Document:

As of September 9, 1999

Stefan Capital, LLC
1500 Hempstead Turnpike
East Meadow, NY 11554
Attention: Jeffrey Rubin

Dear Jeff:

      We are pleased you have agreed to serve as a consultant to SIGA
Pharmaceuticals, Inc. (the "Company"). In this letter, I would like to present
the terms of your engagement with the Company.

1.    Duties and Term. In connection with your engagement, you will consult with
      the Company concerning its strategic review and development of alternative
      internet and related technologies, as requested from time to time by its
      Chairman or President. You agree to be reasonably available to meet with
      or discuss with the senior officers of the Company as well as to evaluate
      potential strategic acquisitions or transactions.

2.    Compensation. In consideration for your services, the Company will issue
      to you warrants (the "Warrants") to purchase an aggregate of 100,000
      shares of the Company's Common Stock at an exercise price of $1.00 per
      share, of which 50,000 warrants are immediately vested, and will become
      exercisable on the first anniversary of the date hereof. The other 50,000
      warrants will vest as of the date of grant, and will become exercisable on
      the second anniversary of the date hereof. The Warrants will have cashless
      exercise provisions and will be represented by a Warrant Agreement dated
      as of the date hereof and have certain registration rights, as reflected
      in a Registration Rights Agreement dated as of the date hereof, which have
      been executed by the Company and by you.

3.    Additional Compensation. In addition to the compensation referred to
      above, if you introduce the Company to a person or entity with whom the
      Company enters into a transaction involving a merger or acquisition, asset
      acquisition or sale, strategic alliance or joint venture, or equity or
      debt financing transaction involving the issuance of securities and/or the
      borrowing of money, the Company will pay to you an agreed-upon fee, which
      may consist of cash and/or securities, based upon the size of the
      transaction and your involvement therein.

4.    Other Benefits. You will not be entitled to any other compensation or
      benefits for your services, regardless of the compensation or benefits
      offered by the Company to its employees or other consultants. The Company
      will reimburse you for actual out-of-pocket expenses incurred by you in
      the performance of your services
<PAGE>

Stefan Capital, LLC
As of September 9, 1999
Page 2

      provided that such expenditures have been approved in advance by an
      officer of the Company in writing.

5.    Confidentiality. As a consultant to the Company, you may have access to
      information about the Company and third parties which is confidential in
      nature. You agree that you will not disclose any such information to any
      other person or entity, nor shall you use such information for any purpose
      other than the performance of your duties with the Company.

6.    Miscellaneous. The agreements set forth in this letter are personal, and
      your rights set forth above may not be transferred or assigned by you
      without the Company's prior written consent. This letter agreement
      represents the entire agreement between you and the Company concerning
      your consulting and supersedes all prior negotiations and agreements,
      whether written or oral, relating to your engagement.

      This letter agreement may not be amended or waived unless pursuant to a
      writing signed by you and an officer of the Company. No waiver or any term
      of this letter agreement or of any breach of any condition or provision to
      be performed under this letter agreement shall be deemed a waiver or a
      similar or dissimilar condition or provision at the same time, any prior
      time or any subsequent time.

      You will bear full and complete liability for the payment of all
      applicable income, payroll, withholding and other taxes and deductions
      required to be paid on account of amounts received by you pursuant to this
      Agreement by any law, rule or regulation of any federal, state or local
      authority.

      The laws of the State of New York shall govern the interpretation,
      validity and performance of the terms of this letter agreement, without
      reference to conflicts of laws rules.

      You agree that you are an independent contractor to, and not an employee
      or agent of, the Company, and that you do not have any authority or right
      to enter into any agreements or binding obligations on behalf of the
      Company.
<PAGE>

Stefan Capital, LLC
As of September 9, 1999
Page 3

      To acknowledge your agreement to the terms of your engagement set forth
above, please sign a copy of this letter where indicated and return it to me at
your earliest convenience. We look forward to working with you.

                                Very truly yours,

                                SIGA PHARMACEUTICALS, INC.

