Document:

Exhibit 10.1 Agreement and Plan of Merger

    
      

    

     

                                                                                            Exhibit
      10.1

    

    

     

     

    
 

    

    

    ___________________________________________________

    

     

    AGREEMENT
      AND PLAN OF MERGER 

    

    Dated
      as of June 8, 2006

    

    among

    

    SIGA
      TECHNOLOGIES, INC.,

    

    SIGA
      ACQUISITION CORP.

    

    AND

    

    PHARMATHENE,
      INC.

    

    ___________________________________________________

    

     

     

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

          

        

      

    

     

     

    
      TABLE
        OF CONTENTS

      

       

      
        	ARTICLE
                I THE MERGER  	1
	 	 	 
	
                1.1

              	
                The
                  Merger.

              	
                1

              
	
                1.2

              	
                Effect
                  of Merger.

              	
                2

              
	
                1.3

              	
                Certificate
                  of Incorporation and By-Laws.

              	
                2

              
	
                1.4

              	
                Effective
                  Time of Merger.

              	
                2

              
	
                1.5

              	
                Surviving
                  Corporation Directors and Officers.

              	
                2

              
	
                1.6

              	
                Withholding
                  Rights.

              	
                2

              
	
                1.7

              	
                Taking
                  of Necessary Action; Further Action.

              	
                3

              

      

       

      
        	
                ARTICLE
                  II MERGER CONSIDERATION AND CONVERSION OF SHARES

              	
                3

              
	 	 	 
	
                2.1

              	
                Merger
                  Sub Common Stock.

              	
                3

              
	
                2.2

              	
                Merger
                  Consideration.

              	
                3

              
	
                2.3

              	
                SIGA
                  Common Stock.

              	
                5

              

      

       

      
        	
                ARTICLE
                  III DISSENTING SHARES; EXCHANGE OF CERTIFICATES

              	
                6

              
	 	 	 
	
                3.1

              	
                Dissenting
                  Shares.

              	
                6

              
	
                3.2

              	
                Exchange
                  of Shares.

              	
                6

              
	
                3.3

              	
                Dividends
                  and Other Distributions.

              	
                7

              
	
                3.4

              	
                Pharmathene
                  Stock Transfer Ledger.

              	
                7

              
	
                3.5

              	
                Termination
                  of Exchange Agency.

              	
                8

              

      

       

      
        	
                ARTICLE
                  IV CLOSING

              	
                8

              
	 	 	 
	
                4.1

              	
                Time
                  and Place of Closing.

              	
                8

              
	
                4.2

              	
                Certificate
                  of Merger.

              	
                8

              

      

       

      
        	
                ARTICLE
                  V REPRESENTATIONS AND WARRANTIES OF PHARMATHENE

              	
                9

              
	 	 	 
	
                5.1

              	
                Incorporation.

              	
                9

              
	
                5.2

              	
                Authorization.

              	
                10

              
	
                5.3

              	
                Conflicts.

              	
                10

              
	
                5.4

              	
                Capitalization.

              	
                10

              
	
                5.5

              	
                Subsidiaries.

              	
                11

              
	
                5.6

              	
                Disputes
                  and Litigation.

              	
                12

              
	
                5.7

              	
                Financial
                  Statements.

              	
                12

              
	
                5.8

              	
                Absence
                  of Undisclosed Liabilities.

              	
                13

              
	
                5.9

              	
                Absence
                  of Certain Changes.

              	
                14

              
	
                5.10

              	
                Intellectual
                  Property.

              	
                16

              
	
                5.11

              	
                Taxes.

              	
                19

              
	
                5.12

              	
                Title.

              	
                20

              
	
                5.13

              	
                Real
                  Estate and Leases.

              	
                20

              
	
                5.14

              	
                Contractual
                  and Other Obligations.

              	
                21

              
	
                5.15

              	
                Compensation.

              	
                22

              
	
                5.16

              	
                Employee
                  Benefit Plans.

              	
                22

              

      

       

       

      i

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      
        	
                5.17

              	
                Labor
                  Relations.

              	
                25

              
	
                5.18

              	
                Transactions
                  with Affiliated Persons.

              	
                25

              
	
                5.19

              	
                Insurance.

              	
                26

              
	
                5.20

              	
                Licenses;
                  Franchises; Rights.

              	
                26

              
	
                5.21

              	
                Environmental
                  Matters.

              	
                26

              
	
                5.22

              	
                Food
                  And Drug Administration Matters.

              	
                28

              
	
                5.23

              	
                Brokers
                  and Finders.

              	
                29

              
	
                5.24

              	
                Absence
                  of Certain Business Practices.

              	
                29

              
	
                5.25

              	
                Restrictions
                  on Business Activities.

              	
                30

              
	
                5.26

              	
                Section
                  203 of GCL Not Applicable.

              	
                30

              
	
                5.27

              	
                Books
                  and Records.

              	
                30

              
	
                5.28

              	
                Disclosure.

              	
                30

              

      

       

      
        	
                ARTICLE
                  VI REPRESENTATIONS AND WARRANTIES OF SIGA AND MERGER
                  SUB

              	
                31

              
	 	 	 
	
                6.2

              	
                Authorization.

              	
                31

              
	
                6.3

              	
                Conflicts.

              	
                32

              
	
                6.4

              	
                Capitalization.

              	
                32

              
	
                6.5

              	
                Subsidiaries.

              	
                33

              
	
                6.6

              	
                Disputes
                  and Litigation.

              	
                34

              
	
                6.7

              	
                Financial
                  Statements and SEC Filings.

              	
                34

              
	
                6.8

              	
                Absence
                  of Undisclosed Liabilities.

              	
                36

              
	
                6.9

              	
                Absence
                  of Certain Changes.

              	
                36

              
	
                6.10

              	
                Intellectual
                  Property.

              	
                38

              
	
                6.11

              	
                Taxes.

              	
                40

              
	
                6.12

              	
                Title.

              	
                41

              
	
                6.13

              	
                Real
                  Estate and Leases.

              	
                41

              
	
                6.14

              	
                Contractual
                  and Other Obligations.

              	
                42

              
	
                6.15

              	
                Compensation.

              	
                43

              
	
                6.16

              	
                Employee
                  Benefit Plans.

              	
                43

              
	
                6.17

              	
                Labor
                  Relations.

              	
                46

              
	
                6.18

              	
                Transactions
                  with Affiliated Persons.

              	
                46

              
	
                6.19

              	
                Insurance.

              	
                46

              
	
                6.20

              	
                Licenses;
                  Franchises; Rights.

              	
                47

              
	
                6.21

              	
                Environmental
                  Matters.

              	
                47

              
	
                6.22

              	
                Food
                  And Drug Administration Matters.

              	
                48

              
	
                6.23

              	
                Brokers
                  and Finders.

              	
                49

              
	
                6.24

              	
                Voting
                  Agreement

              	
                49

              
	
                6.25

              	
                Fairness
                  Opinion

              	
                49

              
	
                6.26

              	
                Section
                  203 of GCL Not Applicable.

              	
                49

              
	
                6.27

              	
                Valid
                  Issuance.

              	
                49

              
	
                6.28

              	
                Absence
                  of Certain Business Practices.

              	
                50

              
	
                6.29

              	
                Restrictions
                  on Business Activities.

              	
                50

              

      

       

      ii

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      
        	6.30 	Nasdaq. 	50 
	
                6.31

              	
                Books
                  and Records.

              	
                50

              
	
                6.32

              	
                Validity
                  of Shares.

              	
                50

              

      

       

      
        	
                ARTICLE
                  VII CERTAIN COVENANTS

              	
                51

              
	 	 	 
	
                7.1

              	
                SIGA
                  Stockholders’ Meeting; Preparation of Proxy Statement.

              	
                51

              
	
                7.2

              	
                SIGA
                  Board of Directors.

              	
                52

              
	
                7.3

              	
                SIGA
                  Officers.

              	
                52

              
	
                7.4

              	
                Preparation
                  of Information Statement.

              	
                52

              
	
                7.5

              	
                Governmental
                  and Judicial Filings.

              	
                52

              
	
                7.6

              	
                Access
                  to Information.

              	
                53

              
	
                7.7

              	
                Ordinary
                  Course of Pharmathene.

              	
                53

              
	
                7.8

              	
                Conduct
                  of Pharmathene Business.

              	
                53

              
	
                7.9

              	
                Ordinary
                  Course of SIGA.

              	
                55

              
	
                7.10

              	
                Conduct
                  of SIGA Business.

              	
                56

              
	
                7.11

              	
                Notification
                  of Certain Matters.

              	
                58

              
	
                7.12

              	
                SEC
                  Filings.

              	
                58

              
	
                7.13

              	
                Forbearance
                  and Fiduciary Duties.

              	
                59

              
	
                7.14

              	
                Additional
                  Agreements.

              	
                61

              
	
                7.15

              	
                PIPE.

              	
                61

              
	
                7.16

              	
                Name
                  and Nasdaq Symbol Change.

              	
                61

              
	
                7.17

              	
                Tax
                  Treatment

              	
                61

              
	
                7.18

              	
                Registration
                  Rights Agreement.

              	
                62

              
	
                7.19

              	
                Stockholders
                  Agreement.

              	
                62

              
	
                7.20

              	
                SIGA
                  Board Approval.

              	
                62

              

      

       

      
        	
                ARTICLE
                  VIII PUBLICITY

              	62 
	 	 	 
	
                8.1

              	
                Publicity.

              	
                62

              

      

       

      
        	
                ARTICLE
                  IX CONDITIONS TO OBLIGATIONS OF EACH PARTY

              	
                63

              
	 	 	 
	
                9.1

              	
                Merger
                  Approval.

              	
                63

              
	
                9.2

              	
                Amendments
                  to SIGA’s Certificate of Incorporation.

              	
                63

              
	
                9.3

              	
                No
                  Prohibition on Consummation.

