Exhibit 10.1 Bridge Note Purchase Agreement


    
      

    

     

                                                                                            Exhibit
      10.1

     

     

     

     

     

     

     

    
 

    BRIDGE
      NOTE PURCHASE AGREEMENT

     

    By
      and Between

     

    PHARMATHENE,
      INC.

     

    and

     

    SIGA
      TECHNOLOGIES, INC.

     

    


     

    


     

    Dated
      as of March 20, 2006

     

    


     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    


    


     

    TABLE
      OF
      CONTENTS

     

    ARTICLE
      I
      CONSTRUCTION............................................................................................................................................................................................................................................
      1

     

    1.1    Defined
      Terms.....................................................................................................................................................................................................................................................
      1

    1.2    Other
      Definitional
      Provisions...........................................................................................................................................................................................................................4

     

    ARTICLE
      II PURCHASE OF NOTES; TERMS; ADDITIONAL 

    TRANSACTIONS.................................................................................................................................................................................................................................................5

     

    2.1    Sale
      and Purchase of
      Notes..............................................................................................................................................................................................................................
      5

    2.2    Closing.................................................................................................................................................................................................................................................................
      5

    2.3    Certain
      Terms of
      Notes.....................................................................................................................................................................................................................................
      5

    2.4    Obligations...........................................................................................................................................................................................................................................................6

    2.5    Additional
      Terms................................................................................................................................................................................................................................................
      7

    2.6    Use
      of
      Proceeds...................................................................................................................................................................................................................................................
      7

     

    ARTICLE
      III REPRESENTATIONS AND
      WARRANTIES...........................................................................................................................................................................................
      7

     

    3.1    Representations
      and Warranties of the
      Issuer...........................................................................................................................................................................................
      7

    3.2    Reliance;
      Knowledge......................................................................................................................................................................................................................................
      11

    3.3    Representations
      and Warranties of the
      Holder........................................................................................................................................................................................
      11

     

    ARTICLE
      IV
      CONDITIONS...........................................................................................................................................................................................................................................
      12

     

    4.1    Conditions
      to Holders’
Obligations...........................................................................................................................................................................................................
      12

    4.2    Conditions
      to SIGA’S
      Obligations.............................................................................................................................................................................................................
      13

     

    ARTICLE
      V
      COVENANTS............................................................................................................................................................................................................................................
      13

     

    5.1    Affirmative
      Covenants.................................................................................................................................................................................................................................
      13

    5.2    Negative
      Covenants......................................................................................................................................................................................................................................
      15

     

    ARTICLE
      VI EVENTS OF
      DEFAULT.........................................................................................................................................................................................................................
      15

     

    6.1    Bankruptcy,
      etc............................................................................................................................................................................................................................................
      15

    6.2    Other
      Events.................................................................................................................................................................................................................................................
      16

     

    ARTICLE
      VII
      MISCELLANEOUS..............................................................................................................................................................................................................................
      17

     

    7.1     
      Amendments
      and
      Waivers......................................................................................................................................................................................................................
      17

    7.2     
      Notices........................................................................................................................................................................................................................................................
      17

    7.3     
      No
      Waiver; Cumulative
      Remedies........................................................................................................................................................................................................
      18

    7.4     
      Survival
      of Representations and
      Warranties.....................................................................................................................................................................................
      19

    7.5     
      Payment
      of Fees, Expenses;
      Taxes........................................................................................................................................................................................................
      19

    7.6     
      Indemnification.........................................................................................................................................................................................................................................
      19

    7.7     
      Counterparts.............................................................................................................................................................................................................................................
      19

    7.8     
      Severability...............................................................................................................................................................................................................................................
      19

    7.9     
      Integration.................................................................................................................................................................................................................................................
      20

    7.10  
 Brokers
      or
      Finders.................................................................................................................................................................................................................................
      20

    7.11    GOVERNING
      LAW.................................................................................................................................................................................................................................
      20

    7.12    Submission
      to Jurisdiction;
      Waivers..................................................................................................................................................................................................
      20

    7.13    Remedies...................................................................................................................................................................................................................................................
      21

    7.14    Successors
      and
      Assigns........................................................................................................................................................................................................................
      21

    7.15    Captions.....................................................................................................................................................................................................................................................21

    7.16    Non-Disclosure.......................................................................................................................................................................................................................................
      21

    7.17    Acknowledgements................................................................................................................................................................................................................................
      21

     

     

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    BRIDGE
      NOTE PURCHASE AGREEMENT

     

    BRIDGE
      NOTE PURCHASE AGREEMENT,
      dated
      as of March 20, 2006, by SIGA TECHNOLOGIES, INC., a Delaware corporation (“SIGA”
or the “Issuer”), and PHARMATHENE, INC., a Delaware corporation (together with
      its successors and assigns, the “Holder”).

     

    RECITALS

     

    SIGA
      has
      requested that the Holder purchase three notes of the Issuer for a purchase
      price of $1,000,000 each and the Holders have agreed to purchase such notes,
      in
      each case subject to the terms and conditions set forth therein.

     

    NOW
      THEREFORE, in consideration of the premises and the mutual covenants contained
      herein and for other good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, the parties agree as
      follows:

     

    ARTICLE
      I

     CONSTRUCTION

    1.1 Defined
      Terms.

     

    As
      used
      in this Agreement, the following terms shall have the following
      meanings:

     

    “Affiliate”:
      as to
      SIGA, (i) any Person which, directly or indirectly, is in control of, is
      controlled by, or is under common control with, the Issuer, including, without
      limitation, any joint venture of the Issuer, or (ii) any Person who is a
      director, officer, member or partner of (A) the Issuer, or (B) any Person
      described in the preceding clause (i). For purposes of this definition,
“control” of a Person means the power, directly or indirectly, either to (i)
      vote 25% or more of the voting securities having ordinary voting power for
      the
      election of directors or managers of such Person, or (ii) direct or cause the
      direction of the management and policies of such Person, whether by contract
      or
      otherwise.

     

    “Agreement”:
      this
      Bridge Note Purchase Agreement, as from time to time amended and in
      effect.

     

    “Business
      Day”:
      a day
      other than a Saturday, Sunday or other day on which commercial banks in New
      York
      City are authorized or required by law to close.

     

    “By-laws”:
      the
      By-laws of SIGA, as from time to time amended and in effect.

     

    “Capital
      Expenditure”:
      any
      expenditure by the Issuer in respect of the purchase or other acquisition of
      fixed assets.

     

    “Capital
      Lease”:
      any
      lease of property, real or personal, by the Issuer, the obligations of which
      are
      required in accordance with GAAP to be capitalized on a balance sheet of the
      Issuer.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    “Change
      of Control”:
      is
      deemed to occur if the current holders of greater than 50% of the currently
      outstanding capital stock of SIGA cease to own 50% or more of the outstanding
      capital stock of SIGA.

     

    “Closing
      Date”:
      March
      20, 2006, April 19, 2006 and June 18, 2006 and together, “Closing
      Dates.”.

     

    “Collateral”:
      as
      defined in Section 2.3(e).

     

    “Contractual
      Obligation”:
      any
      terms, conditions or provisions of (i) any material agreement, document,
      instrument, contract, understanding, arrangement, note, indenture, mortgage
      or
      lease to which the Issuer is a party or under which the Issuer or any of its
      material assets is bound or affected, (ii) the Restated Certificate of
      Incorporation, or (iii) the By-laws.

     

    “Event
      of Default”:
      any of
      the events specified in Sections 6.1 or 6.2.

     

    “Exchange
      Act”:
      Securities Exchange Act of 1934, as amended.

     

    “GAAP”:
      generally accepted accounting principles in the United States of America in
      effect from time to time.

