversion Shares and Warrant Shares are being determined
and (b) such hedging and/or trading activities, if any, can reduce the value of
the existing stockholders’ equity interest in the Company both at and after the
time the hedging and/or trading activities are being conducted.  The
Company acknowledges that such aforementioned hedging and/or trading activities,
assuming such trading and hedging activities are in compliance with all
applicable securities laws, do not constitute a breach of this Agreement, the
Notes, the Warrants or any of the documents executed in connection
herewith.

     

    2.2         Representations and
Warranties of the Purchasers. Each of the Purchasers hereby represents
and warrants to the Company with respect solely to itself and not with respect
to any other Purchaser as follows as of the date hereof and as of the applicable
Closing Date:

     

    (a)           Organization and Standing of
the Purchasers. If the Purchaser is an entity, such Purchaser is a
corporation, limited liability company or partnership duly incorporated or
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization.

     

    (b)           Authorization and
Power. Each Purchaser has the requisite power and authority to enter into
and perform the Transaction Documents and to purchase the Securities being sold
to it hereunder. The execution, delivery and performance of the Transaction
Documents by each Purchaser and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate or
partnership action, and no further consent or authorization of such Purchaser or
its Board of Directors, stockholders, or partners, as the case may be, is
required. When executed and delivered by the Purchasers, the other Transaction
Documents shall constitute valid and binding obligations of each Purchaser
enforceable against such Purchaser in accordance with their terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership or
similar laws relating to, or affecting generally the enforcement of, creditor’s
rights and remedies or by other equitable principles of general
application.

     

    (c)           Acquisition for
Investment. Each Purchaser is purchasing the Securities solely for its
own account and not with a view to or for sale in connection with distribution.
Each Purchaser does not have a present intention to sell any of the Securities,
nor a present arrangement (whether or not legally binding) or intention to
effect any distribution of any of the Securities to or through any person or
entity; provided, however, that by
making the representations herein, such Purchaser does not agree to hold the
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with federal and state
securities laws applicable to such disposition. Each Purchaser acknowledges that
it (i) has such knowledge and experience in financial and business matters such
that Purchaser is capable of evaluating the merits and risks of Purchaser’s
investment in the Company, (ii) is able to bear the financial risks associated
with an investment in the Securities and (iii) has been given full access to
such records of the Company and the Subsidiaries and to the officers of the
Company and the Subsidiaries as it has deemed necessary or appropriate to
conduct its due diligence investigation.

     

    
      
         

      

      
        15.

        
          

        

      

      
         

      

    

     

    (d)           Rule 144. Each
Purchaser understands that the Securities must be held indefinitely unless such
Securities are registered under the Securities Act or an exemption from
registration is available. Each Purchaser acknowledges that such person is
familiar with Rule 144 of the rules and regulations of the SEC, as amended,
promulgated pursuant to the Securities Act (“Rule 144”), and that
such Purchaser has been advised that Rule 144 permits resales only under certain
circumstances. Each Purchaser understands that to the extent that Rule 144 is
not available, such Purchaser will be unable to sell any Securities without
either registration under the Securities Act or the existence of another
exemption from such registration requirement.

     

    (e)           General. Each
Purchaser understands that the Securities are being offered and sold in reliance
on a transactional exemption from the registration requirements of federal and
state securities laws and the Company is relying upon the truth and accuracy of
the representations, warranties, agreements, acknowledgments and understandings
of such Purchaser set forth herein in order to determine the applicability of
such exemptions and the suitability of such Purchaser to acquire the Securities.
Each Purchaser understands that no United States federal or state agency or any
government or governmental agency has passed upon or made any recommendation or
endorsement of the Securities. Commencing on the date that the Purchasers were
initially contacted regarding an investment in the Securities, none of the
Purchasers has engaged in any short sale of the Common Stock and will not engage
in any short sale of the Common Stock prior to public announcement of the
transactions contemplated by this Agreement pursuant to Section
3.10.

     

    (f)           No General
Solicitation. Each Purchaser acknowledges that the Securities were not
offered to such Purchaser by means of any form of general or public solicitation
or general advertising, or publicly disseminated advertisements or sales
literature, including (i) any advertisement, article, notice or other
communication published in any newspaper, magazine, or similar media, or
broadcast over television or radio, or (ii) any seminar or meeting to which such
Purchaser was invited by any of the foregoing means of communications. Each
Purchaser, in making the decision to purchase the Securities, has relied upon
independent investigation made by it and has not relied on any information or
representations made by third parties, and was not solicited through Company’s
pending registration statement as described on Schedule 2.1(bb).

     

    (g)           Accredited Investor.
Each Purchaser is an “accredited investor” (as defined in Rule 501 of Regulation
D), and such Purchaser has such experience in business and financial matters
that it is capable of evaluating the merits and risks of an investment in the
Securities. Such Purchaser is not required to be registered as a broker-dealer
under Section 15 of the Exchange Act and such Purchaser is not a broker-dealer.
Each Purchaser acknowledges that an investment in the Securities is speculative
and involves a high degree of risk.