              	
                63

              
	
                9.4

              	
                Financing.

              	
                63

              
	
                9.5

              	
                Litigation.

              	
                63

              
	
                9.6

              	
                Stockholders
                  Agreement.

              	
                64

              
	
                9.7

              	
                Pharmathene
                  Stockholders.

              	
                64

              

      

       

      
        	
                ARTICLE
                  X CONDITIONS TO OBLIGATIONS OF PHARMATHENE

              	
                64

              
	 	 	 
	
                10.1

              	
                Opinion
                  of Counsel for SIGA and Merger Sub.

              	
                64

              
	
                10.2

              	
                Representations;
                  Warranties; Covenants.

              	
                64

              
	
                10.3

              	
                No
                  Material Adverse Change.

              	
                65

              
	
                10.4

              	
                Secretary’s
                  Certificate.

              	
                65

              
	
                10.5

              	
                Third
                  Party Consents.

              	
                65

              
	
                10.6

              	
                Other
                  Certificates.

              	
                65

              
	
                10.7

              	
                Lock-Up
                  Agreement.

              	
                65

              

      

       

      iii

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      
        	
                 

              	 	 
	
                10.8

              	
                Resignations.

              	
                65

              
	
                10.9

              	
                Directors.

              	
                65

              
	
                10.10

              	
                Stock
                  Option Plan Amendment.

              	
                66

              
	
                10.11

              	
                Registration
                  Rights Agreement

              	
                66

              
	
                10.12

              	
                Amendment
                  to SIGA Charter

              	
                66

              
	
                10.13

              	
                Termination
                  of Agreements.

              	
                66

              
	
                10.14

              	
                Waiver
                  of Anti-Dilution Rights.

              	
                66

              
	 	 
	
                ARTICLE
                  XI CONDITIONS TO OBLIGATIONS OF SIGA AND MERGER
                  SUB

              	
                66

              
	 	 	 
	
                11.1

              	
                Opinion
                  of Counsel for Pharmathene.

              	
                66

              
	
                11.2

              	
                Representations:
                  Warranties; Covenants.

              	
                66

              
	
                11.3

              	
                No
                  Material Adverse Change.

              	
                67

              
	
                11.4

              	
                Secretary’s
                  Certificate.

              	
                67

              
	
                11.5

              	
                Third
                  Party Consents.

              	
                67

              
	
                11.6

              	
                Other
                  Certificates.

              	
                67

              
	
                11.7

              	
                Lock-Up
                  Agreement.

              	
                67

              
	
                11.8

              	
                Stockholders
                  Agreement.

              	
                67

              
	
                11.9

              	
                Investor
                  Questionnaires.

              	
                68

              

      

       

      
        	
                ARTICLE
                  XII TERMINATION

              	
                68

              
	 	 	 
	
                12.1

              	
                Termination.

              	
                68

              
	
                12.2

              	
                Termination
                  Fee.

              	
                69

              
	
                12.3

              	
                License
                  Agreement

              	
                69

              
	
                12.4

              	
                Effect
                  of Termination.

              	
                69

              

      

       

      
        	
                ARTICLE
                  XIII MISCELLANEOUS

              	
                70

              
	 	 	 
	
                13.1

              	
                Notices.

              	
                70

              
	
                13.2

              	
                Entire
                  Agreement.

              	
                71

              
	
                13.3

              	
                Further
                  Action.

              	
                71

              
	
                13.4

              	
                Expenses.

              	
                71

              
	
                13.5

              	
                Governing
                  Law.

              	
                71

              
	
                13.6

              	
                Captions.

              	
                71

              
	
                13.7

              	
                Accounting
                  Terms.

              	
                71

              
	
                13.8

              	
                Assignment.

              	
                71

              
	
                13.9

              	
                No
                  Third Party Beneficiary.

              	
                72

              
	
                13.10

              	
                Partial
                  Invalidity.

              	
                72

              
	
                13.11

              	
                Counterparts.

              	
                72

              
	
                13.12

              	
                Directors
                  and Officers Insurance.

              	
                72

              
	
                13.13

              	
                Nasdaq.

              	
                73

              

      

    

     

     

    iv

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

          

        

      

    

    AGREEMENT
      AND PLAN OF MERGER

     

    AGREEMENT
      AND PLAN OF MERGER
      dated as
      of this 8th day of June, 2006 (hereinafter referred to as the “Agreement”),
      by
      and among SIGA
      TECHNOLOGIES, INC.,
      a
      corporation organized and existing under the laws of the State of Delaware
      (hereinafter referred to as “SIGA”),
      SIGA
      ACQUISITION CORP.,
      a
      corporation organized and existing under the laws of the State of Delaware
      and a
      wholly-owned subsidiary of SIGA (hereinafter referred to as “Merger
      Sub”),
      and
PHARMATHENE,
      INC.,
      a
      corporation organized and existing under the laws of the State of Delaware
      (hereinafter referred to as “Pharmathene”;
      and,
      together with Merger Sub, as the “Constituent
      Corporations”).

     

    W
      I T N E S S E T H:

    

    WHEREAS,
      the
      respective boards of directors of SIGA, Merger Sub, and Pharmathene have deemed
      it advisable and in the best interests of their respective corporations and
      stockholders to consummate the Merger (as hereinafter defined), on the terms
      and
      subject to the conditions set forth in this Agreement; and

     

    WHEREAS,
      the
      respective boards of directors of SIGA, Merger Sub and Pharmathene have approved
      and declared advisable this Agreement and the transactions contemplated hereby,
      including the Merger;

     

    WHEREAS,
      SIGA,
      Merger Sub and Pharmathene intend, by approving resolutions authorizing this
      Agreement, to adopt this Agreement as a plan of reorganization within the
      meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended,
      and
      the regulations promulgated thereunder (the “Code”)
      and
      that the transactions contemplated by this Agreement be undertaken pursuant
      to
      such plan;

     

    NOW,
      THEREFORE,
      in
      consideration of the mutual covenants and agreements hereinafter set forth,
      the
      parties hereby agree as follows:

     

    ARTICLE
      I

     

    THE
      MERGER

     

    1.1 The
      Merger.

     

    At
      the
      Effective Time (as hereinafter defined), in accordance with this Agreement
      and
      the Delaware General Corporation Law (hereinafter referred to as the
“GCL”),
      Merger Sub shall be merged into and with Pharmathene, the separate corporate
      existence of Merger Sub shall cease and Pharmathene shall continue as the
      surviving corporation (hereinafter referred to as the “Merger”),
      governed by the laws of the State of Delaware, under the corporate name it
      possesses immediately prior to the Effective Time. Pharmathene is hereinafter
      sometimes referred to as the “Surviving
      Corporation”.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    1.2 Effect
      of Merger.

     

    At
      the
      Effective Time, the Surviving Corporation shall possess all the rights,
      privileges, immunities and franchises, of a public as well as a private nature,
      of the Constituent Corporations. All of the rights, privileges, immunities
      and
      franchises, and all property, real and personal, and all debts due on whatever
      account to each of the Constituent Corporations, shall be taken and deemed
      to be
      transferred to and vested in the Surviving Corporation without further act
      or
      deed; and all of the property, rights, privileges, immunities, powers,
      franchises and all and every other interest of each of the Constituent
      Corporations thereafter shall be vested as effectively and fully in the
      Surviving Corporation as they were in each of the Constituent
      Corporations.

     

    1.3 Certificate
      of Incorporation and By-Laws.

     

    The
      certificate of incorporation and by-laws of Pharmathene, as in effect
      immediately prior to the Effective Time, shall be the certificate of
      incorporation and by-laws of the Surviving Corporation and thereafter shall
      continue to be its certificate of incorporation and by-laws until changed as
      provided therein and under the laws of the State of Delaware. The first annual
      meeting of the stockholders of the Surviving Corporation held after the
      Effective Time shall be the next annual meeting of stockholders provided for
      in
      the by-laws of Pharmathene. Notwithstanding the foregoing, the certificate
      of
      incorporation of Pharmathene shall be amended and restated as of the Effective
      Time (as hereinafter defined) to provide for the changing of the name of such
      entity to Pharmathene Holdings, Inc., and to eliminate all classes of equity
      securities other than common stock.

     

    1.4 Effective
      Time of Merger.

     

    The
      Merger shall become effective at the time of filing of a certificate of merger
      with respect to the Merger in the office of the Secretary of State of the State
      of Delaware, as required by the GCL. Such time is herein referred to as the
      “Effective
      Time”.

     

    1.5 Surviving
      Corporation Directors and Officers.

     

    At
      the
      Effective Time and until their successors have been duly elected and have
      qualified, the Board of Directors of the Surviving Corporation shall consist
      of
      the members of the Board of Directors of SIGA as of the Effective Time. Until
      their successors have been duly elected and have qualified, the officers of
      SIGA
      as of the effective time shall become the officers of the Surviving
      Corporation.

     

    1.6 Withholding
      Rights.

     

    Each
      of
      the Exchange Agent, SIGA and the Surviving Corporation shall be entitled to
      deduct and withhold from any consideration payable or otherwise deliverable
      pursuant to this Agreement to any holder or former holder of Pharmathene Capital
      Stock, Pharmathene Options or to Pharmathene such amounts as are required to
      be
      deducted or withheld therefrom under the Code or under any provision of state,
      local or foreign tax law or under any other applicable legal requirement. To
      the
      extent such amounts are so deducted or withheld, such amounts shall
      be

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    treated
      for all purposes under this Agreement as having been paid to the person to
      whom
      such amounts would otherwise have been paid.

     

    1.7 Taking
      of Necessary Action; Further Action.

     

    Pharmathene,
      SIGA and Merger Sub, respectively, shall take all such lawful action as may
      be
      necessary or appropriate in order to effectuate the transactions contemplated
      by
      this Agreement. In case at any time after the Effective Time, any further action
      is necessary or desirable to carry out the purposes of this Agreement and to
      vest the Surviving Corporation with full title to all assets, rights,
      privileges, powers, immunities, purposes and franchises of either of the
      Constituent Corporations, the officers and directors of such corporation shall
      take all such lawful and necessary action.

