Document:

kl05005_ex4-1.htm

 

 

Exhibit 4.1

 

 

NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY OTHER SECURITIES LAWS, AND NO SUCH SECURITIES MAY BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNDER SAID ACT AND LAWS OR AN EXEMPTION THEREFROM.

 

 

SIGA TECHNOLOGIES, INC.

 

COMMON STOCK PURCHASE WARRANT

 

 

1.    Issuance; Certain Definitions.

 

 

1.1    For good and valuable consideration, the receipt of which is hereby acknowledged by SIGA TECHNOLOGIES, INC., a Delaware corporation (the “Company”), MacAndrews & Forbes LLC, a Delaware limited liability corporation (the “Original Holder”), or its registered assigns, is hereby granted the right to purchase at any time until 5:00 P.M., New York City time, on the Expiration Date, 250,000 fully paid and non-assessable shares of Common Stock, at an initial exercise price per share (the “Exercise Price”) of $3.29 per share, subject to adjustment as set forth herein.  The shares of Common Stock issued upon exercise of this Warrant, as adjusted from time to time pursuant to Section 6 hereof, are referred to as “Consideration Warrant Shares.”  This Warrant is being issued as consideration for the services to be performed by the Original Holder or its affiliates pursuant to the Services Agreement.

 

1.2    As used in this Warrant, the following terms have the respective meanings set forth below:

 

“Actual Minimum” has the meaning assigned to it in Section 11.2 hereof.

 

“Affiliate” means, with respect to any specified Person, (i) any other Person 50% or more of whose Outstanding voting securities are directly or indirectly owned, controlled or held with the power to vote by such specified Person or (ii) any other Person directly or indirectly controlling, controlled by or under direct or indirect common control with such specified Person.  For purposes of this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person by virtue of ownership of voting securities, by contract or otherwise.

 

“Appraisal Procedure” means the following procedure to determine the fair market value, as to any security, for purposes of the definition of “Fair Market Value” or the fair market value, as to any other property (in either case, the “Valuation Amount”).  The Valuation Amount shall be determined in good faith jointly by the Board of Directors and the Holder; provided, however, that if such parties are not able to agree on the Valuation Amount within a reasonable period of time (not to exceed 20 Business Days) the Valuation Amount shall be determined by an investment banking firm of national reputation, which firm shall be reasonably acceptable to the Board of Directors and the Holder.  If the Board of Directors and the Holder are unable to agree upon an acceptable investment banking firm within 10 days after the date either party proposed that one be selected, the investment banking firm will be selected by an arbitrator located in New York City, New York, selected by the American Arbitration Association (or if such organization ceases to exist, the arbitrator shall be chosen by a court of competent jurisdiction). The arbitrator shall select the investment banking firm (within 10 days of his appointment) from a list, jointly prepared by the Board of Directors and the Holder, of not more than six investment banking firms of national reputation in the United States, of which no more than three may be named by the Board of Directors and no more than three may be named by the Holder.  The arbitrator may consider, within the 10-day period allotted, arguments from the parties regarding which investment banking firm to choose, but the selection by

 

 

  

  

  

 

 

the arbitrator shall be made in its sole discretion from the list of six.  The Board of Directors and the Holder shall submit their respective valuations and other relevant data to the investment banking firm, and the investment banking firm shall, within 30 days of its appointment, make its own determination of the Valuation Amount.  The determination of the final Valuation Amount by such investment banking firm shall be final and binding upon the parties.  The Company shall pay all of the fees and expenses of the investment banking firm and arbitrator (if any) used to determine the Valuation Amount.  If required by any such investment banking firm or arbitrator, the Company shall execute a retainer and engagement letter containing reasonable terms and conditions, including, without limitation, customary provisions concerning the rights of indemnification and contribution by the Company in favor of such investment banking firm or arbitrator and its officers, directors, partners, employees, agents and Affiliates.

 

“Board of Directors” means the board of directors of the Company.

 

“Business Day” means any day that is not a Saturday or Sunday or a day on which banks are required or permitted to be closed in the State of New York.

“Common Stock” means the Common Stock of the Company, par value $0.0001 per share, as constituted on the Original Issue Date, and any capital stock into which such Common Stock may thereafter be changed, and shall also include (i) capital stock of the Company of any other class (regardless of how denominated) issued to the holders of shares of any Common Stock upon any reclassification thereof which is not preferred as to dividends or liquidation over any other class of stock of the Company and which is not subject to redemption and (ii) shares of common stock of any successor or acquiring corporation received by or distributed to the holders of Common Stock of the Company in the circumstances contemplated by Section 6.5 hereof.

 

“Company” has the meaning assigned to it in Section 1.1 hereof.

“Consideration Warrant Shares” has the meaning assigned to it in Section 1.1 hereof.

 

“Designated Office” has the meaning assigned to it in Section 11.3 hereof.

 

“Excluded Stock” has the meaning assigned to it in Section 6.10 hereof.

 

“Exercise Date” has the meaning assigned to it Section 2.1(a) hereof.

 

 “Exercise Price” means, in respect of a share of Common Stock at any date herein specified, the initial Exercise Price set forth in Section 1.1 hereof, as adjusted from time to time pursuant to Section 6 hereof.

 

“Expiration Date” means April 29, 2015.

 

“Fair Market Value” means, as to any security, the Twenty Day Average of the average closing prices of such security’s sales on all domestic securities exchanges on which such security may at the time be listed, or, if there have been no sales on any such exchange on any day, the average of the highest bid and lowest asked prices on all such exchanges at the end of such day, or, if on any day such security is not so listed, the average of the highest bid and lowest asked prices on such day in the domestic over-the-counter market as reported by the National Quotation Bureau, Incorporated, or any similar or successor organization (and in each such case excluding any trades that are not bona fide, arm’s length transactions).  If at any time such security is not listed on any domestic securities exchange or quoted on the domestic over-the-counter market, the “Fair Market Value” of such security shall be the fair market value thereof as determined in accordance with the Appraisal Procedure, using any appropriate valuation method, assuming an arms-length sale to an independent party.

 

 

  

  

  

 

 

“Form of Assignment” has the meaning assigned to it in Section 4.1 hereof.

 

“Governmental Entity” means any national, federal, state, municipal, local, territorial, foreign or other government or any department, commission, board, bureau, agency, regulatory authority or instrumentality thereof, or any court, judicial, administrative or arbitral body or public or private tribunal.

 

“Holder” means (a) with respect to this Warrant, the Person in whose name the Warrant set forth herein is registered on the books of the Company maintained for such purpose and (b) with respect to any other Warrant or Consideration Warrant Shares, the Person in whose name such Warrant or Consideration Warrant Shares is registered on the books of the Company maintained for such purpose.

 

“Issuable Minimum” has the meaning assigned to it in Section 11.2 hereof.

 

“Lien” means any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, lien, charge, claim, security interest, easement or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any lease or title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement perfecting a security interest under the Uniform Commercial Code or comparable law of any jurisdiction).

 

“Notice of Exercise” has the meaning assigned to it in Section 2.1(a) hereof.

“Original Issue Date” means April 30, 2013.

 “Outstanding” means, (a) when used with reference to Common Stock, at any date as of which the number of shares thereof is to be determined, all issued shares of Common Stock, except shares then owned or held by or for the account of the Company or any Subsidiary, and shall include all shares issuable in respect of Outstanding scrip or any certificates representing fractional interests in shares of Common Stock and (b) when used with reference to Warrants, at any date as of which the number thereof is to be determined, all issued Warrants.