     

    (h)           Certain Fees. The
Purchasers have not employed any broker or finder or incurred any liability for
any brokerage or investment banking fees, commissions, finders’ structuring
fees, financial advisory fees or other similar fees in connection with the
Transaction Documents.

     

    
      
         

      

      
        16.

        
          

        

      

      
         

      

    

     

    (i)           Independent
Investment. No Purchaser has agreed to act with any other Purchaser for
the purpose of acquiring, holding, voting or disposing of the Securities
purchased hereunder for purposes of Section 13(d) under the Exchange Act, and
each Purchaser is acting independently with respect to its investment in the
Securities.

     

    ARTICLE
3

     

    COVENANTS

     

    Unless
otherwise specified in this Article, for so long as any Notes have not been paid
in full or converted in full, the Company covenants with each Purchaser as
follows, which covenants are for the benefit of each Purchaser and their
respective permitted assignees.

     

    3.1         Securities
Compliance. The Company shall notify the SEC in accordance with its rules
and regulations, of the transactions contemplated by any of the Transaction
Documents and shall take all other necessary action and proceedings as may be
required and permitted by applicable law, rule and regulation, for the legal and
valid issuance of the Securities to the Purchasers, or their respective
subsequent holders.

     

    3.2         Registration and
Listing. The Company shall cause its Common Stock to continue to be
registered under Sections 12(b) or 12(g) of the Exchange Act, to comply in all
respects with its reporting and filing obligations under the Exchange Act and to
not take any action or file any document (whether or not permitted by the
Securities Act or the rules promulgated thereunder) to terminate or suspend such
registration or to terminate or suspend its reporting and filing obligations
under the Exchange Act or Securities Act. The Company will take all action
necessary to continue the listing or trading of its Common Stock on the Over the
Counter Bulletin Board (the “Principal Market”).
The Company further covenants that it will take such further action as the
Purchasers may reasonably request from time to time to enable the Purchasers to
sell the Securities without registration under the Securities Act pursuant to
the exemption provided by Rule 144 promulgated under the Securities Act. Upon
the request of the Purchasers, the Company shall deliver to the Purchasers a
written certification of a duly authorized officer as to whether it has complied
with such requirements.

     

    3.3         Inspection Rights.
Provided the same would not be in violation of Regulation FD, the Company shall
permit, during normal business hours and upon reasonable request and reasonable
notice, each Purchaser or any employees, agents or representatives thereof, so
long as such Purchaser shall be obligated hereunder to purchase the Notes or
shall beneficially own any Conversion Shares, for purposes reasonably related to
such Purchaser’s interests as a stockholder, to examine the publicly available,
non-confidential records and books of account of, and visit and inspect the
properties, assets, operations and business of the Company and any Subsidiary,
and to discuss the publicly available, non-confidential affairs, finances and
accounts of the Company and any Subsidiary with any of its officers,
consultants, directors, and key employees.

     

    
      
         

      

      
        17.

        
          

        

      

      
         

      

    

     

    3.4         Compliance with Laws.
The Company shall comply, and cause each Subsidiary to comply, with all
applicable laws, rules, regulations and orders, noncompliance with which would
be reasonably likely to have a Material Adverse Effect.

     

    3.5         Keeping of Records and Books
of Account. The Company shall keep and cause each Subsidiary to keep
adequate records and books of account, in which complete entries will be made in
accordance with GAAP consistently applied, reflecting all financial transactions
of the Company and its Subsidiaries, and in which, for each fiscal year, all
proper reserves for depreciation, depletion, obsolescence, amortization, taxes,
bad debts and other purposes in connection with its business shall be
made.

     

    3.6         Reporting
Requirements. If the Company ceases to file its periodic reports with the
SEC, or if the SEC ceases making these periodic reports available via the
Internet without charge, then the Company shall furnish the following to each
Purchaser so long as such Purchaser shall be obligated hereunder to purchase the
Securities or shall beneficially own Securities:

     

    (a)           Quarterly
Reports on Form 10-Q (or an equivalent form), including financial statements,
promptly following the end of each quarter, and in any event within 45 days of
the end of each quarter, if such reports are no longer filed with the SEC or as
soon as practical after the document is filed with the SEC, and in any event
within five days after the document is filed with the SEC;

     

    (b)           Annual
Reports on Form 10-K (or an equivalent form), including financial statements,
promptly following the end of each year, and in any event within 45 days of the
end of each year, if such reports are no longer filed with the SEC or as soon as
practical after the document is filed with the SEC, and in any event within five
days after the document is filed with the SEC; and

     

    (c)           Copies
of all notices, information and proxy statements in connection with any
meetings, that are, in each case, provided to holders of shares of Common Stock,
contemporaneously with the delivery of such notices or information to such
holders of Common Stock.

     

    3.7         Other Agreements. The
Company shall not enter into any agreement in which the terms of such agreement
would restrict or impair the right or ability to perform of the Company or any
Subsidiary under any Transaction Document.

     

    3.8         Use of Proceeds. The
proceeds from the sale of the Securities hereunder shall be used by the Company
for general corporate purposes. In no event shall the proceeds be used to redeem
any Common Stock or securities convertible, exercisable or exchangeable into
Common Stock or to settle any outstanding litigation.