     

    ARTICLE
      II

     

    MERGER
      CONSIDERATION AND CONVERSION OF SHARES

     

    The
      manner and basis of converting in the Merger the outstanding shares of
      Pharmathene Common Stock (as defined below) and Pharmathene Preferred Stock
      (as
      defined below) into shares of SIGA Common Stock (as hereinafter defined), as
      well as the manner and basis of converting in the merger the outstanding shares
      of Merger Sub Common Stock into shares of the capital stock of the Surviving
      Corporation are as follows:

     

    2.1 Merger
      Sub Common Stock.

     

    The
      one
      share of Merger Sub Common Stock outstanding immediately prior to the Effective
      Time shall, by virtue of the Merger and without any action by the holder
      thereof, be deemed cancelled and converted into and shall represent the right
      to
      receive one share of the common stock, $.01 par value (hereinafter referred
      to
      as the “Surviving
      Common Stock”),
      of
      the Surviving Corporation.

     

    2.2 Merger
      Consideration.

     

    (a) The
      shares of common stock of Pharmathene, $.001 par value (hereinafter referred
      to
      as the “Pharmathene
      Common Stock”),
      Series A Convertible Preferred Stock of Pharmathene, $.001 par value
      (hereinafter referred to as the “Pharmathene
      Series A Preferred Stock”),
      Series B Convertible Preferred Stock of Pharmathene, $.001 par value
      (hereinafter referred to as the “Pharmathene
      Series B Preferred Stock”),
      and
      Series C Convertible Preferred Stock of Pharmathene, $.001 par value
      (hereinafter referred to as the “Pharmathene
      Series C Preferred Stock”
and
      together with the Pharmathene Series A Preferred Stock, and the Pharmathene
      Series B Preferred Stock, the “Pharmathene
      Preferred Stock”;
      the
      Pharmathene Common Stock and Pharmathene Preferred Stock may be hereinafter
      referred to collectively as the “Pharmathene
      Capital Stock”),
      outstanding immediately prior to the Effective Time, shall, by virtue of the
      Merger and without any action by the holder thereof, be deemed cancelled and
      converted into and shall represent the right to receive the aggregate number
      of
      shares of the common stock of SIGA, $.0001 par value (hereinafter referred
      to as
      the “SIGA
      Common Stock”),
      equal
      to: the product of (i) the difference between (A) the sum of (I)
      the

     

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    number
      of
      shares of SIGA Common Stock outstanding on the Closing Date (as hereinafter
      defined), (II) the number of shares of SIGA Common Stock issuable upon the
      exercise of SIGA Options (as hereinafter defined) outstanding on the Closing
      Date, and (III) the number of shares of SIGA Common Stock issuable upon the
      exercise of SIGA Warrants (as hereinafter defined) outstanding on the Closing
      Date and (B) the product of (I) the number of Partially Excluded Derivative
      Shares (as hereinafter defined) as of the Closing Date and (II) .5, and (ii)
      2.1
      (hereinafter referred to as the “Merger
      Stock”).
      In
      addition, the holders of Pharmathene Capital Stock shall receive, in the
      aggregate, warrants to purchase a number of shares of SIGA Common Stock
      (hereinafter referred to as “True-up
      Warrants”
and
      together with the Merger Stock, the “Aggregate
      Merger Consideration”)
      equal
      to the product of (i) the increase in the outstanding number of shares issuable
      upon the exercise of warrants or other derivative securities to purchase SIGA
      Common Stock resulting from the application of anti-dilution rights held by
      holders of derivative securities identified on Schedule
      2.2
      hereto
      (hereinafter referred to as the “Included
      Derivative Securities”))
      of
      SIGA on the Closing Date after taking into consideration the transactions
      contemplated by this Agreement (hereinafter referred to as “Anti-Dilution
      Warrants”),
      including without limitation, the Merger and the PIPE (as hereinafter defined)
      and (ii) 2.1 (such True-up Warrants shall be subject to substantially the same
      terms and conditions, including without limitation, exercise price, as the
      corresponding Anti-Dilution Warrant giving rise to its issuance).

     

    (b) The
      Aggregate Merger Consideration to be distributed pursuant to Section 2.2(a)
      shall be allocated to the holders of Pharmathene Capital Stock, in accordance
      with an agreement among such holders, as follows:

     

    (i) the
      holders of Pharmathene Common Stock shall be entitled to receive on a pro rata
      basis (determined based upon the number of shares of Pharmathene Common Stock
      held by such holder) divided among the holders thereof, 5.3774% of the Aggregate
      Merger Consideration;

     

    (ii) the
      holders of Pharmathene Series A Preferred Stock shall be entitled to receive
      on
      a pro rata basis (determined based upon the number of shares of Pharmathene
      Series A Preferred Stock held by such holder) divided among the holders thereof,
      17% of the Aggregate Merger Consideration;

     

    (iii) the
      holders of Pharmathene Series B Preferred Stock shall be entitled to receive
      on
      a pro rata basis (determined based upon the number of shares of Pharmathene
      Series B Preferred Stock held by such holder) divided among the holders thereof,
      41.9% of the Aggregate Merger Consideration; and

     

    (iv) the
      holders of Pharmathene Series C Preferred Stock shall be entitled to receive
      on
      a pro rata basis (determined based upon the number of shares of Pharmathene
      Series C Preferred Stock held by such holder) divided among the holders thereof,
      31.1% of the Aggregate 

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    Merger
      Consideration. The balance of the Aggregate Merger Consideration shall be
      distributed upon the exercise of Replacement Options (as hereinafter defined).
      To the extent Replacement Options terminate without being exercised, the shares
      of SIGA Common Stock allocated to such Replacement Options under this Agreement
      shall be remain unissued. Notwithstanding anything herein to the contrary,
      if
      any Pharmathene Options (as hereinafter defined) are exercised between the
      date
      hereof and the Closing, the foregoing allocation shall be adjusted as necessary
      to maintain the allocation percentages prescribed by this section. In
      particular, the percentage of the Aggregate Merger Consideration allocated
      to
      holders of Pharmathene Common Stock in accordance with Subsection (b)(i) above
      shall be increased to ensure that the interest of the current holders of
      Pharmathene Common Stock are not diluted as a result of such exercise and the
      percentage of the Aggregate Merger Consideration allocated to holders of
      Pharmathene Options hereunder shall be proportionately decreased. The
      percentages of the Aggregate Merger Percentage allocated to the holders of
      Pharmathene Preferred Stock shall remain unchanged.

     

    (c) Notwithstanding
      anything set forth in paragraph (a) of this Section 2.2, no fractional shares
      of
      SIGA Common Stock shall be issued by virtue of the Merger. All fractional shares
      of SIGA Common Stock to be distributed to an individual stockholder of
      Pharmathene shall be aggregated before determining whether any fractional share
      remains. Any remaining fractional shares of SIGA Common Stock to be issued
      shall
      be rounded to the nearest whole share (with .5 shares being rounded
      up).

     

    (d) Notwithstanding
      the foregoing, immediately following the Effective Time SIGA shall issue to
      each
      holder of a Pharmathene Option (as hereinafter defined) that remains outstanding
      at the Effective Time, in exchange for such Pharmathene Option (as hereinafter
      defined), a replacement option to purchase shares of SIGA Common Stock in the
      form attached hereto as Exhibit
      A
      (each
      hereinafter referred to as, a “Replacement
      Option”),
      which
      shall be exercisable for the number of shares of SIGA Common Stock equal to
      the
      number of shares of SIGA Common Stock that would have been issued to such holder
      pursuant to Section 2.2(b) hereof, rounded down to the nearest whole share,
      had
      the unexercised portion of the applicable Pharmathene Options been exercised
      immediately prior to the Effective Time and shall have an exercise price equal
      to (x) (A) the number of shares of Pharmathene Common Stock issuable upon the
      exercise of the then unexercised portion of such Pharmathene Option multiplied
      by (B) the exercise price of such Pharmathene Option; divided by (y) the number
      of shares of SIGA Common Stock issuable upon the exercise of the applicable
      Replacement Option, rounded up to the nearest whole cent. The SIGA Common Stock
      issuable upon exercise of the Replacement Options shall vest in accordance
      with
      a vesting schedule that is substantially similar to the remaining vesting
      schedule under the Pharmathene Options.

     

    2.3 SIGA
      Common Stock.

     

    The
      Merger shall effect no change in any shares of SIGA Common Stock issued prior
      to
      the Effective Time.

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

     

    ARTICLE
      III

     

    DISSENTING
      SHARES; EXCHANGE OF CERTIFICATES

     

    3.1 Dissenting
      Shares.

     

    Notwithstanding
      anything in this Agreement to the contrary, shares of Pharmathene Capital Stock
      which are issued and outstanding immediately prior to the Effective Time and
      which are held by stockholders who have not voted such shares in favor of the
      Merger and shall have delivered a written demand for payment of the fair value
      of such shares within the time and in the manner provided in Section 262 of
      the
      GCL shall not be converted into or be exchangeable for the right to receive
      the
      consideration provided in Article II of this Agreement, unless and until such
      holder shall have failed to perfect or shall have effectively withdrawn or
      lost
      its right to appraisal and payment under the GCL. If any such holder shall
      have
      so failed to perfect or shall have effectively withdrawn or lost such right,
      such holder’s shares of Pharmathene Capital Stock shall thereupon be deemed to
      have been converted into and to have become exchangeable for, at the Effective
      Time, the right to receive the consideration therefor specified under Article
      II
      hereof, without any interest thereon.