                                By: [ILLEGIBLE]
                                   -----------------------------
                                    An authorized officer
                                    Chairman

ACCEPTED AND AGREED AS OF
THE DATE FIRST WRITTEN ABOVE

STEFAN CAPITAL, LLC

By: /s/ Jeffrey Rubin
   ------------------------------
   Jeffrey Rubin, Managing Member[STEFAN CAPITAL WARRANTS]

                                WARRANT AGREEMENT

      WARRANT AGREEMENT, dated as of September 9, 1999, between SIGA
PHARMACEUTICALS, INC, a Delaware corporation (the "Company"), and Stefan
Capital, LLC ("Holder").

                              W I T N E S S E T H:

      WHEREAS, Holder, in connection with and consideration for its provision of
financial advisory consulting services pursuant to a Consulting Agreement dated
as of the date hereof between the Company and Holder, shall be issued warrants
(the "Warrants") to purchase an aggregate of 100,000 shares of Common Stock of
the Company ("Shares") at an exercise price of $1.00 per Share.

      NOW, THEREFORE, in consideration of the premises herein set forth and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

      1. Issue. The Company hereby issues to Holder a certificate (the "Warrant
Certificate") dated as of the date hereof providing Holder with the right to
purchase 100,000 Shares (subject to adjustment as provided in Section 8 hereof)
at an initial exercise price (subject to adjustment as provided in Section 8
hereof) equal to $1.00 per Share (collectively, all of such shares shall be
referred to herein as the "Warrant Shares").

      2. Warrant Certificate. The Warrant Certificate to be delivered pursuant
to this Agreement shall be in the form set forth in Exhibit X, attached hereto
and made a part hereof, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Agreement.

      3. Exercisability of Warrants. Fifty thousand (50,000) Warrants granted
hereunder shall be exercisable commencing on the first anniversary of the date
hereof and the remaining fifty thousand (50,000) Warrants shall be exercisable
on the second anniversary of the date hereof provided, however, that in the
event of a sale of all, or substantially all, of the assets or capital stock of
the Company or the licensing of all or substantially all of the Company's
technology, then, upon the occurrence of such event, the Warrants shall all
become exercisable immediately. All Warrants must be exercised on or prior to
5:30 p.m., New York time, on September 9, 2004.

      4. Procedure for Exercise Warrants.

      4.1 Cash Exercise. The Warrants are exercisable at an aggregate initial
exercise price per Share set forth in Section 7 hereof payable by certified
check or official bank check in New York Clearing House funds. Upon surrender of
a Warrant Certificate with the annexed Form of Election to Purchase duly
executed, together with payment of the Exercise Price (as hereinafter defined)
for
<PAGE>

the Warrant Shares purchased, at the Company's principal offices in New York
(presently located at 420 Lexington Avenue, Suite 620, New York, NY 10170).
Holder shall be entitled to receive a certificate for the Warrant Shares so
purchased. The purchase rights represented by the Warrant Certificate are
exercisable at the option of the Holder thereof, in whole or in part (but not as
to fractional Shares underlying the Warrants). In the case of the purchase of
less than all the Warrant Shares purchasable under the Warrant Certificate, the
Company shall cancel said Warrant Certificate upon the surrender thereof and
shall execute and deliver a new Warrant Certificate of like tenor for the
balance of the Warrant Shares purchasable thereunder.

      4.2 Cashless Exercise. In addition to the exercise of all or a portion of
the Warrants by the payment of the Exercise Price in cash or check as set forth
in Section 4.1 above, and in lieu of any such payment, the Holder has the right
to exercise the Warrants, in full or in part, by surrendering the Warrant
Certificate with the annexed Form of Election to Purchase duly executed, in
exchange for the number of Shares equal to the product of (x) the number of
Shares as to which the Warrants are being exercised multiplied by (y) a
fraction, the numerator of which is the Current Market Price of the Shares (as
defined below) less the Exercise Price then in effect and the denominator of
which is the Current Market Price.