     

    3.9         Reporting
Status. So long as a Purchaser beneficially owns any of the
Securities, the Company shall timely file all reports required to be filed with
the SEC pursuant to the Exchange Act, and the Company shall not terminate its
status as an issuer required to file reports under the Exchange Act even if the
Exchange Act or the rules and regulations thereunder would permit such
termination.

    
      
         

      

      
        18.

        
          

        

      

      
         

      

    

     

    3.10       Disclosure of
Transaction. The Company shall issue a press release describing the
material terms of the transactions contemplated hereby (the “Press Release”) on
the date of execution of this Agreement but in no event later than one hour
after the execution of this Agreement; provided, however, that if the
execution of this Agreement occurs after 4:00 P.M. Eastern Time on any Trading
Day, the Company shall issue the Press Release no later than 9:00 A.M. Eastern
Time on the first Trading Day following such date of execution. The Company
shall also file with the SEC a Current Report on Form 8-K (the “Form 8-K”) describing
the material terms of the transactions contemplated hereby and by the Consent
Amendment Agreement (and attaching as exhibits thereto this Agreement, the form
of Note and the Press Release) as soon as practicable following the First
Closing Date but in no event more than one Trading Day following the Closing
Date, which Press Release and Form 8-K shall be subject to prior review and
comment by the Purchasers. “Trading Day” means
any day during which the principal exchange on which the Common Stock is traded
shall be open for trading.

     

    3.11       Disclosure of Material
Information. The Company covenants and agrees that neither it nor any
other person acting on its behalf has provided or will provide any Purchaser or
its agents or counsel with any information that the Company believes constitutes
material non-public information, unless prior thereto such Purchaser shall have
executed a written agreement regarding the confidentiality and use of such
information. The Company understands and confirms that each Purchaser shall be
relying on the foregoing representations in effecting transactions in securities
of the Company. In the event of a breach of the foregoing covenant by the
Company, or any of its Subsidiaries, or any of its or their respective officers,
directors, employees and agents, in addition to any other remedy provided herein
or in the Transaction Documents, the Company shall publicly disclose any
material, non-public information in a Form 8-K within one business day of the
date that it discloses such information to any Purchaser. In the event that the
Company discloses any material, non-public information to a Purchaser and fails
to publicly file a Form 8-K in accordance with the above, a Purchaser shall have
the right to make a public disclosure, in the form of a press release, public
advertisement or otherwise, of such material, nonpublic information without the
prior approval by the Company, its Subsidiaries, or any of its or their
respective officers, directors, employees or agents. No Purchaser shall have any
liability to the Company, its Subsidiaries, or any of its or their respective
officers, directors, employees, stockholders or agents, for any such
disclosure.

     

    3.12       Pledge of Securities.
The Company acknowledges that the Securities may be pledged by a Purchaser in
connection with a bona fide margin agreement
or other loan or financing arrangement that is secured by the Securities. The
pledge of Securities shall not be deemed to be a transfer, sale or assignment of
the Securities hereunder, and no Purchaser effecting a pledge of the Securities
shall be required to provide the Company with any notice thereof or otherwise
make any delivery to the Company pursuant to this Agreement or any other
Transaction Document; provided that a Purchaser and its pledgee shall be
required to comply with the provisions of Article V hereof in order to effect a
sale, transfer or assignment of Securities to such pledgee. At the Purchasers’
expense, the Company hereby agrees to execute and deliver such documentation as
a pledgee of the Securities may reasonably request in connection with a pledge
of the Securities to such pledgee by a Purchaser.

     

    
      
         

      

      
        19.

        
          

        

      

      
         

      

    

    3.13      Amendments to Charter
Documents. The Company shall not, without the consent of Purchasers
holding at least 66 2/3% of the Notes then held by the Purchasers, amend or
waive any provision of the Certificate or Bylaws of the Company in any way that
would adversely affect exercise rights, voting rights, conversion rights,
prepayment rights, redemption rights or other rights of the holder of the
Securities.

     

    3.14       Maintenance of
Insurance. The Company shall maintain, and cause each of its Subsidiaries
to maintain, insurance with responsible and reputable insurance companies or
associations (including, without limitation, comprehensive general liability,
hazard, rent and business interruption insurance) with respect to its properties
(including all real properties leased or owned by it) and business, in such
amounts and covering such risks as is required by any governmental authority
having jurisdiction with respect thereto or as is carried generally in
accordance with sound business practice by companies in similar businesses
similarly situated.

     

    3.15       Subsidiaries. For so
long as any Notes remain outstanding, the Company covenants and agrees not to
transfer any assets to any Subsidiary or to otherwise cause any Subsidiary to
acquire any assets or commence operations.

     

    3.16       Public
Offering.  The Company shall use its best efforts to consummate
a public offering and issue registered Notes and registered shares of Common
Stock pursuant to the S-1 registration statement (File No. 333-153278) within 30
days of the First Closing. 