     

    3.2 Exchange
      of Shares.

     

    (a) Prior
      to
      the Effective Time, SIGA shall designate American Stock Transfer, or, at its
      election, a bank or trust company or similar entity, reasonably satisfactory
      to
      Pharmathene, which is authorized to exercise corporate trust or stock powers,
      to
      act as the exchange agent (hereinafter referred to as the “Exchange
      Agent”)
      in the
      Merger. Promptly after the Effective Time, SIGA shall cause the delivery to
      the
      Exchange Agent of shares of the SIGA Common Stock contemplated by Section 2.2
      hereof.

     

    (b) As
      soon
      as practicable after the Effective Time, Pharmathene shall provide to the
      Exchange Agent a schedule setting forth the number of shares of SIGA Common
      Stock to be delivered to each former holder of Pharmathene Capital Stock in
      accordance with Section 2.2(a) and (b) above. SIGA shall instruct the Exchange
      Agent to promptly thereafter send a notice and transmittal form to each holder
      of a certificate theretofore evidencing shares of Pharmathene Capital Stock,
      advising such holders of the terms of the exchange effected by the Merger and
      the procedure for surrendering to the Exchange Agent (who may appoint forwarding
      agents with the approval of SIGA) such record holder’s certificate evidencing
      Pharmathene Capital Stock for exchange for shares of SIGA Common Stock. Each
      holder of a certificate theretofore evidencing shares of Pharmathene Capital
      Stock, upon surrender of the same to the Exchange Agent in accordance with
      such
      transmittal, shall be entitled to receive, in exchange for such certificate,
      a
      certificate evidencing the number of full shares of SIGA Common Stock for which
      the shares of Pharmathene Capital Stock theretofore represented by the
      certificate so surrendered shall have been exchanged pursuant to Section 2.2
      hereof, and the certificate so surrendered shall forthwith be
      cancelled.

     

    (c) If
      any
      certificate evidencing shares of SIGA Common Stock is to be issued in a name
      other than that in which the certificate surrendered in exchange
      therefor

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    is
      registered, or if any payment of cash is to be made to a person other than
      the
      person in whose name such certificate is registered, it shall be a condition
      of
      the issuance thereof or such payment, as the case may be, that the certificate
      so surrendered shall be properly endorsed and otherwise in proper form for
      transfer and that the person requesting such exchange (i) pay to the Exchange
      Agent any transfer or other taxes required by reason of the issuance of a
      certificate for shares of SIGA Common Stock in any name other than that of,
      and
      payment of cash to a person other than, the registered holder of the certificate
      surrendered or (ii) establish to the satisfaction of the Exchange Agent that
      such transfer or other taxes have been paid or are not applicable. 

     

    (d) In
      the
      event any certificate representing any shares of Pharmathene Capital Stock
      shall
      have been lost, stolen or destroyed, upon the making of an affidavit of that
      fact by the person claiming such certificate to be lost, stolen or destroyed,
      the Exchange Agent shall issue in exchange for such lost, stolen or destroyed
      certificate or option instrument the consideration payable in exchange therefor
      pursuant to Article II. The Exchange Agent or SIGA may, in its discretion and
      as
      a condition precedent to the issuance thereof, require the owner of such lost,
      stolen or destroyed certificate to give the Exchange Agent a bond in such sum
      as
      it may direct as indemnity against any claim that may be made against SIGA
      with
      respect to the certificate or option instrument alleged to have been lost,
      stolen or destroyed.

     

    3.3 Dividends
      and Other Distributions.

     

    No
      dividends or other distributions to holders of SIGA Common Stock as of any
      date
      subsequent to the Effective Time shall be paid to the holders of outstanding
      certificates formerly representing shares of Pharmathene Capital Stock until
      such certificates are so surrendered. Subject to the effect, if any, of
      applicable law upon surrender of certificates evidencing shares of Pharmathene
      Capital Stock, there shall be paid to the record holders of SIGA Common Stock
      issued in exchange therefor the amount of dividends or other distributions
      with
      a record date for payment after the Effective Time that have theretofore been
      paid with respect to full shares of SIGA Common Stock which have not yet been
      paid to a public official pursuant to abandoned property laws. No interest
      shall
      be payable with respect to the payment of such dividends or other distributions
      on surrender of outstanding certificates. Notwithstanding the foregoing, neither
      SIGA, Merger Sub, the Exchange Agent nor any other party hereto shall be
      responsible or liable to any holder of shares of Pharmathene Capital Stock
      for
      any SIGA Common Stock, or dividends or distributions thereon or cash, delivered
      to any public official pursuant to applicable escheat laws.

     

    3.4 Pharmathene
      Stock Transfer Ledger.

     

    At
      the
      Effective Time, it shall be deemed that the stock transfer books of Pharmathene
      are closed, and no transfer of Pharmathene Capital Stock on the books of
      Pharmathene shall thereafter be made or consummated. Until surrendered and
      exchanged in accordance with the provisions of Section 3.3 hereof, the
      outstanding certificates evidencing shares of Pharmathene Capital Stock
      immediately prior to the Effective Time shall, from and after the Effective
      Time, be deemed for all corporate purposes to evidence the right to receive
      the
      number of shares of SIGA Common Stock into which the shares of Pharmathene
      Capital Stock theretofore evidenced

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    by
      such
      certificate or certificates shall have been so converted, as though such
      surrender and exchange had taken place.

     

    3.5 Termination
      of Exchange Agency.

     

    Any
      portion of the shares of SIGA Common Stock, which remains undistributed to
      the
      holders of Pharmathene Capital Stock for one year after the Effective Time
      shall
      be delivered to SIGA, upon demand, and any holders of Pharmathene Capital Stock
      who have not therefore complied with this Article III shall thereafter look
      only
      to SIGA for the shares of SIGA Common Stock, to which they are entitled pursuant
      to Paragraph (b) of Section 2.2 hereof and any dividends or other distributions
      with respect to SIGA Common Stock to which they are entitled pursuant to Section
      3.3. Any portion of such remaining shares unclaimed by holders of Pharmathene
      Capital Stock as of a date which is immediately prior to such time as such
      shares or amounts would otherwise escheat to or become property of any
      governmental entity shall, to the extent permitted by applicable law, become
      the
      property of SIGA free and clear of any claims or interest of any person
      previously entitled thereto.

     

    ARTICLE
      IV

     

    CLOSING

     

    4.1 Time
      and Place of Closing.

     

    Pharmathene,
      SIGA and Merger Sub shall regularly communicate and consult with each other
      with
      respect to the fulfillment of the various conditions to the obligations under
      this Agreement of the parties hereto. The exchange of certificates, opinions
      and
      other documents contemplated by this Agreement (hereinafter referred to as
      the
“Closing”)
      shall
      be held at the offices of McCarter & English LLP, 245 Park Avenue,
      27th
      Floor,
      New York, New York 10167, at 10:00 A.M., local time, at such time and date
      (hereinafter referred to as the “Closing
      Date”)
      as the
      parties may determine, such date to fall within ten business days after the
      satisfaction or waiver of the last of the conditions set forth in Articles
      IX, X
      and XI hereof to be satisfied or waived (other than conditions with respect
      to
      actions the parties shall take at the Closing), or such other time and date
      as
      may be agreed upon by the parties hereto. For purposes of this Agreement,
“business
      day”
shall
      mean any day on which the principal offices of the Securities and Exchange
      Commission (the “SEC”)
      in
      Washington, D.C. are open to accept filings, or, in the case of determining
      a
      date when any payment is due, any day on which banks are not required or
      authorized to close in the City of New York.

     

    4.2 Certificate
      of Merger.

     

    In
      the
      event that, at or prior to the Closing, none of the parties has exercised any
      right it may have to terminate this Agreement, and no condition to the
      obligations of the parties exists that is not waived, the parties shall, on
      the
      Closing Date, execute the certificate of merger, in the form attached hereto
      as
Exhibit
      B
      (hereinafter referred to as the “Certificate
      of Merger”),
      and,
      as soon thereafter as is practicable cause it to be filed with the Secretary
      of
      State of the State of Delaware in accordance with the GCL.

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

     

    ARTICLE
      V

     

    REPRESENTATIONS
      AND WARRANTIES OF PHARMATHENE

     

    Pharmathene
      hereby represents and warrants to SIGA as follows, except as set forth in the
      written disclosure schedules delivered by Pharmathene to SIGA (the “Pharmathene
      Disclosure Schedules”).
      The
      Pharmathene Disclosure Schedules shall be arranged in sections and subsections
      corresponding to the numbered and lettered sections and subsections contained
      in
      this Article V. The disclosures in any section or subsection of the Pharmathene
      Disclosure Schedules shall qualify other sections and subsections in this
      Article V to the extent it is reasonably clear from a reading of the disclosure
      that such disclosure is applicable to such other sections and subsections.
      The
      inclusion of any information in the Pharmathene Disclosure Schedules (or any
      update thereto) shall not be deemed to be an admission or acknowledgment, in
      and
      of itself, that such information is required by the terms hereof to be
      disclosed, is material, has resulted in or would result in a Material Adverse
      Effect (as defined below), or is outside the ordinary course of business. For
      purposes of this Agreement, the phrase “to
      the knowledge of Pharmathene”
or
      any
      phrase of similar import shall mean the actual or constructive knowledge of
      any
      person holding the office or position, or fulfilling the function of a director
      or officer of Pharmathene.

     

    5.1 Incorporation.

     

    (a) Pharmathene
      is duly organized, validly existing and in good standing under the laws of
      the
      State of Delaware and has full corporate power and authority to own or hold
      under lease the assets and properties which it owns or holds under lease, to
      conduct its business as currently conducted, to perform all of its obligations
      under the agreements to which it is a party, including, without limitation,
      this
      Agreement, and upon the receipt of authorization of the holders of Pharmathene
      Capital Stock in accordance with the GCL, to consummate the Merger. Pharmathene
      is in good standing in each other jurisdiction wherein the failure so to
      qualify, individually or in the aggregate, would have a Material Adverse Effect
      (as hereinafter defined). The copies of the certificate of incorporation and
      by-laws of Pharmathene which have been delivered to SIGA and Merger Sub by
      Pharmathene are complete and correct.