      4.3 Current Market Price. The term "Current Market Price" shall mean (i)
if the Shares are traded in the over-the-counter market or on the National
Association of Securities Dealers, Inc. Automated Quotations System ("NASDAQ"),
the average per Share closing bid prices on the 5 consecutive trading days
immediately preceding the date of exercise, as reported by NASDAQ or an
equivalent generally accepted reporting service, or (ii) if the Shares are
traded on a national securities exchange, the average for the 20 consecutive
trading days immediately preceding the exercise date of the daily per Share
closing prices on the principal stock exchange on which the Shares are listed,
as the case may be. The closing price referred to in clause (ii) above shall be
the last reported sales price or, if no such reported sale takes place on such
day, the average of the reported closing bid and asked prices, in either case on
the national securities exchange on which the Shares are then listed.

      5. Issuance of Certificate. Upon the exercise of the Warrants, the
issuance of a certificate for Warrant Shares shall be made forthwith (and in any
event within five (5) business days thereafter) without charge to the Holder
thereof including, without limitation, any tax which may be payable in respect
of the issuance thereof, and such certificate shall (subject to the provisions
of Sections 6 and 8 hereof) be issued in the name of, or in such names as may be
directed by, the Holder thereof; provided, however, that the Company shall not
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificate in a name other
than that of the Holder and the Company shall not be required to issue or
deliver such certificate unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.

      The Warrant Certificate and the certificate representing the Warrant
Shares shall be executed on behalf of the Company by the manual or facsimile
signature of the then present Chairman or Vice

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<PAGE>

Chairman of the Board of Directors or President or any Vice President of the
Company under its corporate seal reproduced thereon, attested to by the manual
or facsimile signature of the then present Secretary or any Assistant Secretary
of the Company. The Warrant Certificate shall be dated the date of execution by
the Company upon initial issuance, division, exchange, substitution or transfer.

      6. Transfer of Warrants. The Holder of the Warrant Certificate, by its
acceptance thereof, covenants and agrees that the Warrants are being acquired as
an investment and not with a view to the distribution thereof. The Warrants may
be sold, transferred, assigned, hypothecated or otherwise disposed of, in whole
or in part, without restriction, subject to compliance with applicable
securities laws.

      7. Exercise Price.

      7.1 Initial and Adjusted Exercise Price. Except as otherwise provided in
Section 7 hereof, the initial exercise price of each Warrant shall be the price
set forth in Section 1 hereof per Warrant Shares issued thereunder. The adjusted
exercise price shall be the price which shall result from time to time from any
and all adjustments of the initial exercise price in accordance with the
provisions of Section 9 hereof.

      7.2 Exercise Price. The term "Exercise Price" herein shall mean the
initial exercise price or the adjusted exercise price, depending upon the
context.

      8. Registration Under the Securities Act of 1933. Subject to the
Registration Rights Agreement between the Company and the Holder dated as of the
date hereof, the Warrants, the Warrant Shares and any of the Other Securities
issuable upon exercise of the Warrants have not been registered under the
Securities Act of 1933, as amended (the "Act"). Upon exercise, in whole or in
part, of the Warrants, a certificate representing the Warrant Shares underlying
the Warrants, and any of the Other Securities issuable upon exercise of the
Warrants (collectively, the "Warrant Securities") shall bear the following
legend unless such Warrant Shares previously have been registered under the Act
in accordance with the terms hereof.

      THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT") AND MAY NOT BE
      OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT
      UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR
      ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES),
      OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY
      SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION
      UNDER THE ACT IS AVAILABLE.

      9. Adjustments to Exercise Price and Number of Securities The Exercise
Price and, in some cases, the number of Warrant Shares purchasable upon the
exercise of the Warrants, shall be subject
<PAGE>

to adjustment from time to time Upon the occurrence of certain events described
in this Section 9.

      9.1 Subdivision or Combination of Shares and Share Dividend. In case the
Company shall at any time subdivide its outstanding Shares into a greater number
of Shares or declare a dividend upon its Shares payable solely in Shares, the
Exercise Price in effect immediately prior to such subdivision or declaration
shall be proportionately reduced, and the number of Warrant Shares issuable upon
exercise of the Warrants shall be proportionately increased. Conversely, in case
the outstanding Shares of the Company shall be combined into a smaller number of
Shares, the Exercise Price in effect immediately prior to such combination shall
be proportionately increased, and the number of Warrant Shares issuable upon
exercise of the Warrants shall be proportionately reduced.