     

    ARTICLE
4

     

    CONDITIONS

     

    4.1         Conditions Precedent to the
Obligation of the Company to Close and to Sell the Securities. The
obligation hereunder of the Company to close and issue and sell the Securities
to the Purchasers at each Closing is subject to the satisfaction or waiver, at
or before each Closing of the conditions set forth below. These conditions are
for the Company’s sole benefit and may be waived by the Company at any time in
its sole discretion.

     

    (a)           Accuracy of the Purchasers’
Representations and Warranties. The representations and warranties of
each Purchaser shall be true and correct in all material respects as of the date
when made and as of each applicable Closing Date as though made at that time,
except for representations and warranties that are expressly made as of a
particular date, which shall be true and correct in all material respects as of
such date.

     

    (b)           Performance by the
Purchasers. Each Purchaser shall have performed, satisfied and complied
in all material respects with all covenants, agreements and conditions required
by this Agreement to be performed, satisfied or complied with by the Purchasers
at or prior to each applicable Closing Date.

     

    (c)           No Injunction. No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction which prohibits the consummation of any of
the transactions contemplated by this Agreement.

     

    (d)           Delivery of Purchase
Price. The Purchase Price for the Securities shall have been delivered to
the Company on each applicable Closing Date.

     

    
      
         

      

      
        20.

        
          

        

      

      
         

      

    

     

    (e)           Delivery of Transaction
Documents. The Transaction Documents shall have been duly executed and
delivered by the Purchasers to the Company.

     

    4.2         Conditions Precedent to the
Obligation of the Purchasers to Close and to Purchase the Securities. The
obligation hereunder of the Purchasers to purchase the Securities and consummate
the transactions contemplated by this Agreement is subject to the satisfaction
or waiver, at or before each applicable Closing, of each of the conditions set
forth below. These conditions are for the Purchasers’ sole benefit and may be
waived by the Purchasers at any time in their sole discretion.

     

    (a)           Accuracy of the Company’s
Representations and Warranties. Each of the representations and
warranties of the Company and its Subsidiaries in this Agreement and the other
Transaction Documents shall be true and correct in all material respects as of
each applicable Closing Date, except for representations and warranties that
speak as of a particular date, which shall be true and correct in all material
respects as of such date.

     

    (b)           Performance by the Company
and Subsidiaries. Each of the Company and its Subsidiaries shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company and its Subsidiaries at or prior to each
applicable Closing Date.

     

    (c)           No Suspension, Etc.
The shares of Common Stock (I) shall be designated for quotation or listed
on the Principal Market and (II) shall not have been suspended, as of each
applicable Closing Date, by the SEC or the Principal Market from trading on the
Principal Market nor shall suspension by the SEC or the Principal Market have
been threatened, as of each Closing Date, either (A) in writing by the SEC
or the Principal Market or (B) by falling below the minimum listing
maintenance requirements of the Principal Market.

     

    (d)           No Injunction. No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction which prohibits the consummation of any of
the transactions contemplated by this Agreement.

     

    (e)           No Proceedings or
Litigation. No action, suit or proceeding before any arbitrator or any
governmental authority shall have been commenced, and no investigation by any
governmental authority shall have been threatened, against the Company or any
Subsidiary, or any of the officers, directors or affiliates of the Company or
any Subsidiary seeking to restrain, prevent or change the transactions
contemplated by this Agreement, or seeking damages in connection with such
transactions.

     

    (f)           Opinion of Counsel.
The Purchasers shall have received an opinion of counsel to the Company, dated
the Closing Date, substantially in the form of Exhibit E hereto,
with such exceptions and limitations as shall be reasonably acceptable to
counsel to the Purchasers.

     

    (g)           Notes. At or prior to
each Closing, the Company shall have delivered to the Purchasers the Notes (in
such denominations as each Purchaser may request).

    
      
         

      

      
        21.

        
          

        

      

      
         

      

    

     

    (h)          Warrants. At or prior
to each Closing, the Company shall have delivered to the Purchasers the Warrants
in accordance with the terms of this Agreement.

     

    (i)           Secretary’s
Certificate. The Company and each Subsidiary of the Company shall have
delivered to the Purchasers a secretary’s certificate, dated as of the
applicable Closing Date, as to (i) the resolutions adopted by its Board of
Directors approving the transactions contemplated hereby, (ii) its certificate
of incorporation, (iii) its bylaws, each as in effect at such Closing Date, and
(iv) the authority and incumbency of the officers executing the Transaction
Documents and any other documents required to be executed or delivered in
connection therewith.

     

    (j)           Officer’s
Certificate. On the applicable Closing Date, the Company and each
Subsidiary shall have delivered to the Purchasers a certificate signed by an
executive officer on behalf of the Company and each Subsidiary, dated as of such
Closing Date, confirming the accuracy of the Company’s and each Subsidiary’s
representations, warranties and covenants as of such Closing Date and confirming
the compliance by the Company with the conditions precedent set forth in
paragraphs (a)-(e) and (k) of this Section 4.2 as of such Closing Date (provided
that, with respect to the matters in paragraphs (d) and (e) of this Section 4.2,
such confirmation shall be based on the knowledge of the executive officer after
due inquiry).

     

    (k)          Material Adverse
Effect. No Material Adverse Effect shall have occurred.

     

    (l)           Change in Purchasers.
There shall have been no changes to Exhibit A (List of
Purchasers) since the execution of this Agreement.

     

    (m)         Registration Rights
Agreement.  The Company shall have delivered to the Purchasers
the Registration Rights Agreement, among the Purchasers and the Company,
substantially in the form attached hereto as Exhibit F, duly
executed by the Company, in which the Company agrees to file a re-sale
registration statement to register the Notes and Conversion Shares issued in the
First Closing by the earlier of (i) 30 days following the First Closing, and
(ii) two business days following the Expiration Date, and the Company shall file
a re-sale registration statement to register the Notes and the Conversion Shares
issued in the Additional Closing within 30 days of the Additional Closing, if
such Additional Closing is consummated in accordance with Section
1.2(b).

     

    ARTICLE
5

     

    CERTIFICATE
LEGEND

     

    5.1         Legend. Except as set
forth herein, each certificate representing the Securities shall be stamped or
otherwise imprinted with a legend substantially in the following form (in
addition to any legend required by applicable state securities or “blue sky”
laws):

    
      
         

      

      
        22.

        
          

        

      

      
         

      

    

     

    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”)
OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR THE REGISTRATION OF SUCH SECURITIES UNDER THE
SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS
NOT REQUIRED.

     

    The
Company agrees to issue or reissue certificates representing any of the
Conversion Shares without the legend set forth above when required to do so
pursuant to the terms of the Notes or if (x) the holder thereof shall provide
the Company with reasonable assurances that the Conversion Shares can be sold
pursuant to Rule 144 without any restriction as to the number of securities
acquired as of a particular date that can then be immediately sold (which
assurances shall not require an opinion of counsel) or (y) the holder is selling
such Conversion Shares in compliance with the provisions of Rule
144.

     

    ARTICLE
6

     

    INDEMNIFICATION

     

    6.1         General Indemnity.
The Company agrees to indemnify and hold harmless the Purchasers (and their
respective directors, officers, affiliates, members, managers, employees,
agents, successors and assigns) from and against any and all losses,
liabilities, deficiencies, costs, damages and expenses (including, without
limitation, reasonable attorneys’ fees, charges and disbursements) incurred by
the Purchasers as a result of any inaccuracy in or breach of the
representations, warranties or covenants made by the Company
herein.

     

    6.2         Indemnification
Procedure. Any party entitled to indemnification under this Article 6 (an
“indemnified
party”) will give written notice to the indemnifying party of any matter
giving rise to a claim for indemnification; provided, that the failure of any
party entitled to indemnification hereunder to give notice as provided herein
shall not relieve the indemnifying party of its obligations under this Article 6
except to the extent that the indemnifying party is actually prejudiced by such
failure to give notice. In case any such action, proceeding or claim is brought
against an indemnified party in respect of which indemnification is sought
hereunder, the indemnifying party shall be entitled to participate in and,
unless in the reasonable judgment of the indemnifying party a conflict of
interest between it and the indemnified party exists with respect to such
action, proceeding or claim (in which case the indemnifying party shall be
responsible for the reasonable fees and expenses of one separate counsel for the
indemnified parties), to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. In the event that the indemnifying party
advises an indemnified party that it will contest such a claim for
indemnification hereunder, or fails, within 30 days of receipt of any
indemnification notice to notify, in writing, such person of its election to
defend, settle or compromise, at its sole cost and expense, any action,
proceeding or claim (or discontinues its defense at any time after it commences
such defense), then the indemnified party may, at its option, defend, settle or
otherwise compromise or pay such action or claim. In any event, unless and until
the indemnifying party elects in writing to assume and does so assume the
defense of any such claim, proceeding or action, the indemnified party’s costs
and expenses arising out of the defense, settlement or compromise of any such
action, claim or proceeding shall be losses subject to indemnification
hereunder. The indemnified party shall cooperate fully with the indemnifying
party in connection with any negotiation or defense of any such action or claim
by the indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the indemnified party which relates to such
action or claim. The indemnifying party shall keep the indemnified party fully
apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. If the indemnifying party elects to defend
any such action or claim, then the indemnified party shall be entitled to
participate in such defense with counsel of its choice at its sole cost and
expense. The indemnifying party shall not be liable for any settlement of any
action, claim or proceeding effected without its prior written consent.
Notwithstanding anything in this Article 6 to the contrary, the indemnifying
party shall not, without the indemnified party’s prior written consent, settle
or compromise any claim or consent to entry of any judgment in respect thereof
which imposes any future obligation on the indemnified party or which does not
include, as an unconditional term thereof, the giving by the claimant or the
plaintiff to the indemnified party of a release from all liability in respect of
such claim. The indemnification obligations to defend the indemnified party
required by this Article 6 shall be made by periodic payments of the amount
thereof during the course of investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred, so long as the
indemnified party shall refund such moneys if it is ultimately determined by a
court of competent jurisdiction that such party was not entitled to
indemnification. The indemnity agreements contained herein shall be in addition
to (a) any cause of action or similar rights of the indemnified party against
the indemnifying party or others, and (b) any liabilities the indemnifying party
may be subject to pursuant to the law.

    
      
         

      

      
        23.

        
          

        

      

      
         

      

    

     

    ARTICLE
7

     

    MISCELLANEOUS

     

    7.1         Fees and Expenses.
Each party shall pay the fees and expenses of its advisors, counsel, accountants
and other experts, if any, and all other expenses, incurred by such party
incident to the negotiation, preparation, execution, delivery and performance of
this Agreement; provided, however, that the
Company shall pay all, documented, actual attorneys’ fees and expenses
(including disbursements and out-of-pocket expenses) incurred by the Lead
Purchaser in connection with (i) the preparation, negotiation, execution and
delivery of the Transaction Documents and the transactions contemplated
thereunder, which payment shall be made at the Closing or if the Company elects
to enter into a alternative transaction before the Closing, at the time of such
election by the Company, and (ii) any amendments, modifications or waivers of
this Agreement or any of the other Transaction Documents. In addition, the
Company shall pay all reasonable fees and expenses incurred by the Purchasers in
connection with the enforcement of this Agreement or any of the other
Transaction Documents, including, without limitation, all reasonable attorneys’
fees and expenses; provided, however, that in the event that the enforcement of
this Agreement is contested and it is finally judicially determined that the
Purchasers were not entitled to the enforcement of the Agreement sought, then
the Purchasers seeking enforcement shall reimburse the Company for all fees and
expenses paid pursuant to this sentence.

    
      
         

      

      
        24.

        
          

        

      

      
         

      

    

     

    7.2         Specific Performance;
Consent to Jurisdiction; Venue.

     

    (a)           The
Company and the Purchasers acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement or the other
Transaction Documents were not performed in accordance with their specific terms
or were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement or the other Transaction Documents and to enforce
specifically the terms and provisions hereof or thereof without the requirement
of posting a bond or providing any other security, this being in addition to any
other remedy to which any of them may be entitled by law or equity.

     

    (b)           The
parties agree that venue for any dispute arising under this Agreement will lie
exclusively in the state or federal courts located in New York County, New York,
and the parties irrevocably waive any right to raise forum non conveniens or any
other argument that New York is not the proper venue. The parties irrevocably
consent to personal jurisdiction in the state and federal courts of the state of
New York. The Company and each Purchaser consent to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing in this Section 7.3 shall affect or limit any right to serve
process in any other manner permitted by law. The Company and the Purchasers
hereby agree that the prevailing party in any suit, action or proceeding arising
out of or relating to the Securities, this Agreement or the other Transaction
Documents, shall be entitled to reimbursement for reasonable legal fees from the
non-prevailing party. The parties hereby waive all rights to a trial by
jury.

     

    7.3         Entire Agreement;
Amendment. This Agreement and the Transaction Documents contain the
entire understanding and agreement of the parties with respect to the matters
covered hereby and, except as specifically set forth herein or in the other
Transaction Documents, neither the Company nor any Purchaser make any
representation, warranty, covenant or undertaking with respect to such matters,
and they supersede all prior understandings and agreements with respect to said
subject matter, all of which are merged herein. No provision of this Agreement
may be waived or amended on behalf of all Purchasers other than by a written
instrument signed by the Company and the Purchasers holding at least 66 2/3% of
the principal amount of the Notes then outstanding and held by the Purchasers;
provided that if any Purchaser
is materially adversely affected by such waiver or amendment on behalf of all
Purchasers in a manner that not similar in all material respects to the affect
on the other Purchasers, such waiver or amendment shall not be effective without
the written consent of the adversely affected
Purchaser.  Notwithstanding the foregoing, nothing provided in this
Section 7.4 shall limit an individual Purchaser’s right to waive or amend any
provision of this Agreement on its own behalf.  The Purchasers
acknowledge that any amendment or waiver effected in accordance with this
Section 7.4 shall be binding upon each Purchaser (and their permitted assigns)
and the Company, including, without limitation, an amendment or waiver that has
an adverse effect on any or all Purchasers.

     

    7.4         Notices. Any notice,
demand, request, waiver or other communication required or permitted to be given
hereunder shall be in writing and shall be effective (a) upon hand delivery by
telecopy or facsimile at the address or number designated below (if delivered on
a business day during normal business hours where such notice is to be
received), or the first business day following such delivery (if delivered other
than on a business day during normal business hours where such notice is to be
received) or (b) on the second business day following the date of mailing by
express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:

    
      
         

      

      
        25.

        
          

        

      

      
         

      

    

     

    
      
        
          
            
              	
                      If
      to the Company or its Subsidiaries:

                    	 
      	
                      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

                    
	 	 	 
	
                      with
      copies to:

                    	 
      	
                      Morgan,
      Lewis & Bockius LLP

                      502
      Carnegie Center

                      Princeton,
      NJ 08540

                    
	 
      	 
      	
                      Attention:
      Emilio Ragosa

                    
	 
      	 
      	
                      Telephone
      No.: (609) 919-6633

                    
	 
      	 
      	
                      Telecopy
      No.: (609) 919-6701

                    
	 	 	 
	
                      If
      to any Purchaser:

                    	 
      	
                      At
      the address of such Purchaser set forth on Exhibit A to
      this Agreement, with copies to Purchaser’s counsel as set forth on Exhibit A or as
      specified in writing by such Purchaser, with a copy to:

                    
	 	 	 
	
                       With
      a copy to:

                    	 
      	
                      Cooley
      Godward Kronish LLP

                    
	 
      	 
      	
                      4401
      Eastgate Mall

                    
	 
      	 
      	
                      San
      Diego, CA 92121

                    
	 
      	 
      	
                      Attention:
      Ethan Christensen

                    
	 
      	 
      	
                      Telephone
      No.: (858) 550-6076

                    
	 
      	 
      	
                      Telecopy
      No.: (858)
550-6420

                    

            

          

        

      

    

     

    Any party
hereto may from time to time change its address for notices by giving written
notice of such changed address to the other party hereto.

     

    7.5         Waivers. No waiver by
either party of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in the
future or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of any party to exercise any right hereunder in any
manner impair the exercise of any such right accruing to it
thereafter.  No consideration shall be offered or paid to any
Purchaser to amend or waive or modify any provision of this Agreement unless the
same consideration is also offered to all of the parties to this Agreement then
holding Notes.  This provision constitutes a separate right granted to
each Purchaser by the Company and shall not in any way be construed as the
Purchasers acting in concert or as a group with respect to the purchase
disposition or voting of Securities or otherwise.

    
      
         

      

      
        26.

        
          

        

      

      
         

      

    

     

    7.6         Headings. The
article, section and subsection headings in this Agreement are for convenience
only and shall not constitute a part of this Agreement for any other purpose and
shall not be deemed to limit or affect any of the provisions
hereof.

     

    7.7         Successors and
Assigns. This Agreement shall be binding upon and inure to the benefit of
the parties and their successors and assigns. After the expiration or the option
to purchase additional Notes set forth in Section 1.2(b), the assignment by a
party to this Agreement of any rights hereunder shall not affect the obligations
of such party under this Agreement. The Purchasers may assign the Securities and
its rights under this Agreement and the other Transaction Documents and any
other rights hereto and thereto without the consent of the Company.

     

    7.8         No Third Party
Beneficiaries. This Agreement is intended for the benefit of the parties
hereto and their respective permitted successors and assigns and is not for the
benefit of, nor may any provision hereof be enforced by, any other
person.

     

    7.9         Governing Law. This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York, without giving effect to any of the conflicts of
law principles which would result in the application of the substantive law of
another jurisdiction. This Agreement shall not be interpreted or construed with
any presumption against the party causing this Agreement to be
drafted.

     

    7.10       Survival. The
representations and warranties of the Company and the Purchasers shall survive
the execution and delivery hereof and the Closing until the third anniversary of
the Closing Date, except the agreements and covenants set forth in Articles 1,
3, 5, 6 and 7 of this Agreement shall survive the Closing hereunder
indefinitely.

     

    7.11       Counterparts. This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument and shall become effective
when counterparts have been signed by each party and delivered to the other
parties hereto, it being understood that all parties need not sign the same
counterpart.

     

    7.12       Publicity. The
Company agrees that it will not disclose, and will not include in any public
announcement, the names of the Purchasers without the consent of the Purchasers,
which consent shall not be unreasonably withheld or delayed, or unless and until
such disclosure is required by law, rule or applicable regulation, and then only
to the extent of such requirement. Notwithstanding the foregoing, the Purchasers
consent to being identified in any filings the Company makes with the SEC to the
extent required by law or the rules and regulations of the SEC.

     

    7.13       Severability. The
provisions of this Agreement are severable and, in the event that any court of
competent jurisdiction shall determine that any one or more of the provisions or
part of the provisions contained in this Agreement shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision or part of a
provision of this Agreement and this Agreement shall be reformed and construed
as if such invalid or illegal or unenforceable provision, or part of such
provision, had never been contained herein, so that such provisions would be
valid, legal and enforceable to the maximum extent possible.

    
      
         

      

      
        27.

        
          

        

      

      
         

      

    

     

    7.14       Further Assurances.
From and after the date of this Agreement, upon the request of the Purchasers or
the Company, the Company and each Purchaser shall execute and deliver such
instruments, documents and other writings as may be reasonably necessary or
desirable to confirm and carry out and to effectuate fully the intent and
purposes of this Agreement and the other Transaction Documents

     

    7.15       Representation of Lead
Purchaser. It is acknowledged by each Purchaser that the Lead Purchaser
has retained Cooley Godward Kronish LLP to act as its counsel in connection with
the transactions contemplated by the Transaction Documents and that Cooley
Godward Kronish LLP has not acted as counsel for any Purchaser, other than the
Lead Purchaser, in connection with the transactions contemplated by the
Transaction Documents and that none of such Purchasers has the status of a
client for conflict of interest or any other purposes as a result
thereof.

     

    7.16       Sharing of Payments.
Each Purchaser severally agrees that if it receives (i) payment of principal on
the Maturity Date (as defined in the Notes) or (ii) payment of the Prepayment
Price (as defined in the Notes) in an amount that is ratably more than any other
Purchaser (based on the principal amount of the Notes held by such Purchaser
relative to the principal amount of the Notes outstanding), then: (a) the
Purchaser receiving such payment shall purchase, and shall be deemed to have
simultaneously purchased, from the other Purchasers a participation in the Notes
held by the other Purchasers (in the case of (i) above) or the Notes held by the
other Purchasers being prepaid at such time (in the case of (ii) above) and
shall pay to the other Purchasers a purchase price in an amount so that the
share of the Notes held by each Purchaser after the receipt of such payment
shall be in the same proportion that existed prior to the receipt of such
payment; and (b) such other adjustments and purchases of participations shall be
made from time to time as shall be equitable to ensure that all Purchasers share
any such payment ratably as aforesaid; provided that, if all or any
portion of a disproportionate payment obtained as a result of such payment is
thereafter recovered from the purchasing Purchaser by the Company or any Person
claiming through or succeeding to the rights of Company, the purchase of a
participation shall be rescinded and the purchase price thereof shall be
restored to the extent of the recovery, but without interest. Each Purchaser
that purchases a participation pursuant to this Section shall from and after the
purchase have the right to give all notices, requests, demands, directions and
other communications under this Agreement and the other Transaction Documents
with respect to the portion of the Notes purchased to the same extent as though
the purchasing Purchaser were the original owner of the Notes purchased. The
Company expressly consents to the foregoing arrangements and agrees that any
Purchaser holding a participation in a Note so purchased may exercise any and
all rights with respect to the participation as fully as if such Purchaser were
the original owner of the Note purchased.

    
      
         

      

      
        28.

        
          

        

      

      
         

      

    

    7.17       Independent Nature of
Purchasers’ Obligations and Rights.  The obligations of each
Purchaser under any Transaction Document are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in any
way for the performance of the obligations of any other Purchaser under any
Transaction Document.  Nothing contained herein or in any other
Transaction Document, and no action taken by any Purchaser pursuant hereto or
thereto, shall be deemed to constitute the Purchaser as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents.  Each Purchaser confirms that it has
independently participated in the negotiation of the transaction contemplated
hereby with the advice of its own counsel and advisors.  Each
Purchaser shall be entitled to independently protect and enforce its rights,
including, without limitation, the rights arising out of this Agreement or out
of any other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose.

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

    
      
         

      

      
        29.

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized officers as of the
date first above written.

    

    
      
        
          
            
              	 
      	
                      GENTA
      INCORPORATED

                    
	 
      	 
      	 
      
	 
      	
                      By:

                    	 
      
	 
      	
                      Name:

                    	 
      
	 
      	
                      Title:

                    	 
      

            

          

        

      

    

     

    [SIGNATURE
PAGES CONTINUE]

    
      
         

      

      
        30.

        
          

        

      

      
         

      

    

     

    [PURCHASER
SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]

     

    IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

     

    Name of
Purchaser:
________________________________________________________________________

     

    Signature of Authorized Signatory of
Purchaser:
__________________________________________________

     

    Name of
Authorized Signatory:
____________________________________________________________________

     

    Title of
Authorized Signatory:
_____________________________________________________________________

     

    Email
Address of
Purchaser:________________________________________________________________

     

    Fax
Number of Purchaser:
________________________________________________________________

     

    Address
for Notice of Purchaser:

     

    Address
for Delivery of Securities for Purchaser (if not same as address for
notice):

     

    Subscription
Amount: $_________________

     

    Question:  Are
you a “qualified institutional buyer” as defined in Rule 144A promulgated under
the Securities Act of 1933, as amended?   Yes_____  No
______

     

    EIN
Number: [PROVIDE THIS UNDER
SEPARATE COVER]

     

    [SIGNATURE
PAGES CONTINUE]

    
      
         

      

      
        31.

        
          

        

      

      
         

      

    

     

    EXHIBIT
A

    LIST
OF PURCHASERS

     

    See
attached.

    
      
         

      

      
        32.

        
          

        

      

      
         

      

    

     

    EXHIBIT
B

    FORM
OF SUBORDINATED CONVERTIBLE PROMISSORY NOTE

    
      
         

      

      
        33.

        
          

        

      

      
         

      

    

     

    EXHIBIT
C

    FORM
OF WARRANT

    
      
         

      

      
        34.

        
          

        

      

      
         

      

    

    

    EXHIBIT
D

    FORM
OF OFFICER’S CERTIFICATE

    
      
         

      

      
        35.

        
          

        

      

      
         

      

    

     

    EXHIBIT
E

    OPINION
OF COUNSEL TO COMPANY

    
      
         

      

      
        36.

        
          

        

      

      
         

      

    

     

    EXHIBIT
F

    FORM
OF REGISTRATION RIGHTS AGREEMENT

    
      
         

      

      
        37.

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