January 28, 1997
VIA FACSIMILE:
(000) 000-0000
Xxxxxxx X. Xxxxxxxxx, M.D.
Paramount Capital Asset Management, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Dear Lindsay:
This letter confirms the agreement between Genta Incorporated
(the "Company") and the Aries Domestic Fund, L.P. and The Aries Trust
(collectively, the "Purchasers") as follows:
WHEREAS, as of the date hereof, the Company and the Purchasers
entered into, executed and delivered various agreements (the "Purchase
Documents") pursuant to which the Purchasers, subject to a Closing (as
defined in the Note and Warrant Purchase Agreement), will make an
investment (the "Transaction") in the Company of $3,000,000 in the form
of Senior Secured Convertible Bridge Notes;
WHEREAS, the Purchase Documents are comprised of the
following, (i) Note and Warrant Purchase Agreement, (ii) Senior Secured
Convertible Bridge Note, (iii) Class A Bridge Warrant, (iv) Class B
Bridge Warrant, (v) Security Agreement, (vi) Letter of Intent, (vii)
Certificate of Designations for Series D Preferred Stock and (viii)
Security Agreement;
WHEREAS, the Purchase Documents have been executed but the
Purchasers have yet to be provided with the final executed opinion of
Pillsbury Madison & Sutro LLP (the "Pillsbury Madison Opinion") or the
final version of the schedules (the "Schedules") to the Purchase
Documents;
WHEREAS, the Company has determined that in light of its
financial situation, it requires funding immediately;
In light of the foregoing the Company and Purchasers agree as follows:
(1) The parties acknowledge that all the Purchase Documents
have been signed and that Purchasers have yet to receive the
final executed Pillsbury Madison Opinion and the Schedules,
which such documents shall be satisfactory in
Xxxxxxx X. Xxxxxxxxx, M.D.
January 28, 1997
Page 2
form and substance to Purchasers in their sole
discretion.
(2) Purchasers agree to advance to the Company under and
subject to the terms of the Purchase Documents, two hundred
and fifty thousand dollars ($250,000) to provide the Company
with immediate operating capital to be expended in accordance
with the attached schedule.
(3) The Company agrees that if it does not deliver the
Schedules and the Pillsbury Madison Opinion, in form and
substance satisfactory to Purchasers in their sole discretion,
by February 7, it will immediately refund $250,000 (or if less
than $250,000 remains from the initial $250,000, such lesser
amount as remains) to the Purchasers and the Purchasers shall
have an unconditional right to rescind their purchase of the
$250,000 worth of Senior Secured Convertible Bridge Notes.
(4) Purchasers agree that upon receipt of the Schedules and
Pillsbury Madison Opinion, subject to the satisfaction of all
of the conditions to Purchasers' closing contained in the
Purchase Documents (which satisfaction Purchasers shall
determine in their sole discretion), and upon the occurrence
of a Closing, they will provide to the Company the remaining
$2,750,000 of debt financing in exchange for the securities of
the Company all as provided for and set forth in, and subject
to the terms of, the Purchase Documents.
(5) The Company agrees that it may not terminate any of the
Purchase Documents and is obligated to proceed with the
Transaction as set forth in the Purchase Documents unless
Purchasers terminate such agreements or indicate in writing to
the Company that they have determined not to close the
Transaction.
Xxxxxxx X. Xxxxxxxxx, M.D.
January 28, 1997
Page 3
If the foregoing conforms to your understanding, please sign, date and return to
us the enclosed copy of this letter.
Very truly yours,
GENTA INCORPORATED.
By: /s/Xxxxxx Xxxxx
---------------
Xxxxxx Xxxxx
President and Chief Executive Officer
The foregoing is in conformity with our understanding:
ARIES DOMESTIC FUND, L.P.
By: /s/Xxxxxxx X. Xxxxxxxxx
---------------------------
Xxxxxxx X. Xxxxxxxxx, M.D.
President, Paramount Capital Asset Management, Inc.
General Partner of Aries Domestic Fund, L.P.
THE ARIES TRUST
By: /s/Xxxxxxx X. Xxxxxxxxx
---------------------------
Xxxxxxx X. Xxxxxxxxx, M.D.
President, Paramount Capital Asset Management, Inc
Investment Adviser to the Aries Trust
Xxxxxxx X. Xxxxxxxxx, M.D.
January 28, 1997
Page 4
Expenditure Schedule
--------------------
Payroll $114,000*
Pillsbury Madison $ 72,000
D&O Insurance $ 39,000
Medical, Dental, Disability $ 25,000
--------
Total $250,000
--------
*Amounts attributable to 401(k) to be discussed with Paramount
Capital Asset Management