 

“Permitted Transferee” means (i) any Affiliate of the Holder, including, without limitation, directors, executives and officers of the Holder, (ii) any member of the family of any Affiliate of the Holder, including any such Person’s spouse and descendants and any trust, partnership, corporation, limited liability company or other entity for the benefit of such spouse and/or descendants to whom or which any of the Securities have been transferred by any such Person for estate or tax planning purposes, (iii) any charity or foundation to which the Securities have been transferred by the Holder or any Person or entity described in clause (i) or (ii) above for estate or tax planning or charitable purposes, or (iv) the beneficiary of any bona fide pledge by the Holder of any of the Securities.

 

“Person” means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, incorporated organization, association, corporation, institution, Governmental Entity or any other entity.

 

“Reserved Spin Off Securities” has the meaning assigned to it in Section 6.2 hereof.

 

“SEC” means the U.S. Securities and Exchange Commission or any other federal agency then administering the Securities Act and other federal securities laws.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time.

 

 

 

 

  

  

  

 

 

“Services Agreement” means that certain Services Agreement, dated April 30, 2013, by and between the Original Holder or one if its affiliates, on the one hand, and the Company, on the other hand.

 

“Spin Off Securities” has the meaning assigned to it in Section 6.2 hereof.

 

“Subsidiary” means, with respect to any Person, any corporation, association, trust, limited liability company, partnership, joint venture or other business association or entity (i) at least 50% of the Outstanding voting securities of which are at the time owned or controlled, directly or indirectly, by such Person or (ii) with respect to which the Company possesses, directly or indirectly, the power to direct or cause the direction of the affairs or management of such Person.

 

“Transfer” means any disposition of any Warrant or Consideration Warrant Shares or of any interest therein, which would constitute a “sale” thereof within the meaning of the Securities Act.

 

“Twenty Day Average” means, with respect to any prices and in connection with the calculation of Fair Market Value, the average of such prices over the 20 Business Days ending on the Business Day immediately prior to the day as of which Fair Market Value is being determined.

 

“Warrant Price” means an amount equal to (i) the number of Consideration Warrant Shares being purchased upon exercise of this Warrant pursuant to Sections 1 and 2 hereof, multiplied by (ii) the Exercise Price.

 

“Warrants” means these Warrants and all warrants issued upon transfer, division or combination of, or in substitution for, these Warrants.

 

2.    Exercise of Warrants.

 

2.1    Manner of Exercise.

 

(a) This Warrant is exercisable in whole or in part at any time and from time to time on any Business Day from and after the Original Issue Date and at any time until 5:00 P.M., New York time, on the Expiration Date; provided, that, the Warrant shall not be exercisable during any time during which there is an uncured breach by the Original Holder or its affiliates of any obligation to perform services under the Services Agreement.  Such exercise shall be effectuated by submitting to the Company at its Designated Office (i) a completed and duly executed written notice of the Holder’s election to exercise this Warrant (a “Notice of Exercise”) (substantially in the form attached to this Warrant as Annex A) indicating the Consideration Warrant Shares then being purchased pursuant to such exercise, together with this Warrant and (ii) payment to the Company of the Warrant Price. The date on which such delivery and payment shall have taken place being sometimes referred to as the “Exercise Date.”

 

(b) Upon receipt by the Company of such Notice of Exercise, surrender of this Warrant and payment of the Warrant Price (in accordance with Section 2.1(c) hereof), the Holder shall be entitled to receive as promptly as practicable, and in any event within five Business Days thereafter, a certificate or certificates for Consideration Warrant Shares so purchased in such denomination or denominations as the exercising Holder shall reasonably request in the Notice of Exercise, registered in the name of the Holder or, subject to Section 4 hereof, such other name as shall be designated in the Notice of Exercise, together with cash in lieu of any fraction of a share, as provided in Section 2.3 hereof.  If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing the Consideration Warrant Shares being issued, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the remaining Consideration Warrant Shares underlying this Warrant.  Such new Warrant shall in all other respects be identical to this Warrant.  This Warrant shall be deemed to have been exercised and such certificate or certificates of Consideration Warrant Shares shall be deemed to have been issued, and the Holder or any other Person so designated to be named therein shall be deemed to have become a holder of record of such Consideration Warrant Shares for all purposes, as of the Exercise Date.

 

 

  

  

  

 

 

(c) Payment of the Warrant Price shall be made at the option of the Holder by one or more of the following methods: (i) by delivery of a certified or official bank check or by wire transfer of immediately available funds in the amount of such Warrant Price payable to the order of the Company, (ii) by instructing the Company to withhold a number of Consideration Warrant Shares then issuable upon exercise of this Warrant with an aggregate Fair Market Value equal to such Warrant Price, (iii) by surrendering to the Company shares of Common Stock previously acquired by the Holder with an aggregate Fair Market Value equal to such Warrant Price, or (iv) any combination of the foregoing.  In the event of any withholding of Consideration Warrant Shares or surrender of Common Stock pursuant to clause (ii), (iii) or (iv) above where the number of shares whose Fair Market Value is equal to the Warrant Price is not a whole number, the number of shares withheld by or surrendered to the Company shall be rounded up to the nearest whole share and the Company shall make a cash payment to the Holder based on the incremental fraction of a share being so withheld by or surrendered to the Company in an amount determined in accordance with Section 2.3 hereof.

 

2.2    Payment of Taxes.  All Consideration Warrant Shares issuable upon the exercise of this Warrant pursuant to the terms hereof shall be validly issued, fully paid and non-assessable, issued without violation of any preemptive or similar rights of any stockholder of the Company and free and clear of all Liens.  The Company shall pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issue or delivery thereof.  The Company shall not, however, be required to pay any tax or governmental charge which may be issuable upon exercise of this Warrant payable in respect of any Transfer involved in the issue and delivery of Consideration Warrant Shares in a name other than that of the holder of the Warrants to be exercised, and no such issue or delivery shall be made unless and until the Person requesting such issue has paid to the Company the amount of any such tax, or has established to the satisfaction of the Company that such tax has been paid.

 

2.3    Fractional Shares.  The Company shall not be required to issue a fractional share of Common Stock upon exercise of any Warrant.  As to any fraction of a share that the Holder of one or more Warrants, the rights under which are exercised in the same transaction, would otherwise be entitled to purchase upon such exercise, the Company shall pay to such Holder an amount in cash equal to such fraction multiplied by the Fair Market Value of one share of Common Stock on the Exercise Date.

 

3.    Reservation and Authorization of Common Stock.  The Company shall at all times during the term of this Warrant reserve for issuance upon exercise of the then outstanding balance of this Warrant such number of shares of its Common Stock as shall be required for issuance of the Consideration Warrant Shares.  Before taking any action that would result in an adjustment in the number of Consideration Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction over such action.  If any Consideration Warrant Shares required to be reserved for issuance upon exercise of Warrants require registration or qualification with any Governmental Entity (other than under the Securities Act or any state securities law) before such shares may be so issued, the Company will in good faith and as expeditiously as possible and at its expense endeavor to cause such shares to be duly registered.  Before taking any action that would cause an adjustment reducing the Exercise Price below the then par value (if any) of the shares of Common Stock deliverable upon exercise of the Warrant or that would cause the number of Consideration Warrant Shares issuable upon exercise of the Warrant to exceed (when taken together with all other Outstanding shares of Common Stock) the number of Consideration Warrant Shares that the Company is authorized to issue, the Company will take any corporate action that, in the opinion of its counsel, is necessary in order that the Company may validly and legally issue the full number of fully paid and non-assessable shares of Common Stock issuable upon exercise of the Warrant at such adjusted exercise price.