     

    (b) For
      purposes of this Agreement:

     

    (i) “Material
      Adverse Effect”
with
      respect to a party shall mean any change, effect, event, occurrence or state
      of
      facts which is, or is reasonably expected to be, materially adverse to the
      business, financial condition, results of operations or prospects of such party
      and its subsidiaries (as hereinafter defined), taken as a whole, other than
      any
      change, effect, event or occurrence relating to (i) the economy or securities
      markets of the United States or any other region in general or (ii) this
      Agreement or the transactions contemplated hereby or the announcement thereof;
      and

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
 

    (ii)
      each
      reference to a “subsidiary”
or
      “subsidiaries”
of
      any
      person means any corporation, partnership, joint venture or other legal entity
      of which such person (either above or through or together with any other
      subsidiary), owns, directly or indirectly, more than 50% of the stock or other
      equity interests the holder of which are generally entitled to vote for the
      election of the board of directors or other governing body of such corporation
      or other legal entity.

     

    5.2 Authorization.

     

    The
      execution and delivery of this Agreement by Pharmathene, the performance by
      Pharmathene of its covenants and agreements hereunder and thereunder and upon
      the receipt of authorization of the holders of Pharmathene Capital Stock in
      accordance with the GCL, the consummation by Pharmathene of the transactions
      contemplated hereby and thereby have been duly authorized by all necessary
      corporate action. When executed and delivered by Pharmathene, this Agreement
      shall constitute the valid and legally binding obligations of Pharmathene,
      enforceable against Pharmathene in accordance with their respective terms,
      except as may be limited by bankruptcy, insolvency or other laws affecting
      generally the enforceability of creditors’ rights and by limitations on the
      availability of equitable remedies.

     

    5.3 Conflicts.

     

    Neither
      the execution and delivery of this Agreement, nor upon the receipt of
      authorization of the holders of Pharmathene Capital Stock in accordance with
      the
      GCL, the consummation of the transactions contemplated herein, will violate
      any
      provision of the certificate of incorporation or by-laws of Pharmathene or,
      subject to compliance with the regulatory requirements hereinafter specified
      in
      this Section 5.3, any law, rule, regulation, writ, judgment, injunction, decree,
      determination, award or other order of any court, government or governmental
      agency or instrumentality, domestic or foreign, binding upon Pharmathene or
      any
      of its subsidiaries or conflict with or result in any breach of any of the
      terms
      of or the creation or imposition of any mortgage, deed of trust, pledge, lien,
      security interest or other charge or encumbrance of any nature pursuant to,
      or
      create any cause for termination under, the terms of any material contract
      or
      agreement to which Pharmathene or any subsidiary is a party or by which
      Pharmathene or any subsidiary or any of their respective properties or assets
      is
      bound. Other than the approval of the consummation of the transactions
      contemplated by this Agreement in accordance with the GCL by the holders of
      Pharmathene Capital Stock, and except as set forth on Schedule
      5.3,
      no
      consents, approvals or authorizations, or filings or registrations with any
      governmental agency or authority or any other person or entity are required
      in
      connection with the execution and delivery of this Agreement by Pharmathene
      or
      the consummation by Pharmathene of the transactions contemplated
      hereby.

     

    5.4 Capitalization.

     

    The
      authorized Pharmathene Capital Stock consists of (i) 147,089,105 shares of
      Pharmathene Common Stock, of which 10,942,906 shares are issued and outstanding
      and (ii) 105,009,575 shares of Pharmathene Preferred Stock, of which (A)
      16,442,000 shares have been designated as Series A Convertible Preferred Stock,
      16,442,000 of which are issued or

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    outstanding,
      (B) 65,768,001 shares have been designated as Series B Convertible Preferred
      Stock, 30,448,147 of which are issued or outstanding, and (C) 22,799,574 shares
      have been designated as Series C Convertible Preferred Stock, of which
      14,946,479 shares are issued and outstanding. There are no other classes of
      capital stock of Pharmathene authorized, issued or outstanding. All of the
      outstanding shares of Pharmathene Capital Stock are, and all outstanding shares
      of Pharmathene Capital Stock issuable upon exercise of Pharmathene Options
      and
      Pharmathene Warrants will be, duly authorized, validly issued and fully paid
      and
      non-assessable, issued without violation of the preemptive rights of any person.
      Except as set forth on Schedule
      5.4,
      there
      are no subscriptions, warrants, options, calls, commitments by or agreements
      to
      which Pharmathene is bound relating to the issuance, conversion, or purchase
      of
      any shares of Pharmathene Common Stock, or any other capital stock of
      Pharmathene, except for the options (“Pharmathene
      Options”)
      granted by Pharmathene pursuant to its 2002 Long Term Incentive Plan, as amended
      covering an aggregate of 9,193,683 shares of Pharmathene Common Stock. The
      Warrants described on Schedule
      5.4
      are
      hereinafter referred to as the “Pharmathene
      Warrants.”
Except
      as set forth on Schedule
      5.4,
      Pharmathene is not a party to any agreement or arrangement relating to the
      voting or control of any of its capital stock, or obligating Pharmathene,
      directly or indirectly, to sell any asset which is material to the businesses,
      financial condition, results of operations or prospects of Pharmathene and
      the
      Pharmathene subsidiaries (as hereinafter defined), taken as a whole (hereinafter
      referred to as “Pharmathene’s
      business or condition”).
      Except as set forth in Schedule
      5.4,
      Pharmathene has not agreed to register any securities under the Securities
      Act
      of 1933, as amended (the “Securities
      Act”),
      under
      any arrangements that would require any such registration as a result of this
      Agreement or the transactions contemplated hereby or otherwise. All outstanding
      shares of Pharmathene Capital Stock, all outstanding Pharmathene Options, and
      all outstanding Pharmathene Warrants have been issued or granted in compliance
      with all applicable securities laws.

     

    5.5 Subsidiaries.

     

    (a) Schedule
      5.5
      annexed
      hereto sets forth the name of each corporation, partnership, joint venture,
      business trust or other legal entity in which Pharmathene, directly or
      indirectly, beneficially or legally owns or holds any capital stock or other
      proprietary interest (herein referred to, individually, as a “Pharmathene
      Subsidiary”
and,
      collectively, as the “Pharmathene
      Subsidiaries”),
      the
      jurisdiction of its incorporation or formation, and Pharmathene’s direct or
      indirect ownership thereof. Each Pharmathene Subsidiary is a corporation duly
      organized, validly existing and in good standing under the laws of the
      jurisdiction of its incorporation, and has full corporate power and authority
      to
      own or hold under lease the assets and properties which it owns or holds under
      lease and to perform all its obligations under the agreements to which it is
      a
      party and to conduct such Pharmathene Subsidiary’s business. Each Pharmathene
      Subsidiary is in good standing in each other jurisdiction wherein the failure
      so
      to qualify would, individually or in the aggregate, have a Material Adverse
      Effect. Except as set forth on Schedule
      5.5,
      all of
      the outstanding shares of the capital stock of each Pharmathene Subsidiary
      are
      owned by Pharmathene and are duly authorized and validly issued, fully paid
      and
      non-assessable, issued without violation of the preemptive rights of any person,
      and are owned free and clear of any mortgages, deeds of trust, pledges, liens,
      security interests or any charges or encumbrances of any nature. Except as
      set
      forth on Schedule
      5.5,
      no
      shares of capital stock or other proprietary interest of any Pharmathene
      Subsidiary is subject to any option, call,

     

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    commitment
      or other agreement of any nature, and except as set forth on Schedule
      5.5,
      there
      are no subscriptions, warrants, options, calls, commitments by agreements to
      which Pharmathene or any Pharmathene Subsidiary is bound relating to the
      issuance or purchase of any shares of capital stock of any Pharmathene
      Subsidiary. Except as set forth on Schedule
      5.5,
      neither
      Pharmathene nor any Pharmathene Subsidiary is party to any agreement or
      arrangement relating to the voting or control of any capital stock of any
      Pharmathene Subsidiary, or obligating Pharmathene or any Pharmathene Subsidiary
      to sell any assets of any Pharmathene Subsidiary, which is material to
      Pharmathene’s business or condition. The copies of the certificates of
      incorporation and by-laws, or other instruments of formation, of each such
      Pharmathene Subsidiary, which have been delivered or made available to SIGA
      by
      Pharmathene are complete and correct.

     

    5.6 Disputes
      and Litigation.

     

    Except
      as
      set forth in Schedule
      5.6,
      there is
      no action, suit, proceeding, or claim, pending or to the Knowledge of
      Pharmathene, threatened, and no investigation by any court or government or
      governmental agency or instrumentality, domestic or foreign, pending or to
      the
      Knowledge of Pharmathene, threatened, against Pharmathene or any of the
      Pharmathene Subsidiaries, before any court, government or governmental agency
      or
      instrumentality, domestic or foreign, nor is there any outstanding order, writ,
      judgment, stipulation, injunction, decree, determination, award, or other order
      of any court or government or governmental agency or instrumentality, domestic
      or foreign, against Pharmathene or any of the Pharmathene
      Subsidiaries.

     

    5.7 Financial
      Statements.

     

    (a) Set
      forth
      in Schedule
      5.7
      are: (i)
      the audited consolidated balance sheets of Pharmathene and the Pharmathene
      Subsidiaries as and at December 31, 2004 and 2005, respectively, and the related
      consolidated statements of income, stockholders’ equity and cash flows for the
      fiscal years then ended, together with the report of Ernst & Young LLP
      (hereinafter referred to as the “Accountant”)
      with
      respect thereto (hereinafter referred to as the “Pharmathene
      Audited Financial Statements”)
      and
      (ii) the consolidated balance sheet of Pharmathene and the Pharmathene
      Subsidiaries as and at March 31, 2006, and the related consolidated statements
      of income and cash flows for the three months then ended (hereinafter referred
      to as the “Pharmathene
      Interim Financial Statements”
and,
      together with the Pharmathene Audited Financial Statements, the “Pharmathene
      Historical Financial Statements”).
      

