Exhibit 10.1 Separation Agreement


    
      

    

     

                                                                                    Exhibit
      10.1

     

    


    SEPARATION
      AGREEMENT

     

    This
      Separation Agreement (the “Agreement”) is entered into as of March 31, 2006,
      between SIGA Technologies, Inc., a Delaware corporation (the “Company”), and
      Bernard Kasten, M.D. (“Executive”).

     

    WHEREAS,
      the
      Company no longer desires to employ Executive and Executive no longer desires
      to
      be employed by the Company, the parties hereto agree to terminate Executive’s
      employment on the terms and conditions set forth herein.

    


    NOW,
      THEREFORE, in
      consideration of the foregoing premises and of the mutual agreements and
      covenants hereinafter set forth, the parties agree to the terms and conditions
      of this Agreement as follows:

    


    
      	
              1.

            	
              EMPLOYMENT
                AGREEMENT TERMINATED.
                Except as otherwise expressly set forth below, all terms and conditions
                of
                the Employment Agreement dated July 2, 2004 between Executive and
                Company
                (the “Employment Agreement”) are hereby terminated, and this Agreement and
                its attachment expressly
                supersede any and all previous understandings and agreements between
                the
                Company and Executive and constitute the sole and exclusive understanding
                between the Company and Executive concerning the subjects set forth
                herein. 

            


    

    


    
      	
              2.

            	
              REMAINING
                TENURE.
                Executive shall retain the title of Chief Executive Officer (“CEO”)
                through and including April 30, 2006 or until he obtains new employment,
                whichever occurs first (the “Remaining Tenure”).
                

            


    

    


    
      	
              3.

            	
              CONSIDERATION.
                

            


    

    


    
      	 	
              a.

            	
              Salary.
                During the Remaining Tenure and for an additional period beginning
                the
                first business day after the end of the Remaining Tenure and continuing
                through September 16, 2006 (the “Separation Period”), Executive shall
                receive his salary on the terms and conditions set forth in Section
                3(a)
                of the Employment Agreement in lieu of any other severance or payment.
                

            


    

    


    
      	 	
              b.

            	
              Options.
                Concurrently with the execution of this Agreement, the parties will
                execute an amendment to Executive’s Incentive
                Stock Option Agreement (relating to the “Time Vested Options,” as such
                term is defined in the Employment Agreement)
                that is substantially in the form of the annexed Exhibit A. Executive’s
                Incentive Stock Option Agreement (relating to the “Milestone Options,” as
                such term is defined in the Employment Agreement) is cancelled and
                hereby
                declared void ab
                initio
                and of no further force or effect. The parties’ rights and obligations
                with respect to all options in Company stock, whether vested or unvested,
                shall be as set forth in the amended Incentive Stock Option Agreement
                (relating to the Time Vested 

            


    

    
      	 	
               

            	 


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
 

    Options),
      notwithstanding anything in the Employment
      Agreement to the contrary.

    


    
      	 	
              c.

            	
              Medical
                and/or Dental Insurance Benefits.
                Executive will be permitted to continue participation in the Company's
                group medical and/or dental insurance benefit plans as in effect
                and
                amended from time to time at the contribution level in effect for
                active
                employees until (i) the end of the Remaining Tenure, (ii) he becomes
                entitled to Medicare or (iii) he becomes eligible for coverage under
                medical and/or dental insurance benefit plans, as the case may be,
                of
                another employer through his future employment, whichever occurs
                first.
                Executive shall notify the Company of his eligibility for coverage
                under
                medical and/or dental insurance benefit plans of any future employer
                of
                Executive promptly and no later than the date when such coverage
                begins.

            


    

    


    
      	
              4.