 

4.    Transfer, Assignment, Division, Combination, Mutilation or Loss of Warrant.

 

 

 

  

  

  

 

 

 

4.1    Transfer or Assignment of Warrant.  Subject to the limitations set forth in Section 7 hereof, upon (a) surrender of this Warrant to the Company at its Designated Office accompanied by a Form of Assignment annexed hereto as Annex B (each, a “Form of Assignment”) duly executed and funds sufficient to pay any applicable transfer tax, and (b) delivery of an opinion of counsel to the Holder reasonably satisfactory to the Company to the effect that, in the opinion of such counsel, the transfer is exempt from the registration requirements of the Securities Act (provided that no such opinion shall be required in the event of a Transfer to a Permitted Transferee), the Company shall, without charge, execute and deliver a new Warrant registered in the name of the assignee named in the Form of Assignment at the address, and evidencing the right to purchase the shares of Common Stock, specified in the Form of Assignment, and the Warrant represented by this Warrant shall promptly be cancelled.

 

4.2    Mutilation or Loss of Warrant.  Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) receipt of reasonably satisfactory indemnification, and (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will execute and deliver a new Warrant of like tenor and date and any such lost, stolen, destroyed or mutilated Warrant shall thereupon become void.

 

4.3    Division and Combination.  Subject to compliance with the applicable provisions of this Warrant, this Warrant may be divided or combined with other Warrants upon presentation hereof at the Designated Office, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney.  Subject to compliance with the applicable provisions of this Warrant as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

 

4.4    Expenses.  The Company shall prepare, issue and deliver at its own expense any new Warrant or Warrants required to be issued hereunder.

 

4.5    Maintenance of Books.  The Company agrees to maintain, at the Designated Office, books for the registration and transfer of the Warrants.

 

5.    Rights of the Holder.  The Holder shall not, by virtue hereof, be entitled to any rights of a stockholder in the Company, either at law or equity, and the rights of the Holder are limited to those expressed in this Warrant and are not enforceable against the Company except to the extent set forth herein.

 

6.    Protection Against Dilution and Other Adjustments.

 

6.1    Adjustment of Number of Shares Purchasable. Upon any adjustment of the Exercise Price as provided in Sections 6.3 through 6.6 hereof, the Holders of the Warrants shall thereafter be entitled to purchase upon the exercise thereof, at the Exercise Price resulting from such adjustment, the number of shares of Common Stock (calculated to the nearest 1/100th of a share) obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock issuable on the exercise hereof immediately prior to such adjustment and dividing the product thereof by the Exercise Price resulting from such adjustment.

 

6.2    Adjustment Upon Spin Off.  If, at any time or from time to time after the Original Issue Date, the Company shall spin off or otherwise divest itself of a part of its business or operations or dispose of all or of a part of its assets in a transaction in which the Company does not receive compensation for such business, operations or assets, but causes securities of another entity (the “Spin Off Securities”) to be issued to security holders of the Company, then the Company shall cause (i) to be reserved a number of Spin Off Securities (the “Reserved Spin Off

 

 

 

  

  

  

 

 

Securities”) equal to the number of Spin Off Securities that would have been issued to the Holder had all of the Holder’s Outstanding Warrants on the record date for determining the number of Spin Off Securities to be issued to stockholders of the Company been exercised as of the close of business on the trading day immediately before such record date, and (ii) to be issued to the Holder on the exercise of all or any of the Outstanding Warrants, a number of  Reserved Spin Off Securities equal to (x) the Reserved Spin Off Securities multiplied by (y) a fraction, the numerator of which shall be the amount of the Outstanding Warrants then being exercised, and the denominator of which shall be the amount of the Outstanding Warrants.

 

6.3    Upon Stock Dividends, Subdivisions or Splits.  If, at any time or from time to time after the Original Issue Date, the number of shares of Common Stock Outstanding is increased by a stock dividend payable in shares of Common Stock or by a subdivision or split-up of shares of Common Stock, then, following the record date for the determination of holders of Common Stock entitled to receive such stock dividend, or to be affected by such subdivision or split-up, the Exercise Price shall be appropriately decreased by multiplying the Exercise Price by a fraction, the numerator of which is the number of shares of Common Stock Outstanding immediately prior to, and the denominator of which is the number of shares of Common Stock Outstanding immediately after, such increase in Outstanding shares.

 

6.4    Upon Combinations or Reverse Stock Splits.  If, at any time or from time to time after the Original Issue Date, the number of shares of Common Stock Outstanding is decreased by a combination or reverse stock split of the Outstanding shares of Common Stock into a smaller number of shares of Common Stock, then, following the record date to determine shares affected by such combination or reverse stock split, the Exercise Price shall be appropriately increased by multiplying the Exercise Price by a fraction, the numerator of which is the number of shares of Common Stock Outstanding immediately prior to, and the denominator of which is the number of shares of Common Stock Outstanding immediately after, such decrease in Outstanding shares.

 

6.5    Upon Reclassifications, Reorganizations, Consolidations or Mergers.  If, at any time or from time to time after the Original Issue Date, there is any capital reorganization of the Company, any reclassification of the stock of the Company (other than a change in par value or from par value to no par value or from no par value to par value or as a result of a stock dividend or subdivision, split-up or combination of shares), or any consolidation or merger of the Company with or into another Person (where the Company is not the surviving Person or where there is a change in or distribution with respect to the Common Stock), each Warrant shall after such reorganization, reclassification, consolidation, or merger be exercisable for the kind and number of shares of stock or other securities or property of the Company or of the successor Person resulting from such consolidation or surviving such merger, if any, to which the holder of the Consideration Warrant Shares deliverable (immediately prior to the time of such reorganization, reclassification, consolidation or merger) upon exercise of such Warrant would have been entitled upon such reorganization, reclassification, consolidation or merger.  The provisions of this clause shall similarly apply to successive reorganizations, reclassifications, consolidations, or mergers.  The Company shall not effect any such reorganization, reclassification, consolidation or merger unless, prior to the consummation thereof, the successor Person (if other than the Company) resulting from such reorganization, reclassification, consolidation or merger, shall assume, by written instrument, the obligation to deliver to the Holders of the Warrant such shares of stock, securities or assets, which, in accordance with the foregoing provisions, such Holders shall be entitled to receive upon such conversion.

 

6.6    Upon Issuance of Common Stock.  If, at any time or from time to time after the Original Issue Date, the Company shall issue any shares of Common Stock, options to purchase or rights to subscribe for Common Stock, securities by their terms convertible into or exchangeable for Common Stock, or options to purchase or rights to subscribe for such convertible or exchangeable securities, other than Excluded Stock, without consideration or for consideration per share less than either (x) the Exercise Price in effect immediately prior to such issuance or (y) the Fair Market Value per share of the Common Stock immediately prior to such issuance, then such Exercise Price shall forthwith be lowered to a price equal to the price obtained by multiplying:

 

 

  

  

  

 

 

(i) the Exercise Price in effect immediately prior to the issuance of such Common Stock, options, rights or securities by

 

(ii) a fraction of which (x) the numerator shall be the sum of (A) the number of shares of Common Stock Outstanding on a fully-diluted basis immediately prior to such issuance and (B) the number of additional shares of Common Stock which the aggregate consideration for the number of shares of Common Stock so offered would purchase at the greater of the Exercise Price  in effect immediately prior to such issuance or the Fair Market Value per share of Common Stock and (y) the denominator shall be the number of shares of Common Stock Outstanding on a fully-diluted basis immediately after such issuance.

 

6.7    Provisions Applicable to Adjustments.  For purposes of any adjustment of the Exercise Price pursuant to Section 6.6 hereof, the following provisions shall be applicable:

 

(i) In the case of the issuance of Common Stock for cash in a public offering or private placement, the consideration shall be deemed to be the amount of cash paid therefor before deducting therefrom any discounts, commissions or placement fees payable by the Company to any underwriter or placement agent in connection with the issuance and sale thereof.

 

(ii) In the case of the issuance of Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the Valuation Amount as determined in accordance with the Appraisal Procedure.

 

(iii) In the case of the issuance of options to purchase or rights to subscribe for Common Stock, securities by their terms convertible into or exchangeable for Common Stock, or options to purchase or rights to subscribe for such convertible or exchangeable securities (except for options to acquire Excluded Stock):

 

(A) the aggregate maximum number of shares of Common Stock deliverable upon exercise of such options to purchase or rights to subscribe for Common Stock shall be deemed to have been issued at the time such options or rights were issued and for a consideration equal to the consideration (determined in the manner provided in subparagraphs (i) and (ii) above), if any, received by the Company upon the issuance of such options or rights plus the minimum purchase price provided in such options or rights for the Common Stock covered thereby;

 

(B) the aggregate maximum number of shares of Common Stock deliverable upon conversion of or in exchange for any such convertible or exchangeable securities or upon the exercise of options to purchase or rights to subscribe for such convertible or exchangeable securities and subsequent conversion or exchange thereof shall be deemed to have been issued at the time such securities, options, or rights were issued and for a consideration equal to the consideration received by the Company for any such securities and related options or rights (excluding any cash received on account of accrued interest or accrued dividends), plus the minimum additional consideration, if any, to be received by the Company upon the conversion or exchange of such securities or the exercise of any related options or rights (the consideration in each case to be determined in the manner provided in paragraphs (i) and (ii) above);

 

(C) on any change in the number of shares or exercise price of Common Stock deliverable upon exercise of any such options or rights or conversions of or exchanges for such securities, other than a change resulting from the anti-dilution provisions thereof, the Exercise Price shall forthwith be readjusted to such Exercise Price as would have been obtained had the adjustment made upon the issuance of such options, rights or securities not converted prior to such change or options or rights related to such securities not converted prior to such change been made upon the basis of such change;

 

 

 

  

  

  

 

 

(D) upon the expiration of any options to purchase or rights to subscribe for Common Stock which shall not have been exercised, the Exercise Price computed upon the issuance thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon such expiration, be recomputed as if the only additional shares of Common Stock issued were the shares of Common Stock, if any, actually issued upon the exercise of such options to purchase or rights to subscribe for Common Stock, and the consideration received therefor was the consideration actually received by the Company for the issue of the options to purchase or rights to subscribe for Common Stock that were exercised, plus the consideration actually received by the Company upon such exercise; and

 

(E) no further adjustment of the Exercise Price adjusted upon the issuance of any such options, rights, convertible securities or exchangeable securities shall be made as a result of the actual issuance of Common Stock on the exercise of any such rights or options or any conversion or exchange of any such securities.

 

6.8    Deferral in Certain Circumstances.  In any case in which the provisions of this Section 6 shall require that an adjustment shall become effective immediately after a record date of an event, the Company may defer until the occurrence of such event (a) issuing to the Holder of any Warrant exercised after such record date and before the occurrence of such event the shares of capital stock issuable upon such exercise by reason of the adjustment required by such event and issuing to such Holder only the shares of capital stock issuable upon such exercise before giving effect to such adjustments, and (b) paying to such Holder any amount in cash in lieu of a fractional share of capital stock pursuant to Section 2.3 above; provided, however, that the Company shall deliver to such Holder an appropriate instrument or due bills evidencing such Holder’s right to receive such additional shares or such cash.

 

6.9    Appraisal Procedure.  In any case in which the provisions of this Section 6 shall necessitate that the Appraisal Procedure be utilized for purposes of determining an adjustment to the Exercise Price, the Company may defer until the completion of the Appraisal Procedure and the determination of the adjustment (a) issuing to the Holder of any Warrant exercised after the date of the event that requires the adjustment and before completion of the Appraisal Procedure and the determination of the adjustment, the shares of capital stock issuable upon such exercise by reason of the adjustment required by such event and issuing to such Holder only the shares of capital stock issuable upon such exercise before giving effect to such adjustment and (b) paying to such Holder any amount in cash in lieu of a fractional share of capital stock pursuant to Section 2.3 above; provided, however, that the Company shall deliver to such Holder an appropriate instrument or due bills evidencing such Holder’s right to receive such additional shares or such cash.

 

6.10    Exceptions.  This Section 6 shall not apply to (a) securities offered to the public pursuant to a public offering; (b) securities issued to employees or directors of the Company pursuant to an employee stock option plan or stock incentive plan approved by the Board of Directors; or (c) securities Outstanding as of the date hereof (provided that the terms of such securities will not be modified in any manner following the date hereof) (collectively, “Excluded Stock”).

 

6.11    Notice of Adjustment of Exercise Price.  Whenever the Exercise Price is adjusted as herein provided:

 

(i) the Company shall compute the adjusted Exercise Price in accordance with this Section 6 and shall prepare a certificate signed by the treasurer or chief financial officer of the Company setting forth the adjusted Exercise Price and showing in reasonable detail the facts upon which such adjustment is based, and such certificate shall forthwith be filed at each Designated Office; and

 

(ii) a notice stating that the Exercise Price has been adjusted and setting forth the adjusted Exercise Price shall forthwith be prepared by the Company and mailed to all Holders at their last addresses as they shall appear in the warrant register.

 

 

 

  

  

  

 

 

7.    Transfer to Comply with the Securities Act.

 

7.1    Transfer.  This Warrant has not been registered under the Securities Act and has been issued to the Holder for investment and not with a view to the distribution of either the Warrant or the Consideration Warrant Shares.  Neither this Warrant nor any of the Consideration Warrant Shares or any other security issued or issuable upon exercise of this Warrant may be sold, transferred, pledged or hypothecated in the absence of an effective registration statement under the Securities Act relating to such security or an opinion of counsel satisfactory to the Company that registration is not required under the Securities Act; provided, that, no registration statement or opinion of counsel shall be required in the event of a Transfer to a Permitted Transferee.  Each Warrant, the Consideration Warrant Shares and any other security issued or issuable upon exercise of this Warrant shall contain a legend on the face thereof, in substantially the following form by which the Holder (and any transferee thereof) shall be bound:

 

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY OTHER SECURITIES LAWS, AND SUCH SECURITIES MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNDER SAID ACT AND LAWS OR AN EXEMPTION THEREFROM.

 

8.    Notice of Corporate Actions; Taking of Record; Transfer Books.

 

8.1    Notices of Corporate Actions.  In case:

 

(a) of the Company granting to all of the holders of its Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class; or

 

(b) of any reclassification of the Common Stock (other than a subdivision or combination of the Outstanding shares of Common Stock), or of any consolidation, merger or share exchange to which the Company is a party and for which approval of any stockholders of the Company is required, or of the sale or transfer of all or substantially all of the assets of the Company; or

 

(c) of the voluntary or involuntary dissolution, liquidation or winding up of the Company; or

 

(d) of the commencement by the Company or any Subsidiary of a tender offer for all or a portion of the Outstanding shares of Common Stock (or the amending of any such tender offer to change the maximum number of shares being sought or the amount or type of consideration being offered therefor);

 

then the Company shall cause to be filed at each office or agency maintained for such purpose, and shall cause to be mailed to all Holders at their last addresses as they shall appear in the warrant register, at least 30 days prior to the applicable record, effective or expiration date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution or granting of rights or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record who will be entitled to such dividend, distribution, rights or warrants are to be determined, (y) the date on which such reclassification, consolidation, merger, share exchange, sale, transfer, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, share exchange, sale, transfer, dissolution, liquidation or winding up, or (z) the date on which such tender offer commenced, the date on which such tender offer is scheduled to expire unless extended, the consideration offered and the other material terms thereof (or the material terms of the amendment

 

 

  

  

  

 

 

thereto).  Such notice shall also set forth such facts with respect thereto as shall be reasonably necessary to indicate the effect of such action on the Exercise Price and the number and kind or class of shares or other securities or property which shall be deliverable or purchasable upon the occurrence of such action or deliverable upon exercise of the Warrants.  Neither the failure to give any such notice nor any defect therein shall affect the legality or validity of any action described in clauses (a) through (d) of this Section 8.1.

 

8.2    Taking of Record.  In the case of all dividends or other distributions by the Company to the holders of its Common Stock with respect to which any provision of hereof refers to the taking of a record of such holders, the Company will in each such case take such a record and will take such record as of the close of business on a Business Day.

 

8.3    Closing of Transfer Books.  The Company shall not at any time, except upon dissolution, liquidation or winding up of the Company, close its stock transfer books or Warrant transfer books so as to result in preventing or delaying the exercise or transfer of any Warrant.

 

9.    Notices.  Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally, telegraphed, telexed, sent by facsimile transmission or sent by certified, registered or express mail, postage pre-paid.  Any such notice shall be deemed given when so delivered personally, telegraphed, telexed or sent by facsimile transmission, or, if mailed, two days after the date of deposit in the United States mails, as follows:

 

(i)     if to the Company, to:

 

SIGA Technologies, Inc.

660 Madison Avenue, Suite 1700

New York, New York 10065

Attention:  Chief Financial Officer

Telephone No.:  (212) 672-9100

Facsimile No.:   (212) 697-3130

 

with a copy (which shall not constitute notice) to:

Kramer Levin Naftalis & Frankel LLP

1177 Avenue of the Americas

New York, New York 10036

Attention:  James A. Grayer, Esq.

Facsimile No.: (212) 715-8000

(ii)   if to the Holder, to:

 

MacAndrews & Forbes LLC

35 East 62nd Street

New York, New York 10021

Attention: Michael C. Borofsky, Esq.

Facsimile No.: (212) 572-8435

Any party may be given notice in accordance with this Section 9, unless such party designates another address or person for receipt of notice hereunder.

 

 

 

  

  

  

 

 

10.    No Impairment; Regulatory Compliance And Cooperation; Notice Of Expiration.  The Company shall not by any action, including, without limitation, amending its charter documents or through any reorganization, reclassification, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other similar voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of the Holder against impairment.

 

11.    Miscellaneous.

 

11.1    Successors and Assigns. This Warrant shall inure to the benefit of and be binding upon the successors and assigns of the Company, the Holder and their respective successors and assigns.  The Holder’s rights under this Warrant may be assigned, in whole or in part, to (a) any Permitted Transferee, and any Permitted Transferee shall be deemed to be a Holder for all purposes hereunder or (b) any transferee of a Warrant, or, if applicable, any portion of a Warrant, that represents 10% of the Consideration Warrant Shares exercisable by such transferor on the date of such transfer and any such transferee shall be deemed to be a Holder for all purposes hereunder.

 

11.2    Limitation on Exercise.  Notwithstanding anything to the contrary contained herein, the maximum number of shares of Common Stock that the Company may issue pursuant to the Services Agreement or any other documentation contemplated thereby at an effective purchase price less than the greater of book or market value of the Company’s Common Stock on the trading day immediately preceding the date of the Office Services Letter equals 19.99% of the outstanding shares of Common Stock immediately preceding the date of the Services Agreement (the “Issuable Maximum”), unless the Company obtains shareholder approval in accordance with the rules and regulations of the Nasdaq Stock Market.  If, at the time any Holder requests an exercise of any of the Warrants, the Actual Minimum (excluding any shares issued or issuable at an effective purchase price in excess of the greater of book or market value of the Company’s Common Stock on the trading day immediately preceding the date of the Services Agreement) exceeds the Issuable Maximum (and if the Company has not previously obtained the required shareholder approval), then the Company shall issue to such Holder requesting such exercise a number of shares of Common Stock equal to the Issuable Maximum.  The Company shall not be obligated to seek stockholder approval under the rules and regulations of the Nasdaq Stock Market and shall not be in breach under this Warrant Agreement, the Office Services Letter or any other documentation contemplated hereunder or thereunder for failure to issue securities as a result of its failure to obtain shareholder approval as contemplated hereby.  For purposes hereof, “Actual Minimum” shall mean, as of any date, the maximum aggregate number of shares of Common Stock then issued or potentially issuable in the future pursuant to the Services Agreement or any other documentation contemplated, without giving effect to any limits on the number of shares of Common Stock that may be owned by a Holder at any one time.

 

11.3    Designated Office.  As long as any of the Warrants remain Outstanding, the Company shall maintain an office or agency, which may be the principal executive offices of the Company (the “Designated Office”), where the Warrants may be presented for exercise, registration of transfer, division or combination as provided in this Warrant.  Such Designated Office shall initially be the office of the Company at 660 Madison Avenue, Suite 1700 Street, New York, New York 10065.  The Company may from time to time change the Designated Office to another office of the Company or its agent within the United States by notice given to all registered Holders at least 10 Business Days prior to the effective date of such change.

 

11.4    Supplements and Amendments; Whole Agreement.  This Warrant may be amended or supplemented only by an instrument in writing signed by the parties hereto.  This Warrant and the Services Agreement contain the full understanding of the parties hereto with respect to the subject matter hereof and thereof and there are no representations, warranties, agreements or understandings other than expressly contained herein and therein.

 

11.5    Governing Law; Jurisdiction; Waiver Of Jury Trial.  The internal laws, and not the laws of conflicts (other than Section 5-1401 of the General Obligations Law of the State of New York), of New York shall govern the

 

 

 

  

  

  

 

 

enforceability and validity of this Warrant, the construction of its terms and the interpretation of the rights and duties of the Company.  Any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Warrant or the transactions contemplated hereby may be brought in any federal or state court located in the County and State of New York, and the Company hereby consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum.  Process in any such suit, action or proceeding may be served on the company anywhere in the world, whether within or without the jurisdiction of any such court.  The Company hereby irrevocably waives any and all right to trial by jury in any legal proceeding arising out of or related to this Warrant or the transactions contemplated hereby.

 

11.6    Remedies.  Each Holder of Warrants, in addition to being entitled to exercise its rights granted by law, including recovery of damages, shall be entitled to specific performance of its rights provided under this Warrant.  The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and shall waive, in an action for specific performance, the defense that a remedy at law would be adequate.

11.7    Limitation of Liability.  No provision hereof and no enumeration herein of the rights or privileges of the Holder hereof, shall give rise to any liability of such Holder to pay the Exercise Price for any Consideration Warrant Shares other than pursuant to an exercise of this Warrant or any liability as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

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

 

11.9    Descriptive Headings.  Descriptive headings of the several sections of this Warrant are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.

 

 

[Remainder of Page Intentionally Left Blank]

 

 

 

 

  

  

  

IN WITNESS WHEREOF, this Warrant has been executed as of the 30th day of April, 2013.

 

 

            SIGA TECHNOLOGIES, INC.

            By: /s/ Daniel Luckshire                               

                  Daniel Luckshire

                  Chief Financial Officer

 

 

 

 

 

  

  

  

 

ANNEX A

 

NOTICE OF EXERCISE OF WARRANT

 

[To be executed only upon exercise of Warrant]

 

 

The undersigned hereby irrevocably elects to exercise the right, represented by the Warrant dated as of April  30, 2013, to purchase ______ shares of common stock, par value $0.0001 per share (the “Consideration Warrant Shares”), of SIGA TECHNOLOGIES, INC. and tenders herewith payment in accordance with Sections 1 and 2 of such Warrant.  The undersigned further requests, in accordance with Section 2.1(b) of the Warrant, that certificates for the Consideration Warrant Shares hereby purchased (and any securities or other property issuable upon exercise) be issued in the name of and delivered to ______________ and, if such Consideration Warrant Shares are not all of the Consideration Warrant Shares issuable upon exercise of the Warrant, that a new Warrant of like tenor be issued for the balance of the Consideration Warrant Shares.

 

 

 

 

        _______________________________

        (Name of Registered Owner)

 

 

        _______________________________

        (Signature of Registered Owner)

 

 

        _______________________________

        (Street Address)

 

 

        _______________________________

        (City)    (State)    (Zip Code)

 

 

	
NOTICE:

	
The signature on this notice of exercise must correspond with the name as written upon the face of the within Warrant in every particular, without alteration or enlarge­ment or any change whatsoever.

 

 

  

  

  

 

 

 

ANNEX B

 

 

FORM OF ASSIGNMENT

 

 

(To be executed by the registered holder if such

holder desires to transfer the Warrant.)

 

 

FOR VALUE RECEIVED ________________ hereby sells, assigns and transfers unto ______________________________________________________________

 

 

________________________________________________________________________________________________________________________________

(Please print name and address of transferee)

 

 

the Warrants represented by this Warrant, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint ___________________________ attorney-in-fact, with full power of substitution, to transfer the within Warrant on the books of SIGA TECHNOLOGIES, INC. to give effect to the transfer made hereby.

 

 

Date:  _____________, ____

                _________________________________

                        Signature

	
NOTICE:

	
The signature on this assignment must correspond with the name as written upon the face of the within Warrant in every particular, without alteration or enlarge­ment or any change whatsoever.2013 Q2 8-K re CFO Exh 10.1

Exhibit 10.1

SEVERANCE AND RELEASE AGREEMENT

This Severance and Release Agreement (this “Agreement”) is made and entered into as of April 30, 2013 by and between the undersigned individual (“Employee”) and FelCor Lodging Trust Incorporated (“Employer”) (each of Employer and Employee may be referred to herein as a “Party,” and collectively, they may be referred to herein as the “Parties”).

1.    Release and Waiver Agreement.  Employee acknowledges and understands that this Agreement is a release and waiver contract and that this document is legally binding.  Employee and Employer understand and acknowledge that by executing this Agreement, each party has confirmed that it has read and understood each provision and agrees to all of the provisions set forth in this Agreement.

2.    Claims Covered by Agreement.  Employee and Employer acknowledge and understand that this Agreement applies only to claims that accrue or have accrued prior to the Effective Date of this Agreement, which Effective Date shall be upon the expiration of seven (7) days after Employee signs this Agreement without revocation. Employee acknowledges and agrees that certain benefits provided for under this Agreement are conditioned upon Employee’s execution and delivery of an affirmation in the form attached hereto as Exhibit A (the “Affirmation”) to Employer within five (5) days following the Termination Date (as defined below), for which the Effective Date shall be upon the expiration of seven (7) days after Employee signs the Affirmation without revocation.

3.    Transition; Termination of Employment.  Employee’s employment with Employer is terminated effective on the earliest to occur of: (x) the termination date set forth on Exhibit B attached hereto (the “Severance Schedule”), (y) the date immediately preceding the date on which Employee commences employment with a new employer, and (z) such earlier date as may be determined by the Parties (such date, whether described in clause (x), (y) or (z), being the “Termination Date”). Employee’s service as Employer’s Executive Vice President and Chief Financial Officer shall end effective June 30, 2013, or such earlier date as the Parties may determine (the “Transition Date”), after which date, Employee shall remain an employee of Employer through the Termination Date, and his base salary or annual bonus formula shall remain unchanged.

4.    Severance Benefits.  In exchange for the promises and/or covenants of Employee contained herein, subject to the provisions contained within this Agreement, Employer shall pay to Employee the severance benefits set forth on the Severance Schedule (the “Severance Benefits”).

A.    Withholding; Payment; Additional Tax Considerations. Employer’s payment of the Severance Benefits is subject to applicable federal, state, and local taxes and withholding.  This Agreement shall be administered and interpreted to maximize the short-term deferral exception to Section 409A of the Code, and Employee shall not, directly or indirectly, designate the taxable year of a payment made under this Agreement.  The portion of any payment under this Agreement that is paid within the “short-term deferral period” within the meaning of Treasury Regulation Section 1.409A-1(b)(4) shall be treated as a short term deferral and not aggregated with other plans or payments.  Any other portion of the payment that does not meet the short term deferral requirement shall, to the maximum extent possible, be deemed to satisfy the exception from Treasury Regulation Section 1.409A-1(b)(9)(iii)(A) for involuntary separation pay and shall not be aggregated with any 

1

other payment.  Any right to a series of installment payments pursuant to this Agreement is to be treated as a right to a series of separate payments.  Any amount that is paid as a short-term deferral within the meaning of Treasury Regulation Section 1.409A-1(b)(4), or within the involuntary separation pay limit under Treasury Regulation Section 1.409A-1(b)(9)(iii)(A) shall be treated as a separate payment.  Notwithstanding any provision of this Agreement to the contrary, if Employer determines that any compensation or benefits payable under this Agreement may be subject to Section 409A of the Code and related Department of Treasury guidance, Employer may adopt such amendments to this Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that Employer determines are necessary or appropriate to (i) exempt the compensation and benefits payable under this Agreement from Section 409A of the Code and/or preserve the intended tax treatment of such compensation and benefits, or (ii) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance; provided, however, that no such amendments or adoption of other policies and procedures will reduce the amount of any compensation or benefit Employee otherwise would be entitled to under this Agreement without the written consent of Employee.  All taxable expense reimbursement payments and in-kind benefits provided to Employee are intended to be structured in compliance with Section 409A of the Code, and reimbursements shall be paid by Employer to Employee by no later than the end of the calendar year following the calendar year in which Employee incurs such expenses.

B.    Acknowledgement.  Employee acknowledges and agrees that the Severance Benefits provided as set forth in this Agreement and on the Severance Schedule constitute the totality of all benefits of any kind due and owing to Employee and that upon execution and delivery of this Agreement, Employee shall be entitled to no other benefits, payments, distributions, transfers, penalties or other amounts or consideration of any kind from Employer as a consequence of, relating to or in connection with Employee’s employment by the Employer or the termination of such employment by the Employer as contemplated hereby. 

5.    Consultation with Attorney, Review Period, and Revocation Period.    

A.    Employee is advised, and acknowledges that he has been advised, to consult with an attorney prior to executing this Agreement and the Affirmation concerning the meaning, import, and legal significance of this Agreement and the Affirmation.  Employee acknowledges that he has read this Agreement and the Affirmation, as signified by Employee’s signature hereto, and is voluntarily executing the same after advice of counsel for the purposes and consideration herein expressed.

B.    Employee acknowledges that he has been provided with a period of at least twenty--one (21) days within which to consider, review, and reflect upon the terms of this Agreement and the Affirmation.  Any discussions about or changes to this Agreement or the Affirmation, whether material or immaterial, do not restart the running of the 21-day period.

C.    Employee has seven (7) days in which he may revoke this Agreement or the Affirmation after he signs it.  This Agreement and the Affirmation shall not be effective until the expiration of seven (7) days after Employee signs it without revocation.  Any amounts payable under this Agreement shall be paid no sooner than the expiration of seven (7) days after Employee satisfies all conditions precedent to Employer’s obligation to make such payments.  Any revocation of this Agreement or the Affirmation must be delivered to 

2

Employer’s General Counsel prior to the expiration of seven (7) days after Employee signs this Agreement or the Affirmation.

6.    Release. In exchange for the promises and/or covenants of Employer contained herein and subject to the provisions contained within this Agreement, Employee covenants and agrees as follows:    

A.    Release and Waiver by Employee.  For and in consideration of the Severance Benefits referenced above, as well as the covenants and/or promises contained herein, the receipt and sufficiency of which are hereby acknowledged, Employee, on behalf of Employee and Employee’s family, assigns, representatives, agents, heirs and/or attorneys, if any, hereby covenants not to sue and fully, finally, and forever releases, acquits and discharges Employer, along with its former and present parents, subsidiaries, and/or affiliates, along with its predecessors, successors and/or assigns, if any, as well as their respective former and present officers, administrators, directors, shareholders, general or limited partners, representatives, agents, employees and/or attorneys, if any, jointly and severally (collectively, the “Released Parties”), from any and all claims, demands, actions, liabilities, obligations and/or causes of action of whatever kind or character, whether known or unknown, which Employee or anyone on Employee’s behalf or for Employee’s benefit has or might claim to have against the Released Parties for any and all injuries, harm, damages (actual and punitive), penalties, costs, losses, expenses, attorneys’ fees and/or liability or other detriment, if any, whatsoever and whenever incurred or suffered by Employee arising out of, relating to, or in connection with any transaction or occurrence which transpired prior to the execution of this Agreement, including, without limitation:

(i)    any claim under federal, state, or local law which provides civil remedies for the enforcement of rights arising out of the employment relationship, including, without limitation, discrimination and retaliation claims, such as claims or causes of action under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000 et seq.; The Civil Rights Act of 1866, as amended, 42 U.S.C. § 1981; The Civil Rights Act of 1991, as amended, 42 U.S.C. § 1981a; Americans With Disabilities Act, as amended, 42 U.S.C. § 12101 et seq.; Fair Labor Standards Act, as amended, 29 U.S.C. § 201, et seq.; Employee Retirement Income Security Act, as amended, 29 U.S.C. § 1000 et seq.; Family and Medical Leave Act, as amended, 29 U.S.C. § 2601, et seq.; the Texas Commission on Human Rights Act, as amended, Texas Labor Code § 21.001, et seq.; or any other statute prohibiting discrimination or retaliation in employment under any federal, state, or local law; 

(ii)    any claim under the Age Discrimination in Employment Act, as amended, 29 U.S.C. § 621 et seq.(“ADEA”).  The following terms and conditions apply to and are part of the waiver and release of ADEA claims under this Agreement:  (a) Employee has been advised to consult with an attorney before signing this Agreement; (b) Employee is not waiving any rights or claims under the ADEA that may arise after the date on which he executes this Agreement; (c) Employee has twenty-one (21) days from the date he is presented with this Agreement to decide whether or not to sign the Agreement and Affirmation, although Employee may choose to sign any time earlier; (d) Employee has seven (7) days after signing this Agreement and Affirmation to revoke, and Employee’s waiver and release of ADEA 

3

claims will not be effective until that revocation period has expired; and (e) Employee hereby acknowledges and agrees that he is knowingly and voluntarily waiving and releasing his rights and claims only in exchange for consideration; and

(iii)    any claims for unpaid or withheld wages, relocation allowances or benefits, other benefits, commissions, bonuses or profit-sharing, wrongful discharge, breach of contract, breach of fiduciary duty, promissory estoppel, fraud, breach of any implied covenants, assault, battery, negligence, defamation, invasion of privacy, slander, intentional infliction of emotional distress, or any other contract, tort, or statutory claim.

Employee acknowledges and agrees that the payment of monies hereunder constitutes monies to which Employee was not previously entitled and, further, that the payment of monies hereunder constitutes fair and adequate consideration for the execution of this Agreement.

B.    Covenant Not to Sue and Indemnification. Employee hereby specifically covenants and agrees that Employee will not initiate, or cause to be initiated, any action or cause of action against Employer or any of the other Released Parties in the future asserting any claim covered by the release. Employee further agrees to indemnify Employer and all other Released Parties for (i) any additional sum of money that any of them may hereafter be compelled to pay Employee, and (ii) any of Employer’s or other Released Parties’ legal fees, costs, and expenses associated therewith, on account of Employee bringing or allowing to be brought on Employee’s behalf any legal action based directly or indirectly upon the claims covered by the release.

C.    Noninterference.  Nothing in this Agreement shall interfere with Employee’s right to file a charge, cooperate or participate in an investigation or proceeding conducted by the Equal Employment Opportunity Commission, or other federal or state regulatory or law enforcement agency.  However, the consideration provided to Employee in this Agreement shall be the sole relief provided for the claims released herein and Employee will not be entitled to recover and agrees to waive any monetary benefits or recovery against Employer or Released Parties in connection with any such claim, charge, or proceeding without regard to who has brought such claim, charge, or proceeding. 

D.    Eligibility for Rehire.  Employee acknowledges and agrees that, by signing this Agreement, he is voluntarily giving up any right he may have to maintain an association or employment with Employer or any affiliate or subsidiary of Employer.  Employee further agrees not to seek or accept an association or employment with, or to submit an application to, Employer or any affiliate or subsidiary of Employer at any time in the future.  Employee further agrees that this Agreement shall act as a complete bar to Employee’s entitlement to any legal, equitable or administrative relief based upon any such denial of employment.

7.    Certain Covenants.

A.    Confidentiality.  Employee acknowledges and agrees that the terms and provisions of this Agreement shall not be divulged or disclosed by Employee except as set forth herein. Employee further acknowledges and agrees that Employer may disclose the existence and terms of this Agreement, as well as the circumstances to which it relates, as required by applicable laws and regulations, including without limitation, rules and regulations of the U.S. Securities and Exchange 

4

Commission (Employer shall use its best efforts to provide Employee with advance copies of such disclosure, to the extent practicable). Notwithstanding the foregoing, nothing in this paragraph or its subparts shall prevent the following disclosures of this Agreement by Employee:  (i) Employee may disclose the terms of this Agreement to Employee’s attorneys, immediate family members, and tax advisors and (ii) Employee shall be permitted to disclose the terms of this Agreement as required by any court of competent jurisdiction or government agency.  Other than the exceptions set forth herein, Employee agrees this Agreement shall not be voluntarily introduced as evidence in any proceeding or in any lawsuit unless required by law or court order or to enforce the terms of this Agreement.  Nothing contained in this subparagraph shall prevent Employee from stating that “the matter has been resolved.” Employee covenants and agrees that this confidentiality agreement is contractual and its terms are material to this Agreement.  In the event that Employer proves in a legal proceeding that Employee has disclosed the terms of this Agreement or otherwise has breached this confidentiality agreement, Employer shall be entitled to recover its actual damages from Employee, as well as its reasonable expenses, including attorneys’ fees incurred in the prosecution of any legal proceeding.
B.     Non-Disparagement.  Employee agrees that he will refrain from engaging in any conduct, verbal or otherwise, that would disparage or harm the reputation of Employer or any other Released Parties. Such conduct shall include, but not be limited to, any negative statements made verbally or in writing by Employee about Employer or any of the Released Parties. Employee’s public and private statements shall conform in all respects, explicitly and implicitly, to Employer’s public statements, in substance as prepared in consultation with Employee or otherwise as may be required by applicable laws, rules or regulations applicable to Employer, with regard to the end of Employee’s service with, and employment by, Employer and any related matters.
C.    Other Employees. Employee agrees that, other than by means of a general advertisement or public solicitation, (i) for a period ending on the first anniversary of the Termination Date, he will not, and will cause any future employer or business in which he is an active investor or of which he has a leadership or management role not to, solicit, directly or indirectly, any persons who are or were employed by Employer at any time on or after January 1, 2013 (“Other Employees”) to terminate their employment with Employer and (ii) for a period ending six months immediately following the Termination Date, he will not, and will cause any future employer or business in which he is an active investor or of which he has a leadership or management role not to, hire any Other Employees; provided, however, that, for all purposes of this Agreement, the term “Other Employees” shall exclude Employee’s current administrative assistant.
D.    Property and Confidential Information.  Employee agrees that within three (3) days following the Termination Date and as a condition precedent to Employer making any payments or providing any benefits hereunder, Employee shall return to Employer any and all originals and/or copies of documents relating to the business of Employer or any of the other Released Parties, other than documents, information and other materials directly and primarily relating to Employee’s compensation and benefits (“Employee’s Personal Information”). Employee further agrees that Employee will not directly or indirectly disclose to anyone, or use for Employee’s own benefit or the benefit of anyone other than Employer, any “confidential information” that Employee has received through Employee’s employment with Employer. Confidential information shall include Employer’s business plans and files, financial information, customer information, management and employee information, information regarding Employer’s products, systems, and processes, and 

5

any other related information (other than Employee’s Personal Information. Employee further agrees that in the event it appears that Employee will be compelled by law or judicial process to disclose any such confidential information to avoid potential liability, Employee will notify Employer in writing immediately upon Employee’s receipt of a subpoena or other legal process. 
8.    Miscellaneous.  

A.    Choice of law; Venue. The Parties agree that this Agreement shall be performed in Dallas County, Texas and that the laws of the State of Texas shall govern the enforceability, interpretation and legal effect of this Agreement.  The Parties also agree that venue of any action to enforce the provisions of this Agreement, or any document executed in connection herewith, shall be in Dallas County, Texas.
B.    Entire Agreement.  This Agreement constitutes the entire understanding and agreement of the Parties, and supersedes prior understandings and agreements, if any, (including, without limitation, that certain Change in Control and Severance Agreement by and between Employer and Employee), among or between the Parties with respect to the subject matter hereof.  There are no representations, agreements, arrangements or understandings, oral or written, concerning the subject matter hereof between and among the Parties which are not fully expressed or incorporated by reference herein.

C.    Amendments.  Any modification of this Agreement or additional obligation assumed by any Party in connection with this Agreement shall be binding only if evidenced in writing signed by each Party or an authorized representative of each Party.  Additionally, this Agreement cannot be changed or terminated orally, but may be changed only through written addendum executed by all Parties.

D.    Severability.  The Parties acknowledge and understand that, if any term of this Agreement shall be determined by a court to be illegal, invalid, unconscionable or unenforceable, the remaining provisions will remain effective and legally binding, and the illegal, invalid, unconscionable or unenforceable term shall be deemed not to be a part of this Agreement.

E.    Binding Effect.  This Agreement and the terms, covenants, conditions, provisions, obligations, undertakings, rights and benefits hereof shall be binding upon, and shall inure to the benefit of, the Parties and their respective heirs, executors, administrators, representatives, officers, directors, shareholders, predecessors, successors, parents, subsidiaries, affiliated entities, spouses, agents, attorneys, servants, employees, principals, partners, whether limited or general, and assigns, if any.  Each of the Parties represents and warrants that he or it has the authority to act on his or its behalf and to bind him or it to this Agreement.

F.    Disputes Relating to Agreement.  If any action at law or in equity, including an action for declaratory relief, is brought to enforce or interpret the provisions of this Agreement, the party prevailing in any such litigation shall recover from the adverse party its actual damages and reasonable costs and expenses, including, without limitation, reasonable attorneys’ fees incurred in connection with such dispute and litigation.  In the event of the violation or threatened violation of any of the covenants and/or promises in this Agreement, the non-breaching party shall be entitled to injunctive relief, both preliminary and final, enjoining and restraining such violation or threatened 

6

violation, which injunctive relief shall be in addition to all other remedies available to the non-breaching party, at law or in equity.

G.    Free Will.    Employee and Employer acknowledge that each has had an opportunity to consult with his or its respective attorneys concerning the meaning, import, and legal significance of this Agreement, and each has read this Agreement, as signified by their signatures hereto, and are voluntarily executing same after advice of counsel for the purposes and consideration herein expressed.

IN WITNESS WHEREOF, the Parties have executed this Agreement to be effective as of the latest date set forth on this page

EMPLOYEE:

	
			
	Date: April 30, 2013
	 
	/s/ Andrew J. Welch

	 
	 
	Andrew J. Welch

	 
	 
	 

	FELCOR LODGING TRUST
	 
	 

	INCORPORATED:
	 
	 

	 
	 
	 

	 
	 
	 

	Date: April 30, 2013
	 
	/s/ Richard A. Smith

	 
	 
	Richard A. Smith

	 
	 
	President and Chief Executive Officer

7

EXHIBIT A

AFFIRMATION
By my signature below, I hereby re-execute and affirm the Severance and Release Agreement, originally signed by me on April 30, 2013, including but not limited to the release and waiver of claims to the extent set forth in the Agreement.

	
			
	Date:  _________ ____, 2013
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

	Andrew J. Welch
	 
	 

EXHIBIT B
SEVERANCE SCHEDULE
This Severance Schedule is incorporated by reference into and made part of the Severance and Release Agreement (the “Agreement”; capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Agreement).  The amounts and other benefits set forth below, subject to the terms of the Agreement, are not due, payable, or effective until the later of the twelfth (12th) day following the Termination Date or the expiration of seven (7) days after Employee signs this Agreement and, to the extent relevant, delivers the Affirmation, in either case without revocation (such date being the “Payment Date”).
		
	A.
	Severance Pay.  150% of the sum of (i) 2013 base salary ($397,838) and (ii) 2013 target annual bonus ($298,379). 

		
	B.
	Continued Benefits Offset Payment.  $70,295 in lump sum, which amount the parties agree is approximately the same as the aggregate cost of continued coverage under the medical, dental, and vision coverage plans sponsored by Employer under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and otherwise for 24 months. 

		
	C.
	Outplacement Services.  Employer shall provide Employee with outplacement counseling services through a third-party firm selected by Employee that is reasonably acceptable to Employer.  Employer shall pay the full cost of any such outplacement services, not to exceed $10,000.

		
	D.
	Accelerated Vesting of Contingent or Unvested Compensation.  All of Employee's unvested equity compensation, including restricted stock, restricted cash and restricted stock units, shall vest on the Payment Date. With respect to restricted stock units, such units shall, upon vesting, entitle Employee to receive the number of shares of Employer common stock issuable based on relative TSR (as defined in the applicable grant contract) achieved through the Transition Date (using the weighted average trading price of the relevant companies' common stock over the 20 trading days immediately preceding the Transition Date). 

		
	E.
	2013 Annual Bonus. Employer shall pay, in a lump sum on the Payment Date, an amount equal to Employee's projected 2013 cash bonus, based on known or projected performance through the Termination Date, reduced (if applicable) on a ratable basis to reflect the partial year of service.  

		
	F.
	Employer-Issued Computers, Etc. Employee may retain all computers, printers, tablets, PDAs, cellphones and similar electronic equipment issued by Employer to Employee in the course of Employee's employment, which equipment shall, after the Payment Date, be the exclusive property of Employee.  

		
	G.
	Termination Date. December 31, 2013.

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