     

    “GE
      Capital Agreement”:
      the
      Master Security Agreement between General Electric Capital Corporation and
      SIGA,
      dated as of April 29, 2005.

     

    “Governmental
      Authority”:
      any
      nation or government, any state or other political subdivision thereof and
      any
      entity exercising executive, legislative, judicial, regulatory or administrative
      functions of or pertaining to government.

     

    “Holder”:
      each
      Holder and any of its successors or assigns.

     

    “Indebtedness”:
      (i)
      all indebtedness for borrowed money or for the deferred purchase price of
      property or services (other than current trade liabilities incurred in the
      ordinary course of business) or which is evidenced by a note, bond, debenture
      or
      similar instrument, (ii) all obligations under Capital Leases, (iii) all
      obligations in respect of letters of credit or acceptances, (iv) all obligations
      under currency exchange contracts or interest rate swap agreements, and (v)
      all
      liabilities secured by any Lien on any property.

     

    “Indemnified
      Person”:
      as
      defined in Section 7.6.

     

    “Interim
      Balance Sheet”:
      balance sheet as set forth in most recent filing by SIGA on Form 10-Q for the
      period ended September 30, 2005 (“Form 10-Q”) with the Securities and Exchange
      Commission.

     

    “Interim
      Financial Statements”:
      financial statements as set forth in Form 10-Q.

     

    “License
      Agreement”:
      the
      proposed License Agreement between PharmAthene and SIGA relating to the current
      compound under development by SIGA generally referred to as

     

     

    
      
        
        

      

      
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     SIGA
      - 246 (“SIGA 246”) pursuant to the terms described in the Term Sheet attached
      hereto as Exhibit C.

     

    “Lien”:
      any
      mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance,
      lien (statutory or other), or preference, priority or other security agreement
      or preferential
      arrangement of any kind or nature whatsoever (including, without limitation,
      any
      conditional sale or other title retention agreement, any Capital Lease having
      substantially the same economic effect as any of the foregoing.

     

    “Material
      Adverse Effect”:
      a
      material adverse effect on (i) the business, operations, property or, condition
      (financial or otherwise) or prospects of the Issuer, (ii) the ability of the
      Issuer to perform its obligations under the Purchase Documents, or (iii) the
      validity or enforceability of the Purchase Documents or the rights or remedies
      of the Holders hereunder or thereunder.

     

    “Maturity
      Date”:
      with
      respect to each Note the earlier to occur of (i) the date that is two years
      from
      the date of such Note, (ii) the closing of a Qualified Financing, or (iii)
      a
      Sale Event.

     

    “Merger”:
      the
      proposed merger of PharmAthene with and into a wholly owned subsidiary of SIGA
      in accordance with the terms described in the Merger Term Sheet attached to
      this
      Agreement as Exhibit B.

     

    “Notes”:
      the 8%
      promissory notes issued pursuant to this Agreement, substantially in the form
      attached hereto as Exhibit A and any replacement or substitute note issued
      in
      respect of such note.

     

    “Operating
      Lease”:
      any
      lease of property, real or personal, which is not a Capital Lease.

     

    “Option
      Shares”:
      as
      defined in Section 3.1(b)(i).

     

    “Permitted
      Liens”:
      (i)
      Liens set forth on Schedule
      1.1,
      (ii)
      Liens currently existing as of the date of this Agreement under the GE Capital
      Agreement, (iii) Liens in favor of the Holder, (iii) Liens for taxes, fees,
      assessments or other government charges or levies, either not delinquent or
      being contested in good faith by appropriate proceedings; provided that adequate
      reserves with respect to such taxes, fees, assessments or other government
      charges or levies which are being contested are maintained on the books of
      the
      Issuer, in conformity with GAAP, (v) pledges or deposits in connection with
      workers’ compensation, unemployment insurance and other social security
      legislation, (vi) purchase money Liens not relating to any obligations in excess
      of $20,000 (A) on assets acquired or held by Issuer incurred for financing
      the
      acquisition of such assets, or (B) existing on such asset when acquired;
provided
      that
      such Liens are in each case confined to the property and improvements and the
      proceeds of such assets, and (vii) leases or subleases and non-exclusive
      licenses or sublicenses, not representing obligations of the Issuer in excess
      of
      $20,000 per year, granted in the ordinary course of the Issuer’s
      business.

     

    “Person”:
      an
      individual, partnership, corporation, business trust, joint stock company,
      limited liability company, trust, unincorporated association, joint venture,
      Governmental Authority or other entity of whatever nature.

     

     

    
      
        
        

      

      
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    “Purchase
      Documents”:
      each
      of the Notes and the Security Documents.

     

    “Qualified
      Financing”:
      any
      sale of any of the Issuer’s securities whether in a single transaction or a
      series of transactions in excess of $1,000,000 excluding sales of securities
      upon the
      exercise of stock options to employees, consultants or Directors and the
      conversion or exercise of any derivative security of the Issuer outstanding
      as
      of the date hereof.

     

    “Restated
      Certificate of Incorporation”:
      the
      Restated Certificate of Incorporation of SIGA as publicly filed.

     

    “Sale
      Event”:
      (i)
      the sale or other disposition by the Issuer of all or substantially all of
      its
      assets and business, whether by or through the sale of the Issuer’s securities
      or assets, or any merger, consolidation or joint venture, or otherwise, and
      whether in a single transaction or a series of related transactions, or (ii)
      the
      assignment, licensing or other disposition of any of the Issuer’s intellectual
      property relating to SIGA 246.

     

    “SEC”:
      the
      United States Securities and Exchange Commission.

     

    “Securities
      Act”:
      the
      Securities Act of 1933, as amended.

     

    “Securities
      Laws”:
      as
      defined in Section 3.1(f).

     

    “Security
      Agreement”:
      the
      Security Agreement, of even date herewith, between the Issuer and the Holder,
      in
      the form attached hereto as Exhibit D.

     

    “Security
      Documents”:
      the
      Security Agreement, and any and all documents, instruments and agreements
      necessary to effectuate the transactions contemplated thereby, including any
      UCC- 1 financing statements.

     

    “Subsidiary”:
      as to
      any Person, any other Person of which more than 50% of the shares of stock,
      or
      other ownership interests having ordinary voting power (other than stock or
      such
      other ownership interests having such power only by reason of the happening
      of a
      contingency) to elect a majority of the board of directors or other managers
      of
      such Person, are at the time owned, directly or indirectly, through one or
      more
      intermediaries, or both, by such Person.

     

    “UCC”:
      the
      Uniform Commercial Code, as from time to time in effect in the State of
      Delaware.

     

    1.2 Other
      Definitional Provisions.

     

    (a) Unless
      otherwise specified therein, all capitalized terms used in the Notes or any
      certificate or other document made or delivered hereunder shall have the
      meanings given to such terms in this Agreement.

     

    (b) As
      used
      herein and in the Notes, and any certificate or other document made or delivered
      hereunder, accounting terms relating to the Issuer not defined in Section 1.1
      and accounting terms partly defined in Section 1.1, to the extent not defined,
      shall have the respective meanings given to them under GAAP. 

     

     

    
      
        
        

      

      
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    (c)
      The
      words “hereof’, “herein” and “hereunder” and words of similar import when used
      in this Agreement shall refer to this Agreement as a whole and not to any
      particular provision
      of this Agreement. References to Sections, Subsections, Schedules and Exhibits
      are to this Agreement unless otherwise specified.

     

    (d) The
      meanings given to terms defined herein shall be equally applicable to both
      the
      singular and plural forms of such terms, and masculine words shall include
      the
      feminine and the neuter genders, and vice versa.

     

    (e) The
      word
“including” when used in this Agreement shall be deemed to be followed by the
      words “without limitation.”