      9.2 Dilutive Issuances. In the event that the Company shall sell or issue
at any time after the date of this Warrant and prior to its termination, Shares
(other than Excluded Shares, as defined in Section 9.2.5) at a consideration per
Share less than the Exercise Price then in effect, then the Exercise Price shall
be adjusted to a new Exercise Price (calculated to the nearest cent) determined
by dividing

                  (a) an amount equal to (i) the total number of Shares
            Outstanding (as defined below and subject to adjustment in the
            manner set forth in Section 9.1) on the date of issuance of this
            Warrant multiplied by the Exercise Price in effect on the date of
            issuance of this Warrant (subject, however, to adjustment in the
            manner set forth in Section 9.1), plus (ii) the aggregate of the
            amount of all consideration, if any, received by the Company for the
            issuance or sale of Shares since the date of issuance of this
            Warrant, by

                  (b) the total number of Shares Outstanding immediately after
            such issuance or sale.

In no event shall any such adjustment be made pursuant to this Section 9.2 if it
would increase the Exercise Price in effect immediately prior to such
adjustment, except as provided in Sections 9.2.3 and 9.2.4. Upon each adjustment
of the Exercise Price pursuant to this Section 9.2, the holder of this Warrant
shall thereafter be entitled to purchase, at the Exercise Price resulting from
such adjustment, the number of Warrant Shares obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Shares purchasable pursuant hereto immediately prior to such adjustment,
and dividing the product thereof by the Exercise Price resulting from such
adjustment.

                  9.2.1 Definitions. For purposes of this Section 9.2, the
following definitions shall apply:

                  (a) "Convertible Securities" shall mean any indebtedness or
securities convertible into or exchangeable for Shares.

                                        4
<PAGE>

                  (b) "Options" shall mean any rights, warrants or options to
subscribe for or purchase Shares or Convertible Securities other than rights,
warrants or options to purchase Excluded Securities (as defined in Section
9.2.5).

                  (c) "Shares Outstanding" shall mean the aggregate of all
Shares outstanding and all Shares issuable upon exercise of all outstanding
Options and conversion of all outstanding Convertible Securities.

                  9.2.2 For the purposes of this Section 9.2, the following
provisions shall also be applicable:

                  9.2.2.1 Cash Consideration. In case of the issuance or sale of
      additional Shares for cash, the consideration received by the Company
      therefor shall be deemed to be the amount of cash received by the Company
      for such Shares (or, if such Shares are offered by the Company for
      subscription, the subscription price, or, if such Shares are sold to
      underwriters or dealers for public offering without a subscription
      offering, the public offering price), without deducting therefrom any
      compensation or discount paid or allowed to underwriters or dealers or
      others performing similar services or for any expenses incurred in
      connection therewith.

                  9.2.2.2 Non-Cash Consideration. In case of the issuance
      (otherwise than upon conversion or exchange of Convertible Securities) or
      sale of additional Shares, Options or Convertible Securities for a
      consideration other than cash or a consideration a part of which shall be
      other than cash, the fair value of such consideration as determined by the
      Board of Directors (if any, otherwise by the Managers) of the Company in
      the good faith exercise of its business judgment, irrespective of the
      accounting treatment thereof, shall be deemed to be the value, for
      purposes of this Section 9, of the consideration other than cash received
      by the Company for such securities.

                  9.2.2.3 Options and Convertible Securities. In case the
      Company shall in any manner issue or grant any Options or any Convertible
      Securities, the total maximum number of Shares of issuable upon the
      exercise of such Options or upon conversion or exchange of the total
      maximum amount of such Convertible Securities at the time such Convertible
      Securities first become convertible or exchangeable shall (as of the date
      of issue or grant of such Options or, in the case of the issue or sale of
      Convertible Securities other than where the same are issuable upon the
      exercise of Options, as of the date of such issue or sale) be deemed to be
      issued and to be outstanding for the purpose of this Section 9.2 and to
      have been issued for the sum of the amount (if any) paid for such Options
      or Convertible Securities and the amount (if any) payable upon the
      exercise of such Options or upon conversion or exchange of such
      Convertible Securities at the time such Convertible Securities first
      become convertible or exchangeable; provided that, subject to the
      provisions of Section 9.2.3, no further adjustment of the Exercise Price
      shall be made upon the actual issuance of any such

                                        5
<PAGE>

       Shares or Convertible Securities or upon the conversion or exchange of
       any such Convertible Securities.

                  9.2.3 Change in Option Price or Conversion Rate. In the event
that the purchase price provided for in any Option referred to in subsection
9.2.2.3, or the rate at which any Convertible Securities referred to in
subsection 9.2.2.3 are convertible into or exchangeable for Shares shall change
at any time (other than under or by reason of provisions designed to protect
against dilution), then, for purposes of any adjustment required by Section 9.2,
the Exercise Price in effect at the time of such event shall forthwith be
readjusted to the Exercise Price that would have been in effect at such time had
such Options or Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or conversion rate, as the case
may be, at the time initially granted, issued or sold, provided that if such
readjustment is an increase in the Exercise Price, such readjustment shall not
exceed the amount (as adjusted by Sections 9.1 and 9.2) by which the Exercise
Price was decreased pursuant to Section 9.2 upon the issuance of the Option or
Convertible Security. In the event that the purchase price provided for in any
such Option referred to in subsection 9.2.2.3, or the additional consideration
(if any) payable upon the conversion or exchange of any Convertible Securities
referred to in subsection 9.2.2.3, or the rate at which any Convertible
Securities referred to in subsection 9.2.2.3 are convertible into or
exchangeable for Shares, shall be reduced at any time under or by reason of
provisions with respect thereto designed to protect against dilution, then in
case of the delivery of Shares upon the exercise of any such Option or upon
conversion or exchange of any such Convertible Security; the Exercise Price then
in effect hereunder shall, upon issuance of such Shares, be adjusted to such
amount as would have obtained had such Option or Convertible Security never been
issued and had adjustments been made only upon the issuance of the Shares
delivered as aforesaid and for the consideration actually received for such
Option or Convertible Security and the Shares, provided that if such
readjustment is an increase in the Exercise Price, such readjustment shall not
exceed the amount (as adjusted by Sections 9 1 and 9.2) by which the Exercise
Price was decreased pursuant to Section 9.2 upon the issuance of the Option or
Convertible Security.

                  9.2.4 Termination Of Option or Conversion Rights, In the event
of the termination or expiration of any right to purchase Shares under any
Option granted after the date of this Warrant or of any right to convert or
exchange Convertible Securities issued after the date of this Warrant, the
Exercise Price shall, upon such termination, be readjusted to the Exercise Price
that would have been in effect at the time of such expiration or termination had
such Option or Convertible Security, to the extent outstanding immediately prior
to such expiration or termination, never been issued, and the Shares issuable
thereunder shall no longer be deemed to be Shares Outstanding, provided that if
such readjustment is an increase in the Exercise Price, such readjustment shall
not exceed the amount (as adjusted by Sections 9.1 and 9.2) by which the
Exercise Price was decreased pursuant to Section 9.2 upon the issuance of the
Option or Convertible Security. The termination or expiration of any right to
purchase Shares under any Option granted prior to the date of this Warrant or of
any right to convert or exchange Convertible Securities issued prior to the date
of this Warrant shall not trigger any adjustment to the Exercise Price, but the
Shares issuable under such Options or Convertible Securities shall no longer be
counted in determining the number of

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<PAGE>

Shares Outstanding on the date of issuance of this Warrant for purposes of
subsequent calculations under this Section 9.2.