     

    (b) The
      Pharmathene Audited Financial Statements are true and correct and have been
      prepared in conformity with generally accepted accounting principles
      consistently applied throughout the periods to which such financial statements
      relate. The Pharmathene Audited Financial Statements fairly present, in all
      material respects, in conformity with such principles as so applied, the
      consolidated financial position and results of operations and cash flows of
      Pharmathene and the Pharmathene Subsidiaries, at the dates shown and for the
      periods therein specified. The balance sheets constituting a part of the
      Pharmathene Audited Financial Statements fairly present, in all material
      respects, all liabilities of Pharmathene and the Pharmathene Subsidiaries,
      on a
      consolidated basis, of the

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    types
      normally reflected in balance sheets as and at the respective dates thereof.
      All
      adjustments necessary to fairly present, in all material respects, the
      consolidated financial position and results of operations and cash flows of
      Pharmathene and the Pharmathene Subsidiaries, and the changes in their cash
      flows, on a consolidated basis, for such periods have been included in the
      Pharmathene Audited Financial Statements. 

     

    (c) The
      Pharmathene Interim Financial Statements are true and correct and have been
      prepared in conformity with generally accepted accounting principles
      consistently applied throughout the periods to which such financial statements
      relate. The Pharmathene Interim Financial Statements fairly present, in all
      material respects, in conformity with such principles as so applied, the
      consolidated financial position and results of operations and cash flows of
      Pharmathene and the Pharmathene Subsidiaries, at the dates shown and for the
      periods therein specified. The balance sheets constituting a part of the
      Pharmathene Interim Financial Statements fairly present, in all material
      respects, all liabilities of Pharmathene and the Pharmathene Subsidiaries,
      on a
      consolidated basis, of the types normally reflected in balance sheets as and
      at
      the respective dates thereof. All adjustments necessary to fairly present,
      in
      all material respects, the consolidated financial position and results of
      operations and cash flows of Pharmathene and the Pharmathene Subsidiaries,
      and
      the changes in their cash flows, on a consolidated basis, for such periods
      have
      been included in the Pharmathene Interim Financial Statements.

     

    (d) Each
      of
      Pharmathene and each Pharmathene Subsidiary: maintains a system of internal
      accounting controls sufficient to provide reasonable assurance that (i)
      transactions are executed in accordance with management’s general or specific
      authorizations; (ii) transactions are recorded timely as necessary to permit
      preparation of financial statements in conformity with generally accepted
      accounting principles and to maintain asset accountability; (iii) access to
      assets is permitted only in accordance with management’s general or specific
      authorization; and (iv) the recorded accountability for assets is compared
      with
      the existing assets at reasonable intervals and appropriate action is taken
      with
      respect to any differences. Since December 31, 2004, there have been no changes
      in the internal accounting controls or in other factors that could affect
      Pharmathene’s internal accounting controls.

     

    5.8 Absence
      of Undisclosed Liabilities.

     

    Except
      as
      set forth in Schedule
      5.8
      or as
      otherwise disclosed in this Agreement or the Pharmathene Historical Financial
      Statements, neither Pharmathene, nor any of the Pharmathene Subsidiaries has
      any
      liabilities, whether accrued, absolute, contingent, or otherwise, whether due
      or
      to become due and whether the amount thereof is readily ascertainable or not,
      other than liabilities which, individually or in the aggregate, would not have
      a
      Material Adverse Effect, or any unrealized or anticipated losses from any
      unfavorable commitments or sales of products, other than those which,
      individually or in the aggregate, would not have a Material Adverse
      Effect.

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    5.9
      Absence of Certain Changes.

     

    Since
      December 31, 2005, Pharmathene and each Pharmathene Subsidiary has operated
      its
      business in the ordinary course consistent with past practice. Without limiting
      the generality of the immediately preceding sentence, except as set forth in
      Schedule
      5.9,
      since
      December 31, 2005, neither Pharmathene nor any Pharmathene Subsidiary has:
      

     

    (a) amended
      or otherwise modified its constituting documents or by-laws (or similar
      organizational documents);

     

    (b) altered
      any term of any of its outstanding securities or made any change in its
      outstanding shares of capital stock or other ownership interests or its
      capitalization, whether by reason of a reclassification, recapitalization,
      stock
      split or combination, exchange or readjustment of shares, stock dividend or
      otherwise;

     

    (c) with
      respect to, any shares of its capital stock or any other of its securities,
      granted, encumbered, issued or sold, or authorized for grant or encumbrance,
      issuance or sale, or granted, encumbered, issued or sold any options, warrants,
      purchase agreements, put agreement, call agreements, participation agreements,
      subscription rights, conversion rights, exchange rights or other securities,
      contracts, arrangements, understanding or commitments fixed or contingent that
      could directly or indirectly, require Pharmathene or any Pharmathene Subsidiary
      to issue, sell, pledge, dispose of or otherwise cause to become outstanding,
      any
      of its authorized but unissued shares of capital stock or ownership interests,
      as appropriate, or any securities convertible into, exchangeable for or carrying
      a right or option to purchase shares of capital stock, or to create, authorize,
      issue, sell or otherwise cause to become outstanding any new class of capital
      stock or ownership interests, as appropriate or entered into any agreement,
      commitment or understanding calling for any of the above;

     

    (d) declared,
      set aside or made any payment, dividend or other distribution upon any capital
      stock or, directly or indirectly, purchased, redeemed or otherwise acquired
      or
      disposed of any shares of capital stock or other securities of or other
      ownership interests in Pharmathene or any Pharmathene Subsidiary;

     

    (e) incurred
      any liability or obligation under agreements or otherwise, except current
      liabilities entered into or incurred in the ordinary course of business
      consistent with past practice; issued any notes or other corporate debt
      securities or paid or discharged any outstanding indebtedness, except in the
      ordinary course of business consistent with past practice; or waived any of
      its
      respective rights;

     

    (f) mortgaged,
      pledged, subjected to any Lien (as hereinafter defined) or granted any security
      interest in any of its assets or properties; entered into any lease of real
      property or buildings; or, except in the ordinary course of business consistent
      with past practice, entered into any lease of machinery or equipment, or sold,
      transferred, leased to others or otherwise disposed of any tangible or
      intangible asset or property;

     

    (g) effected
      any increase in salary, wages or other compensation of any kind, whether current
      or deferred, to any employee or agent, other than routine increases

     

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    in
      the
      ordinary course of business consistent with past practice or as was required
      from time to time by governmental legislation affecting wages (provided,
      however, that in no event was any such increase in compensation made with
      respect to any employee or agent earning in excess of $100,000 per annum);
      made
      any bonus, pension, option, deferred compensation, or retirement payment,
      severance, profit sharing, or like payment to any employee or agent, except
      as
      required by the terms of plans or arrangements existing prior to such date
      (provided, however, that in no event was any such payment made with respect
      to
      any employee or agent earning in excess of $100,000 per annum); or entered
      into
      any salary, wage, severance, or other compensation agreement with a term of
      one
      year or longer with any employee or agent or made any contribution to any trust
      or plan for the benefit of any employee or agent, except as required by the
      terms of plans or arrangements existing prior to such date; or lost the
      employment services of any employee whose annual salary exceeded
      $100,000;

     

    (h) adopted
      or, except as required by law, amended, any employee benefit plan other than
      as
      necessary in connection with the transactions contemplated hereby;

     

    (i) entered
      into any transaction other than in the ordinary course of business consistent
      with past practice, except in connection with the execution and performance
      of
      this Agreement and the transactions contemplated hereby;

     

    (j) terminated
      or modified any Pharmathene Agreement, or received any written notice of
      termination of any Pharmathene Agreement, except for terminations of Pharmathene
      Agreements upon their expiration during such period in accordance with their
      terms;

     

    (k) incurred
      or assumed any indebtedness for borrowed money or guaranteed any obligation
      or
      the net worth of any entity or person;

     

    (l) discharged
      or satisfied any Lien other than those then required to be discharged or
      satisfied during such period in accordance with their original terms;

     

    (m) paid
      any
      material obligation or liability (absolute, accrued, contingent or otherwise),
      whether due or to become due, except for any current liabilities, and the
      current portion of any long term liabilities, shown on the Pharmathene
      Historical Financial Statements or incurred since December 31, 2005 in the
      ordinary course of business consistent with past practice;

     

    (n) cancelled,
      waived or compromised any material debt or claim; 

     

    (o) suffered
      any damage, destruction, or loss to any of its assets or properties (whether
      or
      not covered by insurance) except for damage, destruction or loss occurring
      in
      the ordinary course of business which, individually or in the aggregate, would
      not have a Material Adverse Effect; 

     

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    (p)
      made
      any loan or advance to any entity or person other than travel and other similar
      routine advances to employees in the ordinary course of business consistent
      with
      past practice; 

     

    (q) made
      any
      capital expenditures or capital additions or betterments in amounts which exceed
      $50,000 in the aggregate;

     

    (r) purchased
      or acquired any capital stock or other securities of any other corporation
      or
      any ownership interest in any other business enterprise;

     

    (s) changed
      its method of accounting or its accounting principles or practices, including
      any policies or practices with respect to the establishment of reserves for
      work-in-process and accounts receivable, utilized in the preparation of the
      Pharmathene Historical Financial Statements, other than as required by
      GAAP;

     

    (t) instituted
      or settled any litigation or any legal, administrative or arbitration action
      or
      proceeding before any court, government or governmental agency or
      instrumentality, domestic or foreign, relating to it or any of its properties
      or
      assets;

     

    (u) made
      any
      new elections, changed any current elections or settled or compromised any
      liability with respect to its Taxes; or

     

    (v) entered
      into any agreement or commitment to do any of the foregoing; or

     

    (w) suffered
      any Material Adverse Effect; 

     

    and,
      since December 31, 2005, there has been no condition, development or contingency
      which, so far as reasonably may be foreseen, may, individually or in the
      aggregate, have a Material Adverse Effect. For purposes of this Agreement,
      the
      term “Lien”
shall
      be defined to mean any mortgage, deed of trust, security interest, pledge,
      lien,
      or other charge or encumbrance of any nature whatsoever except: (a) liens
      disclosed in either the Pharmathene Historical Financial Statements or SIGA
      Historical Financial Statements; (b) liens for taxes, assessments, or
      governmental charges or levies not yet due and delinquent; and (c) liens
      consisting of zoning or planning restrictions, easements, permits, any other
      restrictions or limitations on the use of real property or irregularities in
      title thereto which do not materially detract from the value of, or impair
      the
      use of, such property by Pharmathene, SIGA or any of their
      subsidiaries.