     

    ARTICLE
      II

    PURCHASE
      OF NOTES; TERMS; ADDITIONAL TRANSACTIONS

    2.1 Sale
      and Purchase of Notes.

     

    (a) Upon
      the
      terms and subject to the conditions set forth herein, the Holder agrees to
      purchase, and the Issuer agrees to sell to Holder, on each of March 20, 2006,
      April 19, 2006 and June 18, 2006 (each, a Closing Date”), Notes in the amount of
      $1,000,000 on each Closing Date. At each Closing, the Issuer shall execute
      and
      deliver to the Holder a Note payable in the principal amount.

     

    (b) The
      Holder shall advance to the Issuer at each Closing, by wire transfer of
      immediately available funds, 100% of the principal amount of the Note issued
      to
      the Holder at such Closing.

     

    2.2 Closing.

     

    Upon
      the
      terms and subject to the conditions set forth in this Agreement, each closing
      of
      the sale and purchase of the Notes (a “Closing”) shall take place at 10:00 a.m.
      on each Closing Date provided that all of the conditions set forth in Article
      4
      shall be satisfied in accordance herewith, or at such other time as shall be
      agreed upon by the parties.

     

    2.3 Certain
      Terms of Notes.

     

    (a) Upon
      any
      termination of the Merger Term Sheet attached as Exhibit B, termination of
      the
      Definitive Agreement relating to the Merger, or if a Definitive Agreement is
      not
      executed by the Holder and the Issuer prior to April 24, 2006, SIGA and
      PharmAthene will negotiate in good faith with the intention of executing a
      definitive License Agreement in accordance with the terms set forth in the
      License Agreement Term Sheet attached as Exhibit C and the Issuer agrees for
      a
      period of 90 days during which the definitive license agreement is under
      negotiation, it shall not, directly or indirectly, initiate discussions or
      engage in negotiations with any corporation, partnership, person or other entity
      or group concerning any Competing Transaction without the prior written consent
      of the other party or notice from the other party that it desires to terminate
      discussions hereunder. For purposes of this letter, a “Competing Transaction”
shall mean lease, exchange, mortgage, pledge, license, transfer or other
      disposition of any of the intellectual properties of the Issuer relating to
      SIGA
      246. The principal and interest

    
 

    
      
        
        

      

      
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      on
        the
        Notes will be repayable, at the option of the Holder, as a credit (in the
        amount
        of 110% of such principal and accrued interest) to the license fee payable
        under
        the definitive License Agreement. The obligation under this Section 2.3 are
        independent of this Agreement and shall not
        be
        extinguished as a result of the satisfaction of any obligations hereunder
        or any
        termination of this Agreement.

    

     

     

    (b) Each
      payment of interest or principal on the Notes shall be allocated among all
      of
      the Notes in proportion, as nearly as practicable, to the respective unpaid
      balances outstanding thereunder at the time such payment is made.

     

    (c) The
      Issuer shall keep at its principal executive office a register for the
      registration of ownership and transfer of Notes. The Issuer covenants and agrees
      to take and cause to be taken all action necessary to effect any transfers
      and
      exchanges requested by the Holder. Any such issuance of new Notes shall not
      be
      deemed to be the sale of new securities and shall in all respects be subject
      to
      compliance with applicable federal and state securities laws. Prior to due
      presentment for registration of transfer, the Person in whose name any Notes
      shall be registered shall be deemed and treated as the owner and holder thereof
      for all purposes hereof, and the Issuer shall not be affected by any notice
      or
      knowledge to the contrary. The Issuer shall give to any Holder promptly upon
      request therefor, a complete and correct copy of the names and addresses of
      all
      registered holders of Notes.

     

    (d) Upon
      surrender by a Holder to the Issuer of Notes purchased by the Holder, the
      Issuer, at its expense but subject to the last sentence of this paragraph,
      shall
      issue in exchange therefore, and deliver to such Holder, a new Note or Notes
      representing the obligations evidenced by the surrendered Notes, in such
      denominations as may be requested by such Holder. Upon receipt by the Issuer
      of
      evidence satisfactory to it of the ownership of and the loss, theft, destruction
      or mutilation of a Note (and the affidavit of a duly authorized representative
      of a registered Holder shall be deemed satisfactory to the Issuer), the Issuer,
      at its own expense shall execute and deliver, in lieu thereof, one or more
      new
      Notes, dated and bearing interest from the date to which interest shall have
      been paid on such lost, stolen, destroyed or mutilated Note or dated the date
      of
      such lost, stolen, destroyed or mutilated Note if no interest shall have been
      paid thereon. Holder or its assignee or transferee shall be responsible for
      all
      taxes associated with or related to such transfer.

     

    (e) The
      obligations of the Issuer under this Agreement and the Notes are secured by
      a
      perfected lien and security interest in all of the assets of the Issuer (the
      “Collateral”), under the terms of the Security Agreement, which lien and
      security interest are subordinated to the liens and security interests of
      holders of Permitted Liens.

     

    2.4 Obligations.

     

    Without
      impairing or releasing the obligations of the Issuer to the Holder, and without
      reducing the amount due under the terms of this Agreement or the Notes (except
      to the extent of amounts actually paid to and legally retained by the Holder),
      the Holder may at any time and from time to time, without the consent to the
      Issuer, upon any terms or conditions, and in whole or in part: (i) exercise
      or
      refrain from exercising any rights against the Issuer or others or against
      any
      security for the obligations under this Agreement or otherwise act or refrain
      from

     

    
 

    
      
        
        

      

      
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    acting
      (other than in breach of its obligations under this Agreement); (ii) settle
      or
      compromise any obligations of the Issuer under this Agreement, whether in a
      proceeding or not, and whether voluntarily or involuntarily, and only upon
      an
      Event of Default, dispose of any security therefor (with or without
      consideration) or settle or compromise any liability incurred directly or
      indirectly in respect thereof or hereof, and subordinate the payment of all
      or
      any part thereof to the payment of any of the obligations under this Agreement,
      whether or not due, to creditors of the Issuer other than the Holder; (iii)
      apply any sums it receives, by whomever paid or however realized, to any of
      the
      obligations due under this Agreement; (iv) add, release, settle, modify or
      discharge the obligation of any maker, endorser, guarantor, surety, obligor
      or
      any other party who is in any way obligated for any of the obligations under
      this Agreement; (v) accept any additional security for the obligations under
      this Agreement; and/or (vi) take any other action which might constitute a
      defense available to, or a discharge of, the Issuer or any other obligated
      party
      in respect of the obligations under this Agreement. The invalidity, irregularity
      or unenforceability of all or any part of any Purchase Document with respect
      to
      the Issuer, or the impairment, loss, failure to obtain or perform any security
      or guaranty therefor, whether caused by any action or inaction of the Holder,
      or
      otherwise, shall not affect, impair or be a defense to the Issuer obligations
      under this Agreement or the Notes.

     

    2.5 Additional
      Terms.

     

    The
      terms
      of the Notes described in this Article II do not include all of the terms
      applicable to the Notes, and the Notes are subject to such other terms and
      conditions set forth herein and therein.

     

    2.6 Use
      of Proceeds.

     

    The
      proceeds from the sale of the Notes hereunder shall be used by the Issuer
      exclusively for (i) expenses directly related to the development of SIGA 246,
      (ii) expenses relating to the Merger and (iii) corporate overhead. The proceeds
      shall not be used to repay indebtedness. 

     

    ARTICLE
      III

    REPRESENTATIONS
      AND WARRANTIES

    3.1 Representations
      and Warranties of the Issuer.

     

    To
      induce
      the Holder to enter into this Agreement and to purchase the Notes, the Issuer
      hereby represents and warrants to each Holder as follows:

     

    (a) Organization.
      The
      Issuer is a corporation duly organized, validly existing and in good standing
      under the laws of the State of Delaware and has all requisite corporate power
      and authority to own and lease its property and to carry on its business as
      presently conducted and as proposed to be conducted. The Issuer is duly
      qualified to do business as a foreign corporation in the States of New York,
      Florida and California. The Issuer does not own or lease property or engage
      in
      any activity in any other jurisdiction which would require its qualification
      in
      such jurisdiction and in which the failure to be so qualified would have a
      Material Adverse Effect.

     

     

    
      
        
        

      

      
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    (b) Capitalization.
      As more
      fully described in the capitalization table set forth on Schedule 3.1, the
      authorized capital stock of the Issuer immediately prior to and immediately
      following each Closing shall consist of:

     

    
      	 	(i)   
                 	
              47,910,223
                shares of Common Stock, of which: (i) 26,500,648 shall be validly
                issued
                and outstanding, fully paid and nonassessable, (ii) 63,038 shares
                shall
                have been duly reserved for issuance upon conversion of the issued
                and
                outstanding Preferred Stock, (iii) 11,467,743 shares (the “Option Shares”)
                shall have been duly reserved for issuance upon exercise of options
                and
                (v) 9,878,794 shares shall have been duly reserved for issuance upon
                exercise of outstanding Warrants;
                and

            


    

     

    
      	
            	(ii)  
              	
              47,910,223
                shares of Common Stock, of which: (i) 26,500,648 shall be validly
                issued
                and outstanding, fully paid and nonassessable, (ii) 63,038 shares
                shall
                have been duly reserved for issuance upon conversion of the issued
                and
                outstanding Preferred Stock, (iii) 11,467,743 shares (the “Option Shares”)
                shall have been duly reserved for issuance upon exercise of options
                and
                (v) 9,878,794 shares shall have been duly reserved for issuance upon
                exercise of outstanding Warrants;
                and

            


    

     

    (c) Authorization
      of this Agreement and the Purchase Documents; Conflicts.
      The
      execution, delivery and performance by the Issuer of this Agreement, the Merger
      Term Sheet and the Purchase Documents and the consummation of the transactions
      contemplated hereby and thereby have been duly authorized by all requisite
      action on the part of the Issuer. Each of this Agreement and the Purchase
      Documents has been duly executed and delivered by the Issuer and constitutes
      a
      valid and binding obligation of the Issuer, enforceable in accordance with
      its
      terms, subject only to applicable bankruptcy, reorganization, insolvency or
      similar laws affecting creditors’ rights generally and to equitable principals
      of general application (regardless of whether enforcement is sought in equity
      or
      at law). The execution, delivery and performance of this Agreement and the
      Purchase Documents and the compliance with the provisions hereof and thereof
      by
      the Issuer, will not:

     

    
      	 	
              (i)

            	
              violate
                any provision of law, statute, ordinance, rule or regulation or any
                ruling, writ, injunction, order, judgment or decree of any court,
                administrative agency or other governmental
                body;

            


    

     

    
      	 	
              (ii)

            	
              conflict
                with or result in any breach of any of the terms, conditions or provisions
                of, or constitute (with due notice or lapse of time, or both) a default
                (or give rise to any right of termination, cancellation or acceleration)
                under (i) any agreement, document, instrument, contract, understanding,
                arrangement, note, indenture, mortgage or lease to which the Issuer
                is a
                party or under which the Issuer or any of its assets is bound or
                affected,
                (ii) the Restated Certificate of Incorporation, or (iii) the By-laws;
                or

            


    

     

    
      	 	
              (iii)

            	
              result
                in the creation of any lien, security interest, charge or encumbrance
                upon
                any of the properties or assets of the Issuer other than as contemplated
                herein.

            


    

     

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (d) Authorization
      of Notes.
      The
      issuance by the Issuer of the Notes has been duly authorized by all requisite
      action of the Issuer.

     

    (e) Consents
      and Approvals.
      Except
      as set forth in Schedule
      3.1(e),
      no
      authorization, consent, approval or other order of, or declaration to or filing
      with, any governmental agency or body (other than filings required to be made
      under applicable federal and state securities laws) or any other Person is
      or
      will be required for: (i) the valid authorization, execution, delivery and
      performance by the Issuer of this Agreement, the Merger Term Sheet and the
      Purchase Documents; or (ii) the valid authorization, reservation, issuance,
      sale
      and delivery of the Notes. The Issuer has obtained all other consents that
      are
      necessary to permit the consummation of the transactions contemplated hereby
      and
      thereby.

     

    (f) Securities
      Laws.
      Neither
      the Issuer nor anyone acting on its behalf has offered securities of the Issuer
      for sale to, or solicited any offers to buy the same from, or sold securities
      of
      the Issuer to, any Person, in violation of the Securities Act, the Exchange
      Act,
      or any state securities or “blue sky” laws (collectively, the “Securities
      Laws”). The offer, grant, sale and/or issuance of the Notes were not, are not,
      or, as the case may be, will not be, in violation of the Securities Laws when
      offered, sold and issued in accordance with this Agreement. The Issuer is not
      an
      Investment Company, as such term is defined under the Investment Company Act
      of
      1940, as amended.

     

    (g) No
      Change.
      Except
      as set forth in Schedule
      3.1(g),
      since
      the date of the SIGA SEC Reports, there has been no development or event which
      has had or could reasonably be expected to have a Material Adverse Effect.
      Since
      the date of SIGA’s most recent report on Form 10-Q as amended by any SIGA SEC
      Reports filed thereafter but prior to the date of this Agreement or as set
      forth
      on Schedule 3.1(g), there has not been any adverse change in the financial
      condition or operations of the Issuer, and that except to the extent reflected
      in SIGA’s most recent report on Form 10-Q as amended by any SIGA SEC Reports
      filed thereafter but prior to the date of this Agreement or as set forth on
      Schedule 3.1(g) and except for liabilities arising in the ordinary course of
      business, the Issuer has no material accrued or contingent liabilities arising
      out of any transaction or state of facts existing prior to the date
      hereof.

     

    (h) No
      Material Litigation.
      Except
      as set forth in the SIGA SEC Reports, or as set forth in Schedule
      3.1(h),
      no
      litigation, investigation or proceeding of or before any arbitrator or
      Governmental Authority is pending or, to the knowledge of the Issuer, threatened
      by or against the Issuer or against any of its respective properties or revenues
      (i) with respect to this Agreement or the Purchase Documents or any of the
      transactions contemplated hereby or thereby, or (ii) which could reasonably
      be
      expected to have a Material Adverse Effect.

     

    (i) Solvency.
      The
      Issuer, after giving effect to each purchase and sale of a Note pursuant to
      this
      Agreement and the use of the proceeds therefrom, will not be engaged in any
      business or transaction for which the Issuer has unreasonably small capital
      (within the meaning of Section 548 of the Federal Bankruptcy Code) and the
      Issuer has no intent to (i) hinder, delay or defraud any Person to which the
      Issuer is, or will become, on or after the date hereof, indebted, or (ii) incur
      debts that would be beyond the Issuer’s ability to pay as they mature. After
      giving effect to the Transactions, Borrower will be solvent, able to pay its
      debts as they mature, will have capital sufficient to carry on its business
      and
      all businesses in which it is

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    about
      to
      engage, and (i) as of the Closing Date, the fair present saleable value of
      its
      assets, calculated on a going concern basis, is in excess of the amount of
      its
      liabilities and (ii) subsequent to the Closing Date, the fair saleable value
      of
      its assets (calculated on a going concern basis) will be in excess of the amount
      of its liabilities.

     

    (j) Collateral;
      Perfection; Security Interest.
      The
      Security Documents create a valid first security interest, and a perfected
      security interest to the extent that perfection may be accomplished by filing
      a
      financing statement pursuant under the UCC, in the Collateral, securing the
      payment of the Notes, and all filings and other actions necessary or desirable
      to perfect and protect such security interest have been duly taken. The Issuer
      is the legal and beneficial owner of the Collateral free and clear of any Lien,
      except for Permitted Liens.

     

    (k) Accounting
      Controls and Procedures. SIGA
      maintains 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
      timely as necessary to permit preparation of financial statements in conformity
      with generally accepted accounting principles 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.
      Since
      December 31, 2004, there have been no changes in the internal accounting
      controls or in other factors that could affect SIGA’s internal accounting
      controls.

     

    (l) SEC
      Filings.
      SIGA has
      filed all forms, reports and documents required to be filed with the SEC since
      January 1, 2000 to the extent that the failure to file such would have a
      Material Adverse Effect on SIGA. All such required forms, reports and documents
      (including those that SIGA may file subsequent to the date hereof) are referred
      to herein as the “SIGA
      SEC Reports.”
As
      of
      their respective dates, the SIGA SEC Reports (i) were prepared in accordance
      with the requirements of the Securities Act or the Exchange Act, as the case
      may
      be, and the rules and regulations of the SEC thereunder applicable to such
      SIGA
      SEC Reports, and (ii) did not at the time they were filed (or if amended or
      superseded by a filing prior to the date of this Agreement, then on the date
      of
      such filing) 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 the light of the circumstances under which they were
      made, not misleading.

     

    (m) Compliance.
      Other
      than as set forth on Schedule 3.1(m), Issuer is in compliance with all material
      obligations, agreements and conditions contained in any evidence of indebtedness
      or any loan agreement or other material contract or agreement (whether or not
      relating to indebtedness) to which the corporation is a party or is subject
      (collectively, the “Obligations”), the lack of compliance with which would
      result in a Material Adverse Effect.

     

    (n) No
      Defaults.
      The
      Issuer is not in violation of or default under any provision of (i) its By-Laws
      or Restated Certificate of Incorporation, (ii) any material contract,
      instrument, judgment, order, writ or decree to which it is a party or by which
      it or any of its properties are bound, and (iii) the Issuer is not in violation
      of any material provision of any

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

     

    federal
      or state statute, rule or regulation applicable to the Issuer the result of
      which, in the case of (ii) or (iii) above, would have a Material Adverse
      Effect.

     

    (o) Payment
      of Taxes.
      The
      Issuer has prepared and filed within the time prescribed by, and in material
      compliance with, applicable law and regulations, all federal, state and local
      income, excise or franchise tax returns, real estate and personal property
      tax
      returns, sales and use tax returns, payroll tax returns and other tax returns
      required to be filed by it including
      giving effect to any permitted extension, and has paid or made provision for
      the
      payment of all accrued and unpaid taxes and other charges to which the Issuer
      is
      subject and which are not currently due and payable. The federal income tax
      returns of the Issuer have never been audited by the Internal Revenue Service.
      Neither the Internal Revenue Service nor any other taxing authority is now
      asserting nor is threatening to assert against the Issuer any deficiency or
      claim for additional taxes or interest thereon or penalties in connection
      therewith, and the Issuer does not know of any such deficiency or basis for
      such
      deficiency or claim.

     

    3.2 Reliance;
      Knowledge.

     

    The
      Issuer acknowledges and agrees that the foregoing representations and warranties
      shall be deemed material and to have been relied upon by the
      Holders.

     

    3.3 Representations
      and Warranties of the Holder.

     

    To
      induce
      the Issuer to enter into this Agreement and to sell the Notes, the Holder hereby
      represents and warrants to the Issuer as follows:

     

    (a) Accredited
      Investor.
      The
      Holder is an “accredited investor” within the meaning of Rule 501 promulgated
      under the Securities Act.

     

    (b) Authorization.
      The
      Holder has the capacity to enter into and perform this Agreement and to purchase
      the Notes being purchased by the Holder. This Agreement has been duly
      authorized, executed and delivered by the Holder, and constitutes the legal,
      valid, and binding obligation of such Holder, enforceable in accordance with
      its
      terms, subject only to applicable bankruptcy, reorganization, insolvency or
      similar laws affecting creditors’ rights generally and to equitable principals
      of general application (regardless of whether enforcement is sought in equity
      or
      at law).

     

    (c) Investment
      Knowledge.
      The
      Holder has sufficient knowledge and experience in financial and business matters
      so as to be capable of evaluating the risks and merits of its acquisition of
      the
      Notes contemplated hereby.

     

    (d) Investment
      Intent.
      The
      Notes purchased hereunder by the Holder are being acquired for the Holder’s own
      account for the purpose of investment and not with a view to or for resale
      in
      connection with any distribution thereof or interest therein in violation of
      the
      Securities Act.

     

    (e) Note
      Not Registered Under the Securities Act.
      The
      Holder understands that (i) the offer and sale of the Notes has not been
      registered under the Securities Act or any other Securities Laws, and is being
      offered and sold pursuant to an exemption

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

     

    under
      the
      Securities Act based in part upon the representations of the Holder contained
      herein, (ii) the Notes must be held indefinitely unless a subsequent disposition
      thereof is registered under the Securities Act or is exempt from such
      registration (it being understood that the Issuer has no present intention
      of
      registering any disposition of the Notes), (iii) the Notes shall bear a legend
      to such effect, and (iv) the Issuer will make a notation on its transfer books
      to such effect.

     

    ARTICLE 
      IV

     CONDITIONS

     

    4.1 Conditions
      to Holders’ Obligations.

     

    The
      obligations of the Holder to purchase and pay for the Notes on each Closing
      Date
      shall be subject to satisfaction of the following conditions
      precedent:

     

    (a) Proceedings.
      All
      proceedings to have been taken and all waivers and consents to be obtained
      in
      connection with the transactions contemplated by this Agreement and the Purchase
      Documents shall have been taken or obtained, and all documents incidental
      thereto shall be reasonably satisfactory to the Holder and its counsel, and
      the
      Holder shall have received copies (executed or certified, as may be appropriate)
      of all documents which the Holder or its counsel may reasonably have requested
      in connection with such transactions.

     

    (b) Legal
      Matters. All
      legal
      matters incident to the purchase and acquisition of the Notes shall be
      satisfactory to the Holders’ counsel, and the Holders shall have received from
      Kramer Levin Naftalis & Frankel, LLC, counsel for the Issuer, such firm’s
      opinion addressed to the Holder as of the Closing Date, substantially in the
      form attached hereto as Exhibit E.

     

    (c) Representations
      and Warranties.
      The
      representations and warranties of the Issuer set forth herein shall be true
      and
      correct in all material respects on and as of each of the Closing Dates with
      the
      same force and effect as though such representations and warranties had been
      made on and as of each such date.

     

    (d) Secretary’s
      Certificate. The
      Issuer shall have delivered to the Holder a certificate or certificates, dated
      as of each of the Closing Dates, of the Secretary of the Issuer certifying
      as to
      (i) the resolutions of the Issuer’s Board of Directors authorizing the execution
      and delivery of this Agreement, the issuance to the Holder of the Notes, the
      execution and delivery of the other Purchase Documents and the consummation
      of
      the transactions contemplated hereby and thereby, and certifying that such
      resolutions were duly adopted and have not been rescinded or amended as of
      said
      date, and (ii) the name and signature of the officers of the Issuer authorized
      to sign, as appropriate, this Agreement, the other Purchase Documents and the
      other certificates to be delivered pursuant to this Agreement by either the
      Issuer or any of its officers.

     

    (e) Officer’s
      Certificate. The
      Issuer shall have delivered to the Holder a certificate or certificates, dated
      as of each of the Closing Dates, of an executive officer of the Issuer
      certifying as to the accuracy of the representations and warranties made by
      the
      Issuer hereunder.

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (f) Security
      Documents. The
      Issuer shall have executed and delivered to the Holder the Security
      Documents.

     

    
      (g) Litigation.
        There
        shall exist no action, suit, investigation, litigation or proceeding affecting
        either party pending or threatened before any court, governmental or regulators
        agency or authority or arbitrator that purports to affect the legality, validity
        or enforceability
        of this Agreement or the Notes any other document related to the consummation
        of
        the transactions contemplated herein.

    

     

    (h)
      Legality. The execution, delivery and performance of this
      Agreement and the Purchase Documents and the compliance with the provisions
      hereof and thereof by the Holder, will not violate any provision of law,
      statute, ordinance, rule or regulation or any ruling, writ, injunction, order,
      judgment or decree of any court, administrative agency or other governmental
      body the effect of which would have a Material Adverse Effect.

     

    4.2 Conditions
      to SIGA’S Obligations.

     

    The
      obligations of SIGA to sell and issue the Notes on each of the Closing Dates
      shall be subject to the satisfaction of the following conditions
      precedent:

     

    (a) Representations
      and Warranties. The
      representations and warranties of the Holder contained herein shall be true
      and
      correct in all material respects on and as of the Closing Date.

     

    (b) Payment
      of Purchase Price. The
      Holder shall have delivered to the Issuer, and the Issuer shall have received,
      payment in full of the purchase price relating to the Notes being purchased
      by
      the Holder on each Closing Date.

     

    ARTICLE
      V

    COVENANTS

    5.1 Affirmative
      Covenants.

     

    For
      so
      long any amounts are due or payable under the Notes, the Issuer agrees to the
      following:

     

    (a) The
      Issuer will punctually pay or cause to be paid the principal of and interest
      on
      the Notes at the times and places and in the manner specified in the
      Notes.

     

    (b) The
      Issuer shall pay, discharge or otherwise satisfy at or before maturity or before
      they become delinquent, as the case may be, all of its material obligations
      of
      whatever nature, except where the amount or validity thereof is being contested
      in good faith, by appropriate proceedings, and reserves, in conformity with
      GAAP
      with respect thereto, have been provided on its books and records.

     

    (c) The
      Issuer shall (i) continue to engage in business of the same general type as
      now
      conducted by it, (ii) and preserve, renew and keep in full force and effect
      its
      corporate existence, (iii) take all reasonable action to maintain all rights,
      privileges and

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    franchises
      necessary or desirable in the normal conduct of its business; and (iv) comply
      with all Contractual Obligations and applicable laws except, in each case,
      to
      the extent that failure to comply therewith could not, individually or in the
      aggregate, have a Material Adverse Effect.

     

    (d) The
      Issuer shall (i) keep all material property useful and necessary in its
      businesses in good working order and condition; and (ii) maintain with
      financially sound and reputable
      insurance companies insurance policies on all its property in such amounts
      and
      against such risks (but including in any event environmental and product
      liability) as are applicable to the policies currently maintained by the Issuer
      and in place.


     

    (e) The
      Issuer shall keep proper books of records and accounts in which full, true
      and
      correct entries in conformity with GAAP and all applicable laws shall be made
      in
      all material respects of all dealings and transactions in relation to its
      business and activities; permit representatives of any Holder to visit and
      inspect any of its properties and examine and make abstracts from any of its
      books and records at any reasonable time during business hours and as often
      as
      may reasonably be required but not so as to materially interfere with the
      operation of the business, including, without limitation, any such visit,
      inspection or examination by the Holder in connection with any audit conducted
      by the Holder, and at which a representative of the Holder may be present from
      time to time at the Holder’s discretion, and to discuss the business,
      operations, properties and financial and other condition of the Issuer with
      officers and employees of the Issuer and with their independent certified public
      accountants.

     

    (f) The
      Issuer shall promptly give notice to the Holder of:

     

    
      	 	
              (i)

            	
              the
                occurrence of any Event of Default;

            


    

     

    
      	 	
              (ii)

            	
              any
                (A) default or event of default under any Contractual Obligation
                of the
                Issuer, or (B) litigation, investigation or proceeding which may
                exist at
                any time between the Issuer and any Governmental Authority;
                and

            


    

     

    
      	 	
              (iii)

            	
              any
                litigation or proceeding affecting the Issuer in which the amount
                involved
                is $100,000 or more (unless such litigation or proceeding affects,
                involves or relates to any intellectual property of the Issuer, in
                which
                event there shall be no dollar threshold) and which is not covered
                by
                insurance or in which injunctive or similar relief is
                sought.

            


    

     

    Each
      notice pursuant to this Section 5.1(e) shall be accompanied by a statement
      of an
      officer of the Issuer selling forth details of the occurrence referred to
      therein and stating what action the Issuer proposes to take with respect
      thereto.

     

    (g) Each
      of
      the parties shall execute any and all further documents, and take all further
      action which the other may reasonably request in order to effectuate the
      transactions contemplated by this Agreement and the Purchase Documents. Without
      limiting the generality of the foregoing, such further documents and actions
      shall include the execution of agreements and instruments, and filing UCC
      financing statements, in order to effectuate the transactions contemplated
      by
      this Agreement and the Purchase Documents and in order to grant,
      preserve,

     

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    protect
      and perfect the validity and priority of the security interests created or
      intended to be created by this Agreement and the Purchase
      Documents.

     

    (h) The
      proceeds from the sale of the Notes hereunder shall be used by the Issuer
      exclusively for (i) expenses directly related to the development of SIGA 246,
      (ii) expenses relating
      to the Merger and (iii) corporate overhead. The proceeds shall not be used
      to
      repay indebtedness.

     

    5.2 Negative
      Covenants.

     

    For
      so
      long as any amounts are due or payable under the Notes, the Issuer agrees to
      the
      following:

     

    (a) The
      Issuer shall not create, incur, assume or suffer to exist any Lien upon any
      of
      its property, assets or revenues, whether now owned or hereafter acquired,
      except for Permitted Liens. Except with respect to Permitted Liens held by
      GE
      Capital, the consent of the Required Holders shall first be obtained before
      the
      terms of any indebtedness, obligations or commitments underlying any Permitted
      Lien are amended, refinanced, increased or in any way changed or before any
      additional indebtedness, borrowings, advances or loans are incurred
      thereunder.

     

    (b) The
      Issuer shall not make any advance, loan, extension of credit or capital
      contribution to, or purchase any stock, bonds, notes, debentures or other
      securities of or any assets constituting a business unit of, or make any other
      investment in, any Person, except for investments in cash and cash
      equivalents.

     

    (c) Unless
      approved by the Holder, the Issuer shall not enter into any transaction,
      including, without limitation, any purchase, sale, lease or exchange of property
      or the rendering of any service, with any Affiliate, unless such transaction
      is
      in the ordinary course of, and pursuant to the reasonable requirements of the
      Issuer’s business, is in good faith and is upon fair and reasonable terms no
      less favorable to the Issuer than it would obtain in a comparable arm’s length
      transaction with a Person not an Affiliate.

     

    (d) The
      Issuer shall not sell, abandon, transfer, lease or otherwise dispose of any
      material assets except for (a) collection of Accounts in the ordinary course
      of
      business, (b) sales of Inventory in the ordinary course of business, or (c)
      sales of Equipment which is obsolete and/or not of material value (each as
      defined in the Security Agreement).

     

    ARTICLE
      VI

    EVENTS
      OF
      DEFAULT

     

    6.1 Bankruptcy,
      etc.

     

    If
      the
      Issuer shall commence any case, proceeding or other action (i) under any
      existing or future law of any jurisdiction, domestic or foreign, relating to
      bankruptcy, insolvency, reorganization or relief of debtors, seeking to have
      an
      order for relief entered with respect to it, or seeking to adjudicate it a
      bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
      winding-up, liquidation, dissolution, composition or other relief with respect
      to it or

     

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    its
      debts, or (ii) seeking appointment of a receiver, trustee, custodian or other
      similar official for it or for all or any substantial part of its assets, or
      the
      Issuer shall make a general assignment for the benefit of its creditors; or
      (iii) there shall be commenced against the Issuer any case, proceeding or other
      action of a nature referred to in clause (i) or (ii) above which (A) results
      in
      the entry of an order for relief or any such adjudication or appointment or
      (B)
      remains undismissed,
      undischarged or unbonded for a period of 60 days; or (iv) there shall be
      commenced against the Issuer any case, proceeding or other action seeking
      issuance of a warrant of attachment, execution, distraint or similar process
      against all or any substantial part of its assets which results in the entry
      of
      an order for any such relief which shall not have been vacated, discharged,
      or
      stayed or bonded pending appeal within 60 days from the entry thereof; or (v)
      the Issuer shall take any action in furtherance of, or indicating its consent
      to, approval of, or acquiescence in, any of the acts set forth in clause (i),
      (ii), (iii), or (iv) above, then all outstanding principal and accrued and
      unpaid interest under the Notes, and all other amounts owing under the Notes
      and
      this Agreement shall immediately become due and payable in full, without the
      need for any notice or other action by the Holder.

     

    6.2 Other
      Events.

     

    Unless
      otherwise waived by the Holder, all outstanding principal and accrued and unpaid
      interest under the Notes, and all other amounts payable under the Notes and
      this
      Agreement, shall become immediately due and payable in full, without the need
      for any notice or other action by the Holder, if any of the following events
      shall occur and be continuing:

     

    (a) The
      Issuer shall fail to pay (i) any principal of the Notes when due in accordance
      with the terms thereof or (ii) interest on the Notes or any fees or other amount
      payable hereunder or thereunder when due in accordance with the terms thereof
      or
      hereof, and such default continues for a period of five Business Days;
      or

     

    (b) Any
      representation or warranty made by the Issuer herein or in any other Purchase
      Document shall prove to have been incorrect in any material respect;
      or

     

    (c) The
      Issuer shall default in the observance or performance of any agreement or
      covenant contained in this Agreement any other Purchase Document; provided
      that
      a default in the observance or performance of any agreement contained in this
      Agreement or the Notes which is by its nature curable shall not constitute
      an
      Event of Default hereunder if such default is fully cured within ten Business
      Days of the occurrence thereof, it being agreed that Events of Default as a
      result of a failure to satisfy any of Section 5.1(c)(ii) and 5.1(d)(ii), 5.1(e)
      (with regard to conformance with GAAP), 5.1(h) and 5.2 are not subject to cure;
      or

     

    (d) The
      Issuer shall default under any of the indebtedness relating to any of the
      Permitted Liens and such default shall continue (in whole or in part) for a
      period of ten Business Days; or

     

    (e) The
      Issuer shall (i) default in any payment of principal of or interest on any
      Indebtedness, (provided that the principal amount of such Indebtedness exceeds,
      individually, or in the aggregate, $50,000), payable in the instrument or
      agreement under which such Indebtedness was created; or (ii) default in the
      observance or performance of any other

     

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    agreement
      or condition relating to any such Indebtedness (provided that the principal
      amount of such Indebtedness exceeds, individually, or in the aggregate, $50,000)
      or contained in any instrument or agreement evidencing, securing or relating
      thereto, or any other event shall occur or condition exist, the effect of which
      default or other event or condition is to cause, or to permit the Holders or
      holders of such Indebtedness (or a trustee or agent on behalf of such holder
      or
      holders or beneficiary or beneficiaries) to cause, with the giving of notice
      if
      required, such Indebtedness to become due prior to its stated maturity;
      or

     

    (f) One
      or
      more judgments or decrees shall be entered against the Issuer involving in
      the
      aggregate a liability (not paid or fully covered by insurance) of $250,000
      or
      more and (i) all such judgments or decrees shall not have been vacated,
      discharged, stayed or bonded pending appeal within 60 days from the entry
      thereof or (ii) the judgment creditors with respect to such judgments or their
      successors or assigns shall have commenced enforcement proceedings, which
      enforcement proceedings shall have remained unstayed for 10 consecutive days;
      or

     

    (g) The
      security interests created by any Purchase Document shall cease for any reason,
      unless caused by the action or inaction of any Holder, to be enforceable and
      of
      the same effect and priority purported to be created thereby.

     

    (h) There
      occurs a Change of Control of the Issuer.

     

    ARTICLE
      VII

    MISCELLANEOUS

     

    7.1 Amendments
      and Waivers.

     

    No
      provision of this Agreement, the Notes or any Purchase Documents may be waived,
      modified or amended except by an instrument in writing executed by the Holder
      and the Issuer.

     

    7.2 Notices.

     

    Any
      and
      all notices, requests, demands, consents and other communications required
      or
      permitted under this Agreement shall be in writing, signed by or on behalf
      of
      the party by which given, and shall be considered to have been duly given when
      (i) delivered by hand, (ii) sent by telecopier (with receipt confirmed), or
      (iii) received by the addressee, if sent by Express Mail, Federal Express or
      other reputable express delivery service (receipt requested), or by first class
      certified or registered mail, return receipt requested, postage prepaid, in
      each
      case to the party for which intended addressed as follows (or to such other
      addresses and telecopier numbers as a party may from time to time designate
      as
      to itself by notice similarly given to the other parties in accordance with
      this
      Section 7.2):

     


    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    


    


    
      	
              Issuer:

            	
              SIGA
                Technologies, Inc.

              420
                Lexington Avenue

              Suite
                408

              New
                York, New York 10170

               

              Tel:   
                212-672-9107

              Fax:   
                212-697-3130

              Attn: Thomas
                Konatich

            
	 	 
	
              With
                a copy to:

            	
              Kramer
                Levin Naftalis & Frankel, LLC

              1177
                Avenue of the Americas

              New
                York, New York 10036

              Tel:   
                (212)
                715-9100

              Fax:   
                (212)
                715-8000

              Attn: James
                Grayer, Esq.

            
	 	 
	
              Holder

            	
              PharmAthene,
                Inc.

              175
                Admiral Cochrane Drive

              Suite
                101

              Annapolis,
                Maryland 21401

              Tel:   
                (410)
                571-8920

              Fax:   
                (410)
                571-8927

              Attn: 
                David
                P. Wright, President and

                 Chief
                Executive Officer

            
	 	 
	
              With
                a copy to:

            	
              McCarter
                & English, LLP

              Four
                Gateway Center

              100
                Mulberry Street

              Newark,
                NJ 07102

              Tel:   
                (973) 622-4444

              Fax:   
                (973) 634-7070

              Attn:
                Jeffrey A. Baumel, Esq.

            


    

    


    A
      notice
      of change of address shall not be deemed given until received by the
      addressee.

     

    7.3 No
      Waiver; Cumulative Remedies.

     

    No
      failure to exercise and no delay in exercising, on the part of the Holder,
      any
      right, remedy, power or privilege hereunder or under any Purchase Document
      shall
      operate as a waiver thereof; nor shall any single or partial exercise of any
      right, remedy, power or privilege hereunder preclude any other or further
      exercise thereof or the exercise of any other right, remedy, power or privilege.
      The rights, remedies, powers and privileges herein provided are cumulative
      and
      not exclusive of any rights, remedies, powers and privileges provided by
      law.

     

     

     


    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    


    7.4
      Survival of Representations and Warranties.

     

    All
      representations and warranties made hereunder or under any Purchase Document
      and
      in any document, certificate or statement delivered hereunder or thereunder
      or
      in connection herewith or therewith shall survive the Closing Date until the
      repayment of the Notes and the extinguishment of all obligations
      hereunder.

     

    7.5 Payment
      of Fees, Expenses; Taxes.

     

    The
      Issuer shall pay, and hold the Holder harmless against all liability for the
      payment of, all costs and other expenses incurred by any such Holder in
      connection with the Issuer’s performance of and compliance with all agreements
      and conditions set forth herein or in any of the Purchase Documents or any
      of
      the transactions contemplated hereby or thereby on its part to be performed
      or
      complied with. The Issuer further agrees that it shall pay, and hold the Holder
      harmless from, any and all liability with respect to any stamp or similar taxes
      which may be determined to be payable in connection with the execution and
      delivery of this Agreement or any Purchase Document or any modification,
      amendment or alteration to the provisions hereof or thereof. This Section 7.5
      shall survive repayment of the Notes and all other amounts payable hereunder.
      Notwithstanding the above, Holder or its assignee or transferee shall be
      responsible for all taxes associated with or related to such
      transfer.

     

    7.6 Indemnification.

     

    The
      Issuer will defend, indemnify, and hold harmless the Holder, its subsidiaries,
      shareholders, partners, employees, agents, Affiliates, attorneys, officers,
      and
      directors (each an “Indemnified Person”), from and against any and all claims,
      demands, penalties, causes of action, fines, liabilities, settlements, damages,
      costs, or expenses of whatever kind or nature, known or unknown, foreseen or
      unforeseen, contingent or otherwise (including, without limitation, counsel
      and
      consultant fees and expenses, investigation and laboratory fees and expenses,
      court costs, and litigation expenses) arising out of this Agreement, the other
      Purchase Documents or the transactions contemplated hereby and thereby; or
      in
      any way related to the inaccuracy, breach of or default under any
      representations, warranties or covenants of the Issuer set forth herein or
      in
      any Purchase Document.

     

    7.7 Counterparts.

     

    This
      Agreement may be executed in any number of counterparts and by facsimile, each
      of which shall be deemed an original and all of which together shall constitute
      one and the same instrument.

     

    7.8 Severability.

     

    Any
      provision of this Agreement which is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining
      provisions hereof, and any such prohibition or unenforceability in any
      jurisdiction shall not invalidate or render unenforceable such provision in
      any
      other jurisdiction.

     


    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    


    7.9
      Integration.

     

    This
      Agreement and the other Purchase Documents represent the agreement of the Issuer
      and the Holder with respect to the subject matter hereof; and there are no
      promises, undertakings, representations or warranties by the Holder relative
      to
      subject matter hereof not expressly set forth or referred to herein or in the
      other Purchase Documents.

     

    7.10 Brokers
      or Finders.

     

    The
      Issuer represents and warrants to the Holder that no Person has or will have,
      as
      a result of the transactions contemplated by this Agreement, any right, interest
      or valid claim against or upon the Issuer or the Holder for any commission,
      fee
      or other compensation as a finder or broker because of any act or omission
      by
      the Issuer or any of its agents.

     

    7.11 GOVERNING
      LAW.

     

    THIS
      AGREEMENT AND THE PURCHASE DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
      PARTIES UNDER THIS AGREEMENT AND THE PURCHASE DOCUMENTS SHALL BE GOVERNED BY,
      AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
      NEW
      YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

     

    7.12 Submission
      to Jurisdiction; Waivers.

     

    The
      Issuer hereby irrevocably and unconditionally:

     

    (a) submits
      for itself and its property in any legal action or proceeding relating to the
      Purchase Documents, or for recognition and enforcement of any judgment in
      respect thereof, to the non-exclusive general jurisdiction of the State of
      New
      York or the Federal Courts for the Southern District of New York;

     

    (b) consents
      that any such action or proceeding may be brought in such courts and waives
      any
      objection that it may now or hereafter have to the venue of any such action
      or
      proceeding in any such court or that such action or proceeding was brought
      in an
      inconvenient court and agrees not to plead or claim the same;

     

    (c) agrees
      that service of process in any such action or proceeding may be effected by
      mailing a copy thereof by registered or certified mail (or any substantially
      similar form of mail), postage prepaid, to the Issuer at its address set forth
      in this Agreement or at such other address of which the Holder shall have been
      notified pursuant thereto;

     

    (d) agrees
      that nothing herein shall affect the right to effect service of process in
      any
      other manner permitted by law or shall limit the right to sue in any other
      jurisdiction;

     

    (e) waives,
      to the maximum extent not prohibited by law, any right it may have to claim
      or
      recover in any legal action or proceeding referred to in this subsection any
      punitive damages; and 

     

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    
      (f) knowingly,
        voluntarily and intentionally waives any rights it may have to a trial by
        jury
        in respect of any litigation, proceeding or other action arising under or
        relating in any manner to this Agreement or any Purchase
        Document.

    

     

    7.13 Remedies.

     

    In
      furtherance, and not in limitation, of the rights of the Holder hereunder,
      in
      case any one or more of the representations, warranties, covenants an/or
      agreements set forth in this Agreement shall have been breached by the Issuer,
      the Holder may proceed to protect and enforce its rights, whether by suit in
      equity and/or by action at law, including an action for damages as a result
      of
      any such breach and/or any action for specific performance of any such covenant
      or agreement.

     

    7.14 Successors
      and Assigns.

     

    Except
      as
      otherwise expressly provided herein, this Agreement shall be binding upon and
      inure to the benefit of the Issuer and the Holder and their respective permitted
      successors and assigns. This Agreement, and the rights and obligations of the
      Holders set forth herein, may be assigned, in whole or in part, by the Holder
      without the prior written approval of the Issuer. Neither this Agreement nor
      any
      of the rights or obligations of the Issuer set forth herein may be assigned
      without the prior written approval of the Holder.

     

    7.15 Captions.

     

    Captions
      contained herein are inserted as a matter of convenience and in no way define,
      limit, extend or describe the scope of this Agreement or the intent of any
      provision hereof.

     

    7.16 Non-Disclosure.

     

    The
      Issuer shall not issue any press release or other public statement relating
      to
      the transactions set forth in this Agreement, or otherwise disclose to any
      third-party (other than professional advisors) the terms of the transactions
      set
      forth in this Agreement or any Purchase Documents, without, in either case,
      the
      prior written consent of the Holder other than as required under the Federal
      securities laws.

     

    7.17 Acknowledgements.

     

    The
      Issuer hereby acknowledges that:

     

    (a) it
      has
      been advised by counsel in the negotiation, execution and delivery of this
      Agreement and the Purchase Documents;

     

    (b) the
      Holder does not have any fiduciary relationship to the Issuer, and the
      relationship between the Holder, on one hand, and the Issuer, on the other
      hand,
      is solely that of debtor and creditor; and

     

    (c) no
      joint
      venture exists between the Holder and the Issuer.

     

     

    21

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
 

    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
      executed and delivered by their proper and duly authorized officers as of the
      day and year first above written.

     

    
      	
                                                      THE
                ISSUER:

               

                                                      SIGA
                TECHNOLOGIES, INC.

            
	
               

               

                                                      By: /s/
                Thomas
                Konatich                                            
                    

            
	
                                                         Thomas
                Konatich

                                         Chief
                Financial Officer

            
	 
	
                                                      THE
                HOLDER:

               

                                                      PHARMATHENE,
                INC.

               

               

            
	
                                                      By: /s/
                David P.
                Wright                                            
                    

            
	
                                                    
David
                P. Wright,
                President and

                                                        
                Chief Executive Officer

            
	 


    

     

     

    
 

    22