                  9.2.5 Excluded Shares. Notwithstanding anything herein to the
contrary, the Exercise Price shall not be adjusted pursuant to this Section 9,2
by virtue of the issuance and/or sale of Excluded Shares, which shall mean the
following: (a) Shares issuable upon the exercise of the Warrants; (b) Shares,
Options or Convertible Securities to be issued and/or sold to employees,
advisors (including, without limitation, financial, technical and legal
advisers), directors, or officers or consultants to, the Company or any of its
subsidiaries pursuant to a share grant, share option plan, share purchase plan,
pension or profit sharing plan or other share agreement or arrangement existing
as of the date hereof or approved by the Company's Board of Directors; (c) the
issuance of Shares, Options and/or Convertible Securities pursuant to Options
and Convertible Securities outstanding as of the date of this Warrant; and (d)
the issuance of Shares, Options or Convertible Securities as a share dividend or
upon any subdivision or combination of Shares or Convertible Securities (for
which appropriate adjustments are to be made pursuant to Section 9.1 hereof).
For all purposes of this Section 9.2, all Shares of Excluded Shares shall be
deemed to have been issued for an amount of consideration per Share equal to the
initial Exercise Price (subject to adjustment in the manner set forth in Section
9.1). In addition, if the amount of any adjustment pursuant to this Section 9
shall be less than two cents (2 (cents)) per Warrant Share no adjustment to the
Exercise Price or to the number of Warrant Shares issuable upon the exercise of
the Warrants shall be made; provided, however, that in such case any adjustment
that would otherwise be required then to be made shall be carried forward and
shall be made at the time of and together with the next subsequent adjustment
which, together with any adjustment so carried forward, shall amount to at least
two cents (2 (cents)) per Warrant Share.

      9.3 Notice of Adjustment. Promptly after adjustment of the Exercise Price
or any increase or decrease in the number of Warrant Shares purchasable upon the
exercise of this Warrant, the Company shall give written notice thereof, by
first class mail, postage prepaid, addressed to the registered holder of this
Warrant at the address of such holder as shown on the books of the Company. The
notice shall be signed by the Company's chief financial officer and shall state
(i) the effective date of the adjustment and the Exercise Price resulting from
such adjustment and (ii) the increase or decrease, if any, in the number of
Shares purchasable at such price upon the exercise of this Warrant, setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based.

      9.4 Other Notices. If at any time:

            (a) the Company shall declare any cash dividend upon its Shares;

            (b) the Company shall declare any dividend upon its Shares payable
in securities (other than a dividend payable solely in Shares) or make any
special dividend or other distribution to the holders of its Shares;

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<PAGE>

            (c) there shall be any consolidation or merger of the Company with
another corporation, or a sale of all or substantially all of the Company's
assets to another corporation; or

            (d) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;

then, in any one or more of said cases, the Company shall give, by certified or
registered mail, postage prepaid, addressed to the registered holder of this
Warrant at the address of such holder as shown on the books of the Company, (i)
at least 15 days' prior written notice of the date on which the books of the
Company shall close or a record shall be taken for such dividend, distribution
or subscription rights or for determining rights to vote in respect of any such
dissolution, liquidation or winding-up; (ii) at least 10 days' prior written
notice of the date on which the books of the Company shall close or a record
shall be taken for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger or sale, and (iii) in
the case of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up, at least 15 days' written notice
of the date when the same shall take place. Any notice given in accordance with
clause (i) above shall also specify, in the case of any such dividend,
distribution or option rights, the date on which the holders of Shares shall be
entitled thereto. Any notice given in accordance with clause (iii) above shall
also specify the date on which the holders of Shares shall be entitled to
exchange their Shares for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, as the case may be. If the Holder of the Warrant does
not exercise this Warrant prior to the occurrence of an event described above,
except as provided in Sections 9.1 and 9.5, the Holder shall not be entitled to
receive the benefits accruing to existing holders of the Shares in such event.

      9.5 Changes in Shares. In case at any time the Company shall be a party to
any transaction (including, without limitation, a merger, consolidation, sale of
all or substantially all of the Company's assets or recapitalization of the
Shares) in which the previously outstanding Shares shall be changed into or
exchanged for different securities of the Company or common stock or other
securities of another corporation or interests in a non-corporate entity or
other property (including cash) or any combination of any of the foregoing (each
such transaction being herein called the "Transaction" and the date of
consummation of the Transaction being herein called the "Consummation Date"),
then, as a condition of the consummation of the Transaction, lawful and adequate
provisions shall be made so that each Holder, upon the exercise hereof at any
time on or after the Consummation Date, shall be entitled to receive, and this
Warrant shall thereafter represent the right to receive, in lieu of the Shares
issuable upon such exercise prior to the Consummation Date, the highest amount
of securities or other property to which such Holder would actually have been
entitled as a shareholder upon the consummation of the Transaction if such
Holder had exercised such Warrant immediately prior thereto. The provisions of
this Section 9.5 shall similarly apply to successive Transactions.

      10. Exchange and Replacement of Warrant Certificate. The Warrant
Certificate is exchangeable without expense, upon the surrender thereof by the
registered Holder at the principal executive office of the Company, for a new
Warrant Certificate of like tenor and date representing

                                        8
<PAGE>

in the aggregate the right to purchase the same number of Warrant Shares in such
denominations as shall be designated by the Holder thereof at the time of such
surrender.

      Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of the Warrant Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.

      11. Elimination of Fractional Interests. The Company shall not be required
to issue certificates representing fractions of Shares upon the exercise of the
Warrants, nor shall it be required to issue scrip or pay cash in lieu of
fractional interests, it being the intent of the parties that all fractional
interests shall be eliminated by rounding any fraction up to the nearest whole
number of Shares or Other Securities.

      12. Reservation of Securities. The Company shall at all times reserve and
keep available out of its authorized Shares, solely for the purpose of issuance
upon the exercise of the Warrants, such number of Shares or Other Securities as
shall be issuable upon the exercise thereof. The Company covenants and agrees
that, upon exercise of the Warrants and payment of the Exercise Price therefor,
all Shares or Other Securities issuable upon such exercise shall be duly and
validly issued, fully paid, non-assessable and not subject to the preemptive
rights of any shareholder.

      13. Notices to Warrant Holder. Except as otherwise provided in Section
9.4, nothing contained in this Agreement shall be construed as conferring upon
the Holder by virtue of his holding the Warrant the right to vote or to consent
or to receive notice as a shareholder in respect of any meetings of shareholders
for the election of directors or any other matter, or as having any rights
whatsoever as a shareholder of the Company.

      14. Notices.

      All notices, requests, consents and other communications hereunder shall
be in writing and shall be deemed to have been duly made and sent when
delivered, or mailed by registered or certified mail, return receipt requested:

            (a) If to the registered Holder of the Warrants, to the address of
      such Holder as shown on the books of the Company; or

            (b) If to the Company, to the address set forth in Section 4 hereof
      or to such other address as the Company may designate by notice to the
      Holder.

      15. Supplements and Amendments. The Company and Holder may from time to
time supplement or amend this Agreement in order to cure any ambiguity, to
correct or supplement any provision contained herein which may be defective or
inconsistent with any provisions herein, or to

                                        9
<PAGE>

make any other provisions in regard to matters or questions arising hereunder
which the Company and Holder may deem necessary or desirable.

      16. Successors. All the covenants and provisions of this Agreement shall
be binding upon and inure to the benefit of the Company, the Holder and their
respective successors and assigns hereunder. Any reference herein to the
"Company" shall include any corporation which is a successor to the limited
liability company structure currently used by the Company.

      17. Termination. This Agreement shall terminate at the close of business
on the tenth anniversary of the issuance of the Warrants.

      18. Governing Law. This Agreement and the Warrant Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
New York and for all purposes shall be construed in accordance with the laws of
the State of New York without giving effect to the rules of the State of New
York governing the conflicts of laws.

      19. Entire Agreement; Modification. This Agreement, including all exhibits
hereto, and a certain Registration Rights Agreement dated the date hereof
between the parties hereto, contains the entire understanding between the
parties hereto with respect to the subject matter hereof and may not be modified
or amended except by a writing duly signed by the party against whom enforcement
of the modification or amendment is sought.

      20. Severability. If any provision of this Agreement shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision of this Agreement.

      21. Captions. The caption headings of the Sections of this Agreement are
for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.

      22. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and Holder
any legal or equitable right, remedy or claim under this Agreement; and this
Agreement shall be for the sole and exclusive benefit of the Company and Holder.

                                       10
<PAGE>

      23.Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.

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

                                     SIGA PHARMACEUTICALS, INC

                                     By: /s/ Jason Cooper
                                         ----------------------------
                                         Name: Jason Cooper
                                         Title: Chairman

                                     STEFAN CAPITAL, LLC

                                     By: /s/ Jeffrey Rubin
                                         ----------------------------
                                             Jeffrey Rubin
                                             Managing Member

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