     

    5.10 Intellectual
      Property.

     

    (a) As
      used
      in this Agreement, the term “Intellectual
      Property Rights”
means
      all: (i) patents, patent applications, foreign patents and foreign patent
      applications, inventions and designs, and any registrations thereof with any
      agency or authority, (ii) trademarks, service marks, trade names, domain names,
      copyrights and mask works and all registrations and applications to register
      any
      of the foregoing with any agency or authority; (iii) trade secrets and
      confidential business information, whether patentable or unpatentable and
      whether or not reduced to practice, including all formulae, processes, know-how,
      technical and clinical data, shop rights, financial, marketing and business
      data,

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    pricing
      and cost information, business and marketing plans and customer and supplier
      lists and information and any media or other tangible embodiment thereof and
      all
      descriptions thereof; (iv) all other technology and intangible property,
      including without limitation computer software and programs in object code
      or
      source code form, databases, and documentation and flow charts; and (v) all
      licenses, grants or other rights running to or from a person relating to any
      of
      the foregoing, including material transfer agreements.

     

    (b) Set
      forth
      on Schedule
      5.10
      is a
      true, accurate and complete list of all Intellectual Property Rights owned,
      licensed or used by Pharmathene and that are material to the business of
      Pharmathene as presently conducted or as contemplated to be conducted
      (hereinafter referred to as the “Pharmathene
      Intellectual Property Rights”),
      specifying whether such Intellectual Property Rights are exclusive or
      non-exclusive to Pharmathene and including identifying information of all
      federal, state and foreign registrations of such Intellectual Property Rights
      or
      applications for registration thereof (but excluding software licenses that
      are
      generally commercially available).

     

    (c) Pharmathene
      owns, is licensed to use, or otherwise has the full legal right to use all
      of
      the Pharmathene Intellectual Property Rights, free and clear of any Lien. To
      the
      knowledge of Pharmathene, such Pharmathene Intellectual Property Rights are
      sufficient for the conduct of Pharmathene’s business as presently conducted and
      to the knowledge of Pharmathene, as contemplated to be conducted, and constitute
      all of the Intellectual Property Rights owned, licensed or used by Pharmathene.
      Except for the licenses disclosed in Schedule
      5.10
      (hereinafter referred to as the “Pharmathene
      Licenses”),
      (i)
      Pharmathene is not bound by or a party to any rights or options (whether or
      not
      currently exercisable), licenses or agreements of any kind (other than software
      licenses that are generally commercially available) with respect to the
      Pharmathene Intellectual Property Rights and (ii) to Pharmathene’s knowledge,
      there are no other outstanding rights or options (whether or not currently
      exercisable), licenses or agreements of any kind relating to Pharmathene
      Intellectual Property Rights. Except under the Pharmathene Licenses identified
      in Schedule
      5.10,
      Pharmathene is not obligated to pay any royalties or other compensation or
      expenses (other than fees for software licenses that are generally commercially
      available), to any third party in respect of its ownership, use or license
      of
      any of the Pharmathene Intellectual Property Rights. There has been no breach
      or
      violation by Pharmathene, and to the knowledge of Pharmathene there is no breach
      or violation by any other party to, any Pharmathene License that is reasonably
      likely to give rise to any termination or any loss of rights
      thereunder.

     

    (d) Except
      as
      set forth in Schedule
      5.10,
      to the
      knowledge of Pharmathene, neither Pharmathene’s business, as presently conducted
      or as contemplated to be conducted, nor the current and contemplated products
      or
      services of Pharmathene infringe, constitute the misappropriation of, or
      conflict with, any Intellectual Property Rights of any third party. Pharmathene
      is not aware of any claim, and has not received any notice or other
      communication (in writing or otherwise) of any claim from, any person asserting
      that Pharmathene’s business, as presently conducted or as contemplated to be
      conducted, or any of the current or contemplated products or services of
      Pharmathene infringe or may infringe, constitute the misappropriation of, or
      conflict with, any Intellectual Property Rights of another person. Pharmathene
      is not aware of any existing or threatened infringement,

     

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    
 

    misappropriation,
      or competing claim by any third party on the right to use or own any of, the
      Pharmathene Intellectual Property Rights.

     

    (e) Pharmathene
      has taken commercially reasonable measures and precautions to establish and
      preserve the confidentiality, secrecy and ownership of all Pharmathene
      Intellectual Property Rights with respect to its products and services. Without
      limiting the generality of the foregoing employees who have had access to
      confidential or proprietary information of Pharmathene have executed and
      delivered to Pharmathene confidentiality agreements in a form customary in
      the
      industry in which Pharmathene operates. Copies of such agreements have been
      delivered to SIGA, and all of such agreements are in full force and effect.
      Pharmathene is not aware of any violation of the confidentiality of any
      non-public Pharmathene Intellectual Property Rights. Pharmathene is not making
      unlawful use of any confidential information or trade secrets of any third
      party. To the knowledge of Pharmathene, the activities of Pharmathene’s
      employees, consultants, or independent contractors on behalf of Pharmathene’s
      business, as presently conducted and contemplated to be conducted, do not
      violate any agreements or arrangements which such employees have with former
      employers or any other third person. To the knowledge of Pharmathene, no current
      or former employee, officer, director, stockholder, consultant or independent
      contractor has any right, claim or interest in or with respect to any of the
      Pharmathene Intellectual Property Rights.

     

    (f) Except
      as
      set forth in Schedule
      5.10,
      to the
      knowledge of Pharmathene, no third party has infringed, misappropriated or
      otherwise conflicted with any of the Pharmathene Intellectual Property Rights.
      To the knowledge of Pharmathene, there are no third party challenges to the
      Pharmathene Intellectual Property Rights including interferences,
      reexaminations, oppositions and appeals.

     

    (g) Except
      as
      set forth in Schedule
      5.10,
      (i)
      there is no action, suit, order, claim, or to Pharmathene’s knowledge,
      governmental investigation pending, or, to Pharmathene’s knowledge, threatened
      in writing against Pharmathene or affecting Pharmathene, relating to the
      Pharmathene Intellectual Property and reasonably likely so as to cause a
      Material Adverse Effect (or to the knowledge of Pharmathene, pending or
      threatened in writing against any of the officers, directors or employees of
      Pharmathene with respect to Pharmathene’s business or proposed business
      activities) at law or in equity, or before of by any governmental department,
      commission, board, bureau, agency or instrumentality (including, without
      limitation, any actions, suit, proceedings or investigations with respect to
      the
      transactions contemplated by this Agreement); (ii) nor has there been any such
      actions, suits, orders, claims, or to the knowledge of Pharmathene, governmental
      investigations or claims pending against Pharmathene at any time; (iii) to
      the
      knowledge of Pharmathene, there is no valid basis for any of the foregoing;
      (v)
      Pharmathene is not subject to any judgment, order or decree of any court or
      other governmental agency; and (vi) there is no action, suit, proceeding, or
      investigation by Pharmathene currently pending or which Pharmathene presently
      intends to initiate with respect to the transactions contemplated by the
      Agreement.

     

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

     

    5.11
      Taxes.

     

    Except
      as
      set forth in Schedule
      5.11:

     

    (a) Pharmathene
      and each Pharmathene Subsidiary has timely and accurately filed, or caused
      to be
      timely and accurately filed, all Tax Returns required to be filed by it, and
      has
      paid, collected or withheld, or caused to be paid, collected or withheld, all
      amounts of Taxes required to be paid, collected or withheld, other than such
      Taxes for which adequate reserves have been established and which are being
      contested in good faith. There are no claims or assessments pending against
      Pharmathene or any Pharmathene Subsidiary for any alleged deficiency in any
      Tax,
      there are no pending or, to the knowledge of Pharmathene, threatened audits
      or
      investigations for or relating to any liability in respect of any Taxes, and
      Pharmathene has not been notified in writing of any proposed Tax claims or
      assessments against Pharmathene or any Pharmathene Subsidiary (other than in
      each case, claims or assessments for which adequate reserves have been
      established and which are being contested in good faith). Neither Pharmathene
      nor any Pharmathene Subsidiary has executed any waivers or extensions of any
      applicable statute of limitations to assess any amount of Taxes. There are
      no
      outstanding requests by Pharmathene or any Pharmathene Subsidiary for any
      extension of time within which to file any Tax Return or within which to pay
      any
      amounts of Taxes shown to be due on any Tax Return. To the knowledge of
      Pharmathene, there are no liens for Taxes on the assets of Pharmathene or any
      Pharmathene Subsidiary except for statutory liens for current Taxes not yet
      due
      and payable. There are no outstanding powers of attorney enabling any party
      to
      represent Pharmathene or any Pharmathene Subsidiary with respect to Taxes.
      Other
      than with respect to Pharmathene or any Pharmathene Subsidiary, neither
      Pharmathene nor any Pharmathene Subsidiary is liable for Taxes of any other

      Person, or is currently under any contractual obligation to indemnify any person
      with respect to any amounts of Taxes (except for customary agreements to
      indemnify lenders or security holders in respect of Taxes), or is a party to
      any
      tax sharing agreement or any other agreement providing for payments by
      Pharmathene or any Pharmathene Subsidiary with respect to any amounts of Taxes.
      Neither Pharmathene nor any Pharmathene Subsidiary has engaged in any
      transaction which requires its participation to be disclosed under Treas. Reg.
      Sec. 1.6011-4.

     

    (b) For
      purposes of this Agreement, the term “Tax”
shall
      mean any United States or Canadian federal, national, state, provincial, local
      or other jurisdictional income, gross receipts, property, sales, use, license,
      excise, franchise, employment, payroll, estimated, alternative, or add-on
      minimum, ad valorem, transfer or excise tax, goods and services or any other
      tax, custom, duty, governmental fee or other like assessment or charge imposed
      by any governmental authority, together with any interest or penalty imposed
      thereon. The term “Tax
      Return”
shall
      mean a report, return or other information (including any attached schedules
      or
      any amendments to such report, return or other information) required to be
      supplied to or filed with a governmental authority with respect to any Tax,
      including an information return, claim for refund, amended return or declaration
      or estimated Tax.

     

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

     

    5.12 Title.

     

    Except
      as
      set forth in Schedule
      5.12,
      Pharmathene and the Pharmathene Subsidiaries have good and marketable title
      to
      all of their respective assets and properties, in each case free and clear
      of
      all Liens. Pharmathene and the Pharmathene Subsidiaries lease or own all
      properties and assets necessary for the operation of their respective businesses
      as presently conducted, and the assets and properties of Pharmathene and the
      Pharmathene Subsidiaries include all of the assets, of every kind and nature,
      whether tangible or intangible, and wherever located, which are utilized by
      Pharmathene or the Pharmathene Subsidiaries in the conduct of their respective
      businesses. Neither Pharmathene nor the Pharmathene Subsidiaries have received
      notice of any violation of, or default under, any law, ordinance, order,
      regulation, or governmental or contractual requirement relating to the assets
      and properties of Pharmathene or the Pharmathene Subsidiaries which remains
      uncured or has not been dismissed, other than with respect to any violation
      which, individually or in the aggregate, would not have a Material Adverse
      Effect. All leases and licenses pursuant to which Pharmathene or the Pharmathene
      Subsidiaries lease or license personal and intangible property from others,
      are
      in good standing, valid and effective in accordance with their respective terms,
      and there is not, under any of such leases or licenses, any existing default
      or
      event of default (or event which with notice or lapse of time, or both, would
      constitute a default, or would constitute a basis for a claim of force majeure
      or other claim of excusable delay or non-performance) which would result in
      a
      Material Adverse Effect. All the tangible personal property owned or leased
      by
      Pharmathene or the Pharmathene Subsidiaries is in good operating condition
      and
      repair, subject only to ordinary wear and tear, and conforms in all respects
      to
      all applicable laws, ordinances, orders, regulations or governmental or
      contractual requirements relating to their operation.

     

    5.13 Real
      Estate and Leases.

     

    Set
      forth
      in Schedule
      5.13
      attached
      hereto is a list of every parcel of real estate owned by Pharmathene or a
      Pharmathene Subsidiary and a list of each lease agreement under which
      Pharmathene or any of the Pharmathene Subsidiaries is lessee of, or holds or
      operates, any real estate owned by any third party (collectively hereinafter
      referred to as the “Pharmathene
      Real Properties”).
      Pharmathene or a Pharmathene Subsidiary has good and marketable title to the
      properties owned by Pharmathene or a Pharmathene Subsidiary set forth on
Schedule
      5.13
      and all
      fixtures thereon in fee simple absolute, subject to no Liens. There is no option
      or right held by any third party to purchase any such properties or any part
      thereof, or any of the fixtures and equipment thereon. All buildings, driveways
      and other improvements on such properties, respectively, are within its boundary
      lines, and no improvements on adjoining properties extend across the boundary
      lines onto such properties. Each lease agreement described in Schedule
      5.13
      is in
      full force and effect and constitutes a legal, valid and binding obligation
      of
      the respective parties thereto. Neither Pharmathene nor any Pharmathene
      Subsidiary is in a default under any such lease agreement, nor to the knowledge
      of Pharmathene is any other party to any such lease agreement in default
      thereunder, and no event has occurred, or is alleged to have occurred, which
      constitutes, or with lapse of time or giving of notice or both would constitute,
      a default by any party to any such lease agreement or a basis for a claim of
      force majeure or other claim of excusable delay or non-performance thereunder,
      other than with respect to any default, event or claim which, individually
      or in
      the aggregate, would not have any Material Adverse Effect.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

        5.14
Contractual
      and Other Obligations.

     

    (a) As
      used
      in this Agreement, the term the “Pharmathene
      Agreements”
shall
      mean all mortgages, indentures, notes, agreements, contracts, leases, licenses,
      franchises, obligations, instruments or other commitments, arrangements or
      understandings of any kind, whether written or oral, to which Pharmathene or
      any
      of the Pharmathene Subsidiaries is a party or by which Pharmathene or any of
      the
      Pharmathene Subsidiaries or any of their respective properties may be bound
      or
      affected. Set forth or provided for on Schedule
      5.14
      attached
      hereto is a list, of each Pharmathene Agreement which is material to its
      business or condition, including but not limited to: (i) any mortgage,
      indenture, note, installment obligation or other instrument, agreement or
      arrangement for or relating to any borrowing of money by Pharmathene or any
      Pharmathene Subsidiary; (ii) any guaranty, direct or indirect, by Pharmathene
      or
      any Pharmathene Subsidiary of any obligation for borrowings or otherwise,
      excluding endorsements made for collection in the ordinary course of business;
      (iii) any Pharmathene Agreement made other than in the ordinary course of its
      business or providing for the grant of any preferential rights to purchase
      or
      lease any assets of Pharmathene or any Pharmathene Subsidiary, except for such
      agreements which, individually and in the aggregate, are not material to
      Pharmathene’s business or condition; (iv) any obligation to make payments,
      contingent or otherwise, arising out of the prior acquisition of the business,
      assets or stock of other companies; (v) any collective bargaining agreement
      with
      any trade or labor union; (vi) any Pharmathene Agreement to which (A) any
      officer of Pharmathene, (B) director of Pharmathene or (C) any stockholder
      of
      Pharmathene beneficially owning (within the meaning of Section 13(d) of the
      Securities Exchange Act of 1934, as amended (the “Exchange
      Act”))
      more
      than 5% of the outstanding shares of Pharmathene Common Stock (determined on
      an
      as-converted basis) (herein referred to collectively, as the “Pharmathene
      Insiders”),
      is a
      party; (vii) any Pharmathene Agreement containing noncompetition or other
      limitations restricting the conduct of the business of Pharmathene or any
      Pharmathene Subsidiary; (viii) any license agreements to which Pharmathene
      or
      any Pharmathene Subsidiary is a party relating to any Intellectual Property;
      (ix) any partnership, shareholder agreement, joint venture or similar agreement;
      (x) any agreements with independent contractors; (xi) any agreements other
      than
      licenses related to any Intellectual Property; and (xii) any agreements with
      employees.

     

    (b) No
      event
      has occurred, or, is alleged to have occurred, which constitutes or with lapse
      of time or giving of notice or both, would constitute a default or a basis
      for a
      claim of force majeure or other claim of excusable delay or non-performance
      by
      Pharmathene or any Pharmathene Subsidiary under any Pharmathene Agreements,
      except for any such default or claim which, individually or in the aggregate,
      would not have a Material Adverse Effect. To the best of the knowledge of
      Pharmathene, no party with whom Pharmathene or any Pharmathene Subsidiary has
      any Pharmathene Agreement is in default in the performance of any covenant
      or
      condition thereunder or has failed in performance thereunder by reason of a
      claim of force majeure or other claim of excusable delay or non-performance
      thereunder.

     

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    5.15 Compensation.

     

    Except
      as
      disclosed in Schedule
      5.15
      attached
      hereto, neither Pharmathene nor any Pharmathene Subsidiary has any agreement
      with any employee with regard to compensation, whether individually or
      collectively, except agreements terminable by Pharmathene or any Pharmathene
      Subsidiary at will without penalty or with respect to employees located in
      Canada, by providing the notice or indemnity required by applicable Canadian
      federal or provincial law, or oral agreements terminable by Pharmathene or
      a
      Pharmathene Subsidiary on not more than 30 days notice or with respect to
      employees located in Canada, any notice or indemnity required by applicable
      Canadian federal or provincial law without penalty, and set forth in
Schedule
      5.15
      is a
      list of all employees of Pharmathene and each Pharmathene Subsidiary entitled
      to
      receive annual compensation in excess of $100,000 and their respective positions
      and salaries. No union or other collective bargaining unit has been certified
      or
      recognized by Pharmathene or any Pharmathene Subsidiary as representing any
      of
      their respective employees. Neither Pharmathene nor SIGA will incur any
      liability with respect to any payment due or damage suffered by any employee
      of
      Pharmathene or any Pharmathene Subsidiary, including, but not limited to, any
      claims for severance, termination benefits or similar claims, by virtue of
      the
      operation of the Merger and the transactions contemplated hereby.

     

    5.16 Employee Benefit
      Plans.

     

    (a) Except
      as
      set forth on Schedule
      5.16,
      neither
      Pharmathene nor any Pharmathene Subsidiary maintains, sponsors, contributes
      to,
      is required to contribute to, is a party to, or otherwise has or is reasonably
      expected to have any liability (contingent or otherwise) with respect to (1)
      any
“employee
      welfare benefit plan,”
as
      defined in Section 3(1) of the Employee Retirement Income Security Act of 1974,
      as amended (“ERISA”),
      (2)
      any “employee
      pension benefit plan,”
as
      defined in Section 3(2) of ERISA, (3) any plan or
      agreement providing for bonