Document:

ex10-4.htm

Exhibit 10.4

SECURITY AGREEMENT

 

This Security Agreement dated as of September 2, 2011 (the “Agreement”) between Genta Incorporated, a Delaware corporation (the “Grantor”) and Tang Capital Partners, L.P., as agent (together with any successor agent, the “Agent”) for the Purchasers (as defined in the Securities Purchase Agreement (as defined below)).  Terms used herein and not otherwise defined herein are used in this Agreement as defined in the Securities Purchase Agreement and the H Notes (as defined below).  Further, unless otherwise defined in this Agreement or in the Securities Purchase Agreement, terms defined in the UCC (as defined below) are used in this Agreement as such terms are defined in the UCC.

 

Preliminary Statements

 

A.          The Grantor has entered into a Securities Purchase Agreement dated as of September 2, 2011 (as amended, amended and restated, supplemented or otherwise modified from time to time, being the “Securities Purchase Agreement”) with the Purchasers pursuant to which, subject to the terms and conditions set forth therein, the Purchasers have agreed to purchase from the Grantor, and the Grantor has agreed to sell to the Purchasers, units, in an aggregate amount of up to $12,700,000, consisting of, among other securities, 12.00% senior secured cash collateralized convertible promissory notes due September 9, 2021 in the aggregate principal amount of $8,466,666.67, convertible into Common Stock (the “H Notes”).

 

B.          The Grantor is entering into this Agreement in order to grant to the Agent for the ratable benefit of the Purchasers a security interest in all of its right, title and interest in and to the Collateral (as defined herein).

 

C.           It is a condition precedent to the purchase of the H Notes by the Purchasers pursuant to the Securities Purchase Agreement that the Grantor shall have granted the security interest contemplated by this Agreement.

 

D.           The Grantor will derive substantial direct and indirect benefit from the transactions contemplated by the Securities Purchase Agreement.

 

Now, Therefore, in consideration of the premises and in order to induce the Purchasers to purchase the H Notes from the Grantor as set forth in the Securities Purchase Agreement and for other good and valuable consideration, the Grantor hereby agrees with the Agent for the ratable benefit of the Purchasers as follows:

 

  

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SECTION 1.   Secured Note.

 

(a)         As collateral security for the full, prompt, complete and final payment and performance when due (whether at stated maturity, by acceleration or otherwise) of the entire outstanding principal balance of and all unpaid accrued interest on the H Notes (including any interest that accrues after the commencement of bankruptcy), and the obligation of Grantor to pay any fees, costs or expenses of the holders of the H Notes (the “H Holders”) and the Agent under the H Notes (collectively, the “Secured Obligations”), Grantor hereby assigns, conveys, mortgages, pledges, hypothecates and transfers to the Agent, on behalf of and for the benefit of the H Holders, and hereby grants to the Agent, on behalf of and for the benefit of the H Holders, a security interest in and to all of Grantor’s right, title, and interest in, to and under the following, whether now owned or hereafter acquired (all of which being collectively referred to herein as the “Collateral”): that certain Deposit Account No. [__________] (the “Collateral Account”) held in the name of Grantor at [______________] (“Depositary Bank”) and any cash or other monies, funds or amounts therein, whether or not restricted or designated for a particular purpose, and all Proceeds (as defined in the UCC) thereof.  “UCC” means the Uniform Commercial Code as the same may from time to time be in effect in the State of New York (and each reference in this Agreement to an Article thereof shall refer to that Article as from time to time in effect; provided, however, in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of the Agent’s security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial Code (including the Articles thereof) as in effect at such time in such other jurisdiction for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of definitions related to such provisions.

 

(b)        Upon the occurrence and during the continuance of an Event of Default under the H Notes (as defined therein), the Agent, on behalf of and for the benefit of all the H Holders, may exercise, in addition to all other rights and remedies granted to it under the H Notes or at law or in equity, all rights and remedies of a secured party under the UCC.  In taking actions pursuant to this Agreement, the Agent shall act in good faith and in a manner that it reasonably believes treats all holders of H Notes proportionately.

 

(c)         Grantor shall, at the sole expense of Grantor, execute and deliver and cause the Depositary Bank to execute and deliver a control agreement, in form and substance acceptable to the Agent, with respect to the Deposit Account in order to perfect the security interest created hereunder in favor of the Agent on behalf of and for the benefit of the H Holders (including giving the Agent “control” over the Deposit Account within the meaning of the applicable provisions of Article 9 of the UCC).

 

(d)         The security interest granted pursuant to this Agreement shall terminate if, at any time after six months following the Closing: (A) the Grantor files a Form 8-K with the United States Securities and Exchange Commission (the “Security Release Filing”) showing that, as of the date of such Security Release Filing, the daily trading volume of the Grantor’s Common Stock, as reported by the Trading Market, for each of the ten (10) Trading Days prior to the date on which such Security Release Filing is filed equals or exceeds one-tenth (1/10) of the number of shares underlying the H Notes on the date of such Security Release Filing; and (B) the daily VWAP of the Grantor’s Common Stock for each of the ten (10) Trading Days prior to the date on which such Security Release Filing is made is greater than the Conversion Price by an amount equal to or greater than 200% of the Conversion Price on the date of the Security Release Filing.  Such release of the security interest shall occur on the date that is thirty (30) calendar days following the date of the Security Release Filing.  The security interest shall also be released (x) dollar for dollar upon any conversion of any part of the H Notes or (y) upon the approval of each holder of the then outstanding H Notes with respect to such holder’s H Notes only.

 

  

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(e)        The Proceeds of any sale, disposition or other realization upon all or any part of the Collateral shall be promptly distributed by the Agent in the following order of priorities:

 

  First, to the Agent and any H Holder in an amount sufficient to pay in full the out-of-pocket reasonable costs of the Agent or such H Holder in connection with such sale, disposition or other realization, including all reasonable out-of-pocket fees, costs, expenses, liabilities and advances incurred or made by the Agent or any H Holder in connection therewith, including, without limitation, reasonable out-of-pocket attorneys’ fees;

 

  Second, to the H Holders in amounts proportional to the Pro Rata (as defined below) share of the then unpaid Secured Obligations of each H Holder; and

 

  Finally, upon payment in full of the Secured Obligations, to Grantor or its representatives, in accordance with the UCC or as a court of competent jurisdiction may direct.

 

“Pro Rata” means, as to any H Holder at any time, the percentage equivalent at such time of such H Holder’s aggregate unpaid principal amount of H Notes, divided by the combined aggregate unpaid principal amount of all H Notes of all H Holders.

 

(f)          Until the full release of the security interest in the Collateral, Grantor hereby irrevocably constitutes and appoints Agent, and any officer or agent of Agent, with full power of substitution, as its true and lawful attorney-in-fact with full, irrevocable power and authority in the place and stead of Grantor and in the name of Grantor or in its own name, from time to time at Agent’s discretion, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute and deliver any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Agreement.  Agent agrees that, except upon the occurrence and during the continuation of an Event of Default, it shall not exercise the power of attorney or any rights granted to Agent pursuant to this Section 1(f).  Grantor hereby ratifies, to the extent permitted by law, all that said attorney shall lawfully do or cause to be done by virtue hereof.  The power of attorney granted pursuant to this Section 1(f) is a power coupled with an interest and shall be irrevocable until the Secured Obligations are completely and indefeasibly paid and performed in full.

 

(g)         If Grantor fails to perform any agreement contained herein or in the H Notes, the Agent may, as the Agent deems necessary to protect the security interest granted in the Collateral or to protect the value thereof, but without any obligation to do so and without notice, itself perform, or cause performance of, such agreement, and the expenses of the Agent incurred in connection therewith shall be payable by Grantor under the H Note and shall constitute Secured Obligations secured hereby.

 

  

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SECTION 2.   Representations and Warranties; Covenants.

 

(a)         All filings and other actions (including the execution and delivery of deposit account control agreements) necessary or reasonably desirable to perfect and protect the security interest in the Collateral of Grantor created under this Agreement have been or are concurrently herewith being duly made or taken and are in full force and effect, and this Agreement creates in favor of the Agent for the benefit of the Purchasers a valid and, together with such filings and other actions, perfected first priority security interest in the Collateral of Grantor, securing the payment of the Secured Obligations.

 

(b)         Except for the security interest granted to the Agent under this Agreement, Grantor is the sole legal and equitable owner of the Collateral in which it purports to grant a security interest hereunder, having good and marketable title thereto, free and clear of any and all liens, security interests or other encumbrances.

 

(c)         From the date hereof until the full release of the security interest in the Collateral, (i) Grantor shall not sell, lease, transfer or otherwise dispose of any of the Collateral, or attempt or contract to do so, and (ii) Grantor shall not, directly or indirectly, create, permit or suffer to exist, and shall defend the Collateral against and take such other action as is necessary to remove, any lien, security interest or other encumbrance on the Collateral.

 

SECTION 3.   Amendments; Waivers.  No amendment or waiver of any provision of this Agreement, and no consent to any departure herefrom, shall in any event be effective unless the same shall be in writing and signed by the Agent, acting with the approval of the holders of at least 66.7% of the combined principal amount of all H Notes then outstanding, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.  No failure on the part of the Agent or any other Purchaser to exercise, and no delay in exercising any right hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right.

 

SECTION 4.   Notices; Etc.  All notices and other communications provided for hereunder shall be in writing and mailed, telecopied, e-mailed, or delivered to its address, telecopier number or e-mail address set forth opposite the Grantor’s or the Agent’s name on the signature pages hereto or, as to any party, at such other address, telecopier number or e-mail address as shall be designated by such party in a written notice to the other party.  All such notices and other communications shall, when mailed, telecopied, e-mailed, or delivered, be effective when deposited in the mails or telecopied, sent by e-mail, or delivered, respectively, addressed as aforesaid; except that notices and other communications to the Agent shall not be effective until received by the Agent.  Delivery by telecopier or by e-mail of an executed counterpart of any amendment or waiver of any provision of this Agreement shall be effective as delivery of an original executed counterpart thereof.

 

SECTION 5.   Continuing Security Interest; Assignments under the Securities Purchase Agreement.  This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until the payment in full of the Secured Obligations, (b) be binding upon the Grantor, its successors and assigns and (c) inure, together with the rights and remedies of the Agent hereunder, to the benefit of the Purchasers and their respective successors, transferees and assigns.  Without limiting the generality of the foregoing clause (c), any Purchaser may assign or otherwise transfer all or any portion of its rights and obligations under the Securities Purchase Agreement as permitted thereunder to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Purchaser herein or otherwise, in each case as provided in the Securities Purchase Agreement.

 

  

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SECTION 6.   Termination. Upon the payment in full of the Secured Obligations, the pledge, assignment and security interest granted hereby shall terminate and all rights to the Collateral shall revert to the Grantor.  Upon any such termination, the Agent will, at the Grantor’s expense, execute and deliver to Grantor such documents as Grantor shall reasonably request to evidence such termination.  Notwithstanding the foregoing, this Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against Grantor for liquidation or reorganization, should Grantor become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of Grantor’s property and assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Secured Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Secured Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment or performance had not been made.  In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Secured Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

 

SECTION 7.    Execution in Counterparts.  This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of an original executed counterpart of this Agreement.

 

SECTION 8.   Governing Law.  This Agreement shall be governed by, and construed in accordance with, the law of the State of New York without regard to principles thereof regarding conflict of laws, except to the extent that the UCC provides for the application of the law of a different jurisdiction.

 

 

  

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

                                           

	 	

Genta Incorporated,

a Delaware corporation

	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	Name: Raymond P. Warrell, Jr., M.D.	 
	 	 	Title: Chairman and Chief Executive Officer	 
	 	 	 	 

  

 

Address for Notices:

 

Genta Incorporated

200 Connell Drive

Berkeley Heights, NJ 07922

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

Telephone No.: (908) 286-9800

 

 

Security Agreement

  

  

  

  

  

  

 

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

 

 

 

	 	
Tang Capital Partners, L.P.,

as Agent

	 
	 	 	 	 
	
 

	
By: 

	/s/ 	 
	 	 	Name: 	 
	 	 	Title: 	 

  

Address for Notices:ex10-5.htm

 

 

 Exhibit 10.5

                                     July 25, 2011

 

STRICTLY CONFIDENTIAL

Raymond P. Warrell Jr., M.D.

Chairman of the Board and Chief Executive Officer

Genta Incorporated

200 Connell Drive

Berkeley Heights, NJ 07922

Dear Dr. Warrell:

This letter (the “Agreement”) constitutes the agreement between Genta Incorporated (the “Company”) and Rodman & Renshaw, LLC (“Rodman”) that Rodman shall serve as the exclusive placement agent and/or exclusive underwriter (the “Services”) for the Company, on a reasonable best efforts basis (or, firm commitment, in the event of an underwritten transaction), in connection with the proposed offer and placement (the “Offering”) by the Company of securities of the Company (the “Securities”). The terms of the Offering and the Securities shall be mutually agreed upon by the Company and the investors and nothing herein implies that Rodman would have the power or authority to bind the Company or an obligation for the Company to issue any Securities or complete the Offering.  The Company expressly acknowledges and agrees that the execution of this Agreement does not constitute a commitment by Rodman to purchase the Securities and does not ensure the successful placement of the Securities or any portion thereof or the success of Rodman with respect to securing any other financing on behalf of the Company.  If Rodman and the Company choose to have the Offering consist of registered securities, then Rodman and the Company shall enter into a placement agent agreement in form and substance reasonably satisfactory to both parties, which shall contain the economic terms set forth herein, except that in such case the provisions of Paragraph C shall not apply.  In the event that Rodman and the Company mutually determine to proceed with an underwritten Offering (either for the account of Rodman or the account of others), the Company shall negotiate the terms of an underwriting agreement with Rodman which shall contain such terms, covenants, conditions, representations, warranties that are customary for such offerings and providing for the delivery of legal opinions, comfort letters and officer’s certificates, all in form and substance reasonably satisfactory to Rodman and its counsel and the Company.

A.            Fees and Expenses.  In connection with the Services described above, the Company shall pay to Rodman the following compensation:

 

1.           Placement Agent’s Fee.  The Company shall pay to Rodman a cash placement fee (the “Placement Agent’s Closing Fee”) equal to 6% of the aggregate purchase price paid by each purchaser of Securities introduced by Rodman that are placed in the Offering, which shall not include any investors who have participated in any financing by the Company after January 2010 (the “Prior Investors”), a complete list of which is set forth on Annex A attached hereto; provided, however, in no event shall the Prior Investors be permitted to participate in more than 33% of any Offering, in the aggregate, without the prior written consent of Rodman.  The Placement Agent’s Closing Fee shall be paid at the closing of the Offering (the “Closing”) from the gross proceeds of the Securities sold.

Rodman & Renshaw, LLC  1251 Avenue of the Americas, 20th Floor, New York, NY 10020

Tel: 212 356 0500  Fax: 212 581 5690  www.rodm.com  Member: FINRA, SIPC

  

  

2.           Warrants.  As additional compensation for the Services, and only if warrants are issued to Investors,  the Company shall issue to Rodman or its designees at the Closing, warrants (the “Rodman Warrants”) to purchase that number of shares of common stock of the Company equal to 6% of the aggregate number of shares of common stock of the Company (“Common Stock”) issued at the Closing or issuable after the Closing upon conversion or exchange of the Securities (if convertible or exchangeable) issued at Closing; provided, however, that the aggregate number of shares of Common Stock issued at Closing or issuable after Closing upon conversion or exchange of the Securities shall not include any shares of Common Stock underlying warrants issued in such Offering.  The Rodman Warrants shall have the same terms, including exercise price and registration rights, as the warrants issued to investors (“Investors”) in the Offering

3.           Expenses.  In addition to any fees payable to Rodman hereunder, the Company hereby agrees to reimburse Rodman for all reasonable travel and other out-of-pocket expenses incurred in connection with Rodman’s engagement, including the reasonable fees and expenses of Rodman’s counsel.   Such reimbursement shall be limited to a maximum of $25,000 per Offering (provided, however, that such expense cap in no way limits or impairs the indemnification and contribution provisions of this Agreement).

4.           FINRA.  Notwithstanding anything herein to the contrary, at the request of Rodman, the Company shall agree to amend this Agreement in writing to reduce compensation payable hereunder to the extent and as necessary, in Rodman’s sole discretion, in order comply with the rules or regulations of Financial Industry Regulatory Authority (“FINRA”); provided, however, the Company shall not be required to enter into any agreement that results in terms or conditions less favorable to the Company.

B.            Term and Termination of Engagement.  The term (the “Term”) of Rodman’s engagement will begin on the date hereof and end 15 days after the receipt by either party hereto of written notice of termination; provided that (i) no such notice may be given by the Company for a period of 4 months after the date hereof and (ii) if an Offering occurs during the Term, such 4 month period shall be extended to December 31, 2011. Notwithstanding anything to the contrary contained herein, the provisions concerning confidentiality, indemnification, contribution and the Company’s obligations to pay fees actually earned and payable and to reimburse expenses actually incurred and reimbursable pursuant to Section A hereof, will survive any expiration or termination of this Agreement.

C.            Fee Tail.  Rodman shall be entitled to a Placement Agent’s Fee and Rodman Warrants, calculated in the manner provided in Paragraph A, with respect to any public or private offering or other financing or capital-raising transaction of any kind (“Tail Financing”) to the extent that such financing or capital is provided to the Company by investors whom Rodman had introduced, directly or indirectly, to the Company in telephonic or face-to-face meetings during the Term, and further provided that Rodman shall be paid the full fee during the Tail Period as to any Prior Investors that participate in both an Offering and a Tail Financing, if such Tail Financing is consummated at any time within the 6-month period following the expiration or termination of this Agreement (the “Tail Period”).

D.            Use of Information.  The Company will furnish Rodman such written information as Rodman reasonably requests in connection with the performance the Services.  The Company understands, acknowledges and agrees that, in performing the Services, Rodman will use and rely entirely upon such information as well as publicly available information regarding the Company and other potential parties to an Offering and that Rodman does not assume responsibility for independent verification of the accuracy or completeness of any information, whether publicly available or otherwise furnished to it, concerning the Company or otherwise relevant to an Offering, including, without limitation, any financial information, forecasts or projections considered by Rodman in connection with the provision of the Services.

  

  

  

E.            Publicity.  In the event of the consummation or public announcement of any Offering, Rodman shall have the right to disclose its participation in such Offering, including, without limitation, the placement at its cost of “tombstone” advertisements in financial and other newspapers and journals.

F.            Securities Matters.  The Company shall be responsible for any and all compliance with the securities laws applicable to it, including Regulation D and the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 promulgated thereunder, and unless otherwise agreed in writing, all state securities (“blue sky”) laws. Rodman agrees to cooperate with counsel to the Company in that regard.

G.            Representations and Warranties.

1.           Rodman shall be entitled to rely on the representations, warranties, agreements, conditions and covenants of the Company contained in any agreements entered into with the Investors in an Offering and such representations, warranties, agreements, conditions and covenants are hereby incorporated by reference into this Agreement as though fully stated herein.

2.           The Company acknowledges that the Offering of convertible Securities may create significant risks, including the risk that the Company may have insufficient cash resources and/or registered shares to timely meet its payment and conversion obligations.  The Company further acknowledges that, depending on the number and price of new shares issued, such transaction may result in substantial dilution which could adversely affect the market price of the Company’s shares.

3.           The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder.  The execution and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, its board of directors or its stockholders in connection herewith.   This Agreement has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

4.           The execution, delivery and performance of this Agreement by the Company, the proposed issuance and sale of the Securities and the consummation by the Company of the other transactions contemplated hereby do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary of the Company’s (“Subsidiaries”) certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected.

  

  

  

5.           The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other “Person” (defined as an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind, including, without limitation, any trading market) in connection with the execution, delivery and performance by the Company of this Agreement, other than such filings as are required to be made under applicable Federal and state securities laws.

6.           Except as required hereunder, no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement.

7.           The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Securities (other than for the Placement Agent’s placement of the Securities), or (iii) paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Company.

8.           There are no affiliations with any FINRA member firm among the Company’s officers, directors or, to the knowledge of the Company, any five percent (5%) or greater stockholder of the Company.

 

H.            Indemnity.

1.     In connection with the Company’s engagement of Rodman as placement agent, the Company hereby agrees to indemnify and hold harmless Rodman and its affiliates, and the respective controlling persons, directors, officers, shareholders, agents and employees of any of the foregoing (collectively the “Indemnified Persons”), from and against any and all claims, actions, suits, proceedings (including those of shareholders), damages, liabilities and expenses incurred by any of them (including the reasonable fees and expenses of counsel), as incurred, (collectively a “Claim”), that are (A) related to or arise out of (i) any actions taken or omitted to be taken (including any untrue statements made or any statements omitted to be made) by the Company, or (ii) any actions taken or omitted to be taken by any Indemnified Person in connection with the Company’s engagement of Rodman, or (B) otherwise relate to or arise out of Rodman’s activities on the Company’s behalf under Rodman’s engagement, and the Company shall reimburse any Indemnified Person for all expenses (including the reasonable fees and expenses of counsel) as incurred by such Indemnified Person in connection with investigating, preparing or defending any such claim, action, suit or proceeding, whether or not in connection with pending or threatened litigation in which any Indemnified Person is a party.  The Company will not, however, be responsible for any Claim that is finally judicially determined to have resulted from the gross negligence or willful misconduct of any person seeking indemnification for such Claim.  The Company further agrees that no Indemnified Person shall have any liability to the Company for or in connection with the Company’s engagement of Rodman except for any Claim incurred by the Company as a result of such Indemnified Person’s gross negligence or willful misconduct.

  

  

  

2.     The Company further agrees that it will not, without the prior written consent of Rodman, settle, compromise or consent to the entry of any judgment in any pending or threatened Claim in respect of which indemnification may be sought hereunder (whether or not any Indemnified Person is an actual or potential party to such Claim), unless such settlement, compromise or consent includes an unconditional, irrevocable release of each Indemnified Person from any and all liability arising out of such Claim.

3.      Promptly upon receipt by an Indemnified Person of notice of any complaint or the assertion or institution of any Claim with respect to which indemnification is being sought hereunder, such Indemnified Person shall notify the Company in writing of such complaint or of such assertion or institution but failure to so notify the Company shall not relieve the Company from any obligation it may have hereunder, except and only to the extent such failure results in the forfeiture by the Company of substantial rights and defenses.  If the Company so elects or is requested by such Indemnified Person, the Company will assume the defense of such Claim, including the employment of counsel reasonably satisfactory to such Indemnified Person and the payment of the fees and expenses of such counsel. In the event, however, that legal counsel to such Indemnified Person reasonably determines that having common counsel would present such counsel with a conflict of interest or if the defendant in, or target of, any such Claim, includes an Indemnified Person and the Company, and legal counsel to such Indemnified Person reasonably concludes that there may be legal defenses available to it or other Indemnified Persons different from or in addition to those available to the Company, then such Indemnified Person may employ its own separate counsel to represent or defend him, her or it in any such Claim and the Company shall pay the reasonable fees and expenses of such counsel.  Notwithstanding anything herein to the contrary, if the Company fails timely or diligently to defend, contest, or otherwise protect against any Claim, the relevant Indemnified Party shall have the right, but not the obligation, to defend, contest, compromise, settle, assert crossclaims, or counterclaims or otherwise protect against the same, and shall be fully indemnified by the Company therefor, including without limitation, for the reasonable fees and expenses of its counsel and all amounts paid as a result of such Claim or the compromise or settlement thereof.  In addition, with respect to any Claim in which the Company assumes the defense, the Indemnified Person shall have the right to participate in such Claim and to retain his, her or its own counsel therefor at his, her or its own expense.

4.     The Company agrees that if any indemnity sought by an Indemnified Person hereunder is held by a court to be unavailable for any reason (other than as a result of the gross negligence or willful misconduct of such Indemnified Person), then (whether or not Rodman is the Indemnified Person) the Company and Rodman shall contribute to the Claim for which such indemnity is held unavailable in such proportion as is appropriate to reflect the relative benefits to the Company, on the one hand, and Rodman on the other, in connection with Rodman’s engagement referred to above, subject to the limitation that in no event shall the amount of Rodman’s contribution to such Claim exceed the amount of fees actually received by Rodman from the Company pursuant to Rodman’s engagement.  The Company hereby agrees that the relative benefits to the Company, on the one hand, and Rodman on the other, with respect to Rodman’s engagement shall be deemed to be in the same proportion as (a) the total value paid or proposed to be paid or received by the Company or its stockholders as the case may be, pursuant to the Offering (whether or not consummated) for which Rodman is engaged to render services bears to (b) the fee paid or proposed to be paid to Rodman in connection with such engagement.

  

  

  

5.     The Company’s indemnity, reimbursement and contribution obligations under this Agreement (a) shall be in addition to, and shall in no way limit or otherwise adversely affect any rights that any Indemnified Party may have at law or at equity and (b) shall be effective whether or not the Company is at fault in any way.

I.              Limitation of Engagement to the Company.  The Company acknowledges that Rodman has been retained only by the Company, that Rodman is providing services hereunder as an independent contractor (and not in any fiduciary or agency capacity) and that the Company’s engagement of Rodman is not deemed to be on behalf of, and is not intended to confer rights upon, any shareholder, owner or partner of the Company or any other person not a party hereto as against Rodman or any of its affiliates, or any of its or their respective officers, directors, controlling persons (within the meaning of Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), employees or agents.  Unless otherwise expressly agreed in writing by Rodman, no one other than the Company is authorized to rely upon this Agreement or any other statements or conduct of Rodman, and no one other than the Company is intended to be a beneficiary of this Agreement.  The Company acknowledges that any recommendation or advice, written or oral, given by Rodman to the Company in connection with Rodman’s engagement is intended solely for the benefit and use of the Company’s management and directors in considering a possible Offering, and any such recommendation or advice is not on behalf of, and shall not confer any rights or remedies upon, any other person or be used or relied upon for any other purpose.  Rodman shall not have the authority to make any commitment binding on the Company.  The Company, in its sole discretion, shall have the right to reject any investor introduced to it by Rodman.  The Company agrees that it will perform and comply with the covenants and other obligations set forth in the purchase agreement and related transaction documents between the Company and the investors in the Offering, and that Rodman will be entitled to rely on the representations, warranties, agreements and covenants of the Company contained in such purchase agreement and related transaction documents as if such representations, warranties, agreements and covenants were made directly to Rodman by the Company.

J.              Limitation of Rodman’s Liability to the Company.  Rodman and the Company further agree that neither Rodman nor any of its affiliates or any of its their respective officers, directors, controlling persons (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), employees or agents shall have any liability to the Company, its security holders or creditors, or any person asserting claims on behalf of or in the right of the Company (whether direct or indirect, in contract, tort, for an act of negligence or otherwise) for any losses, fees, damages, liabilities, costs, expenses or equitable relief arising out of or relating to this Agreement or the Services rendered hereunder, except for losses, fees, damages, liabilities, costs or expenses that arise out of or are based on any action of or failure to act by Rodman and that are finally judicially determined to have resulted solely from the gross negligence or willful misconduct of Rodman.

K.            Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be fully performed therein.  Any disputes that arise under this Agreement, even after the termination of this Agreement, will be heard only in the state or federal courts located in the City of New York, State of New York.  The parties hereto expressly agree to submit themselves to the jurisdiction of the foregoing courts in the City of New York, State of New York. The parties hereto expressly waive any rights they may have to contest the jurisdiction, venue or authority of any court sitting in the City and State of New York.  In the event of the bringing of any action, or suit by a party hereto against the other party hereto, arising out of or relating to this Agreement, the party in whose favor the final judgment or award shall be entered shall be entitled to have and recover from the other party the costs and expenses incurred in connection therewith, including its reasonable attorneys’ fees.  Any rights to trial by jury with respect to any such action, proceeding or suit are hereby waived by Rodman and the Company.

  

  

  

L.            Notices.  All notices hereunder will be in writing and sent by certified mail, hand delivery, overnight delivery or fax, if sent to Rodman, to Rodman & Renshaw, LLC, at the address set forth on the first page hereof, fax number (646) 841-1640, Attention: General Counsel, and if sent to the Company, to the address set forth on the first page hereof, fax number (646) 841-1654, Attention: Gregory Dow.  Notices sent by certified mail shall be deemed received five days thereafter, notices sent by hand delivery or overnight delivery shall be deemed received on the date of the relevant written record of receipt, and notices delivered by fax shall be deemed received as of the date and time printed thereon by the fax machine.

M.           Miscellaneous.  This Agreement shall not be modified or amended except in writing signed by Rodman and the Company.  This Agreement shall be binding upon and inure to the benefit of both Rodman and the Company and their respective assigns, successors, and legal representatives.  This Agreement constitutes the entire agreement of Rodman and the Company, and supersedes any prior agreements, with respect to the subject matter hereof.  If any provision of this Agreement is determined to be invalid or unenforceable in any respect, such determination will not affect such provision in any other respect, and the remainder of the Agreement shall remain in full force and effect.  This Agreement may be executed in counterparts (including facsimile counterparts), each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

In acknowledgment that the foregoing correctly sets forth the understanding reached by Rodman and the Company, please sign in the space provided below, whereupon this letter shall constitute a binding Agreement as of the date indicated above.

                                

	 	
Very truly yours,

 

RODMAN & RENSHAW, LLC

	 
	 	 	
 

 

	 
	
 

	
By: 

	/s/John Borer 	 
	 	 	Name:  John Borer	 
	 	 	Title:  Senior Managing Director and Head of Investment Banking	 
	 	 	 	 

Accepted and Agreed:

GENTA INCORPORATED

By /s/ Gary Siegel_____________

    Name:  Gary Siegel

    Title:    Vice President, Finance

  

  

  

 

ANNEX A

As specified in Paragraph A 1. of the foregoing, the “Prior Investors” are hereby defined as and limited to the following firms, and affiliates thereof:

Tang Capital Management

Tavistock Group

Baker Brothers Life Sciences Capital

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