            	
              COOPERATION.
                During the Remaining Tenure and Separation Period, Executive shall
                be
                available to the Company on a reasonable basis for transitional purposes,
                including, but not limited to, working on continuing funding projects,
                the
                proposed transaction between the Company and PharmAthene, Inc., Company
                obligations with respect to the Securities and Exchange Commission
                (“SEC”)
                and the transition of contacts developed in connection with Executive’s
                work as CEO. At any time, upon request, Executive shall give his
                assistance and cooperation willingly in any matter relating to his
                expertise or experience as the Company may reasonably request, including
                his attendance and truthful testimony where deemed appropriate by
                the
                Company, with respect to any investigation or the Company's defense
                or
                prosecution of any existing or future claims or litigations relating
                to
                matters in which he was involved or potentially has knowledge by
                virtue of
                his employment with the Company.

            


    

    


    
      	
              5.

            	
              NON-DISPARAGEMENT.
                Executive will not disparage or defame the Company, its employees,
                officers, directors or shareholders, any of its actual or proposed
                products or services, the proposed combination of the Company and
                PharmAthene, Inc. or any other activity of the Company during his
                tenure
                with the Company. The Company will not disparage or defame Executive.
                The
                parties acknowledge that providing substantially accurate information
                concerning Executive’s period of tenure or job titles with the Company
                shall not violate this Agreement. 

            


    

    


    
      	
              6.

            	
              ANNOUNCEMENT
                OF SEPARATION.
                The parties shall work in good faith to craft a mutually acceptable
                public
                announcement concerning the subject of this Agreement, including
                a press
                release and Company disclosure on SEC Form
                8-K.

            


    

    


    
      	
              7.

            	
              OUT-OF-POCKET
                EXPENSES.
                During the Remaining Tenure and Separation Period, Executive shall
                be
                reimbursed for all legitimate out-of-pocket expenses actually incurred
                in
                connection with his cooperation with the Company pursuant to Paragraph
                4
                of this Agreement, so long as such expenses are approved in advance
                and
                substantiated with appropriate
                receipts.

            


    

     

    
 

    
      
        
        

      

      
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      	8.             
              	
              COMPANY
                PROPERTY.
                At the end of the Remaining Tenure, Executive shall return all Company
                property in his possession or control, including, without limitation,
                computer disks or data (including, without limitation, data retained
                on
                any computer), any home-office equipment or computers purchased or
                provided by the Company, and any records, documents, files or other
                materials. Executive may retain the computer monitor and other devices
                without data storage capabilities previously supplied or made available
                to
                him that have never contained Company data if, within seven (7) days
                of
                the execution of this Agreement, he shall remit to the Company the
                full
                purchase cost of such items.

            


    

    


    
      	
              9.

            	
              INDEMNIFICATION.
                Executive shall remain entitled to indemnification from the Company
                under
                the terms of the Company’s certificate of incorporation and bylaws as in
                effect on
                the date of this Agreement for acts relating to his employment by
                the
                Company. Without limiting the foregoing, the Company agrees to indemnify
                Executive in accordance with the Company’s certificate of incorporation
                and bylaws in connection with the claims arising out of the pending
                litigation with Four Star Group without Executive being required
                to make
                any further demand or notice, effective on the receipt by the Company
                of
                Executive’s undertaking.

            


    

    


    
      	10.          
              	
              RELEASES.
                

            


    

    


    
      	 	
              (a)

            	
              RELEASE
                OF COMPANY.
                Executive hereby releases and holds harmless (on behalf of himself
                and his
                family, heirs, executors, agents, successors and assigns) now and
                forever,
                the Company from and waives any claim in any legal jurisdiction that
                he
                has presently or may have or has had in the past, known or unknown,
                against the Company upon or by reason of any matter, cause or thing
                whatsoever, from the beginning of the world to the date of this release,
                including, without limitation, all claims arising from his employment
                with, or termination of employment from, the Company, or otherwise.
                Without limiting the generality of the preceding, this Agreement
                is
                intended to and shall release the Company from any and all claims
                or
                rights arising under any federal, state or local statute (including,
                without limitation, Title VII of the Civil Rights Act of 1964, as
                amended,
                the Age Discrimination in Employment Act of 1967, as amended, the
                Equal
                Pay Act, as amended, the Americans with Disabilities Act of 1990,
                as
                amended, the Employee Retirement Income Security Act of 1974, as
                amended,
                the Family and Medical Leave Act of 1993, as amended, the Fair Labor
                Standards Act, as amended, and all other statutes regulating the
                terms and
                conditions of your employment), regulation or ordinance, under the
                common
                law or in equity (including any claims for wages, wrongful discharge,
                discrimination, or otherwise), or under any policy, agreement,
                understanding or promise, written or oral, formal or informal, between
                the
                Company and Executive, including, without limitation, any claim Executive
                might have for severance, termination or severance pay. Notwithstanding
                the provision of any state law, and for the purpose of implementing
                a full
                and complete release and discharge of the Company, Executive expressly
                acknowledges that this Agreement is intended to include in its effect,
                without limitation, all claims which Executive does not
                know

            


    

     

    
 

    
      
        
        

      

      
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    of
      or
      suspect to exist in his favor at the time of signing this Agreement and arising
      from his employment with or termination of employment from the Company, and
      that
      this Agreement contemplates the release of any such claim.

    


    
      	 	
              (b)

            	
              COVENANT
                NOT TO SUE.
                Executive will not sue the Company’s shareholders, or the officers,
                directors, employees, agents, attorneys, successors or assigns of
                any of
                the Company or its shareholders (collectively, with the Company’s
                shareholders, the “Company-Related Group”), regarding any claim or matter
                relating to or arising out of Executive’s employment with the Company, the
                termination of Executive’s employment, or any other event or activity
                relating or pertaining to the Company; provided,
                however,
                that the covenant set forth in this Paragraph 10(b) shall not bar
                the
                assertion of any defense or counterclaim to any claim brought by
                any
                member of the Company-Related Group. Executive acknowledges that
                all
                members of the Company-Related Group are intended third-party
                beneficiaries of this covenant.

            


    

    


    
      	 	
              (c)

            	
              RELEASE
                OF EXECUTIVE.
                The Company hereby releases and holds harmless (on behalf of itself
                and
                its agents, successors and assigns) now and forever, the
                Executive (and
                his family, heirs, executors, agents, successors and assigns) from,
                and
                waives any claim in any legal jurisdiction that it has presently
                or may
                have or has had in the past, known or unknown, against, the Executive
                upon
                or by reason of any matter, cause or thing whatsoever, from the beginning
                of the world to the date of this release, including, without limitation,
                all claims arising from the Executive’s employment with, or termination of
                employment from, the Company, or
                otherwise.

            


    

    


    
      	 	
              (d)

            	
              STOCK
                OPTION AGREEMENT NOT RELEASED.
                The releases set forth in this Paragraph 10 do not extend to the
                rights
                and obligations set forth in this Agreement or the amended Incentive
                Stock
                Option Agreement.

            


    

    


    
      	
              11.

            	
              CONFIDENTIALITY,
                INVENTION OWNERSHIP AND RELATED COVENANTS.
                Executive shall remain bound by the obligations contained in Section
                8(a),
                8(b) and 8(c) of the Employment Agreement. In addition, Executive
                shall
                not at any time divulge to any other entity or person any confidential
                information acquired by Executive concerning the Company’s or its
                affiliates’ financial affairs or business processes or methods or their
                research, development or marketing programs or plans, any other of
                its or
                their trade secrets, any information regarding personal matters of
                any
                directors, officers, employees or agents of the Company or their
                respective family members, any information concerning this Agreement
                or
                the terms thereof, or any information concerning the circumstances
                of
                Executive’s employment with and any termination of Executive’s employment
                from the Company, or any information regarding discussions related
                to any
                of the foregoing or make, write, publish, produce or in any way
                participate in placing into the public domain any statement, opinion
                or
                information with respect to any of the foregoing or that reflects
                adversely upon or would reasonably impair the reputation or best
                interests
                of the Company or any of its directors, officers, employees or agents
                or
                their

            


    

     

    
 

    
      
        
        

      

      
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    respective
      family members, except in each case (i) information that is required to be
      disclosed by court order, subpoena or other judicial process,
      (ii) information regarding Executive’s job responsibilities during his
      employment with the Company to prospective employers in connection with an
      application for employment, (iii) information regarding the financial terms
      of
      this Agreement to Executive’s spouse or his tax advisor for purposes of
      obtaining tax advice provided that such persons are made aware of and agree
      to
      comply with the confidentiality obligation, (iv) information that is necessary
      to be disclosed to Executive’s attorney to determine whether Executive should
      enter into this Agreement or (v) information mutually agreed upon pursuant
      to
      Paragraphs 4 or 6 of this Agreement. The foregoing prohibitions shall include,
      without limitation, directly or indirectly publishing (or causing, participating
      in, assisting or providing any statement, opinion or information in connection
      with the publication of) any diary, memoir, letter, story, photograph,
      interview, article, essay, account or description (whether fictionalized or
      not)
      concerning any of the foregoing, publication being deemed to include any
      presentation or reproduction of any written, verbal or visual material in any
      communication medium, including any book, magazine, newspaper, electronic or
      internet publication or discussion group, theatrical production or movie, or
      television or radio programming or commercial. In addition to any and all other
      remedies available to the Company for any violation of this Paragraph, Executive
      agrees to immediately remit and disgorge to the Company any and all payments
      paid or payable to him in connection with or as a result of engaging in any
      of
      the above acts. In the event that Executive is required to make disclosure
      under
      any court order, subpoena or other judicial process that in any way relates
      to
      his employment with the Company or any of the foregoing matters described above,
      Executive will promptly notify the Company so that the Company may seek
      appropriate relief from such disclosure or waive Executive’s duty of
      nondisclosure hereunder, provided that, if, following any such effort by the
      Company to avoid disclosure, Executive shall, in the reasonable opinion of
      his
      counsel, stand liable for contempt or suffer other censure or penalty for
      failure to disclose, Executive may make such disclosure under terms that seek
      to
      protect confidentiality to the extent permissible without liability hereunder.
      Executive shall permit the Company to participate with counsel of its choice
      in
      any proceeding relating to such compulsory disclosure and shall cooperate with
      the Company’s efforts to avoid disclosure. Executive acknowledges that all
      information the disclosure of which is prohibited by this Paragraph is of a
      confidential and proprietary character and of great value to the
      Company.

    


    
      	
              12.

            	
              FREE
                WILL.
                Executive is entering into this Agreement of his own free will and
                without
                coercion, intimidation or threat of retaliation. He acknowledges
                and
                agrees that the Company has not exerted any undue pressure or influence
                on
                him in this regard. Executive acknowledges that he has had reasonable
                time
                to determine whether entering into this Agreement is in his best
                interest,
                has retained counsel and has read and fully understands the terms
                set
                forth in this Agreement.

            


    

    


    
      	
              13.

            	
              PENALTIES.
                If Executive initiates or participates (other than as a witness providing
                truthful testimony or relevant documents in his possession or control,
                subject to Section 11 of this Agreement) in any lawsuit or other
                legal
                action arising out of his
                employment

            


    

    
      	
               

            	 


    

     

    
 

    
      
        
        

      

      
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    with
      the
      Company or the termination of his employment with the Company, the Company
      may,
      except as otherwise prohibited by law, reclaim any and all amounts paid under
      Section 3(a), 3(c) or 7 of this Agreement, without waiving the release granted
      herein, and terminate any unpaid or unvested benefit or payment that is due
      under this Agreement, in addition to any other remedies it may have. In
      addition, in any action brought to enforce this Agreement, the prevailing party
      shall be entitled to receive all of its reasonable attorneys’ fees and costs
      incurred resulting from, or incident to, any such litigation.

    


    
      	
              14.

            	
              NOTICE.
                Any notice to be given under this Agreement shall be given in writing
                and
                delivered either personally or sent by certified mail to the Company
                c/o
                Chief Financial Officer at 420 Lexington Avenue, Suite 408, New York,
                New
                York 10170, and to you at 4380 27th
                Court, S.W., Building No. One, #104, Naples, Florida 34116, with
                a copy to
                Bradley G. Haas, Esq., Katz Teller Brant & Hild, 255 East Fifth
                Street, Suite 2400, Cincinnati, OH
                45202.

            


    

    


    
      	
              15.

            	
              NON-ADMISSION.
                Nothing contained in this Agreement shall be deemed or construed
                as an
                admission of wrongdoing or liability on the part of the Company or
                Executive.

            


    

    


    
      	
              16.

            	
              SEVERABILITY.
                Should any provision or part of this Agreement be found to be invalid
                or
                unenforceable, only that particular provision or part so found and
                not the
                entire agreement shall be
                inoperative.

            


    

    


    
      	
              17.

            	
              ASSIGNMENT.
                This Agreement may be assigned by the Company to (i) any affiliate
                of the
                Company or (ii) any non-affiliate of the Company that shall acquire
                all or
                the greater part of the business and assets of the Company. In the
                event
                of any such assignment, the Company shall cause such affiliate or
                non-affiliate, as the case may be, to assume the obligations of the
                Company hereunder with the same effect as if such assignee were the
                “Company” hereunder. This Agreement is personal to Executive and Executive
                may not assign any rights or delegate any responsibilities hereunder
                without the prior approval of the
                Company.

            


    

    


    
      	
              18.

            	
              NON-ALIENATION.
                Executive shall not have any right to pledge, hypothecate or in any
                way
                create a lien upon any payment or benefit provided under this Agreement,
                and no such payment or benefit shall be assignable in anticipation
                of
                payment, either by voluntary or involuntary acts or by operation
                of
                law.

            


    

    


    
      	
              19.

            	
              GOVERNING
                LAW AND CHOICE OF FORUM.
                This Agreement shall be governed by, and construed pursuant to, the
                laws
                of the State of New York applicable to agreements made and to be
                performed
                in New York by citizens thereof. The parties consent and agree to
                the
                exclusive jurisdiction of the federal and state courts sitting in
                the
                County of New York in the State of New York for all purposes. Notice
                of
                any lawsuit may, but need not, be sent in accordance with Paragraph
                14
                above in lieu of any other allowable
                method.

            


    

     

    
 

    
      
        
        

      

      
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      	20.          
              	
              ENTIRE
                AGREEMENT.
                This Agreement and its attachment constitute the sole and exclusive
                understanding between the Company and Executive concerning the subjects
                set forth herein, other than the surviving terms of the Employment
                Agreement and the amended Incentive Stock Option Agreement (relating
                to
                Time Vested Options) expressly referenced herein or in the attachment,
                the
                terms of which remain in full force and effect. Neither this Agreement
                nor
                the attachment may be altered, modified, changed or discharged except
                in a
                writing signed by Executive and agreed to by the
                Company.

            


    

    


    IN
      WITNESS WHEREOF,
      the
      parties hereto have executed this Agreement as of the date first written
      above.

    


    SIGA
      TECHNOLOGIES, INC.

    


    By: /s/
      Thomas
      N.
      Konatich                                   


          
                        Thomas
      N. Konatich

          
                        Chief
      Financial Officer

     

    


    


    /s/
      Bernard
      Kasten       

    Bernard
      Kasten, M.D.

     

    KTBH:659076.2

     

     

     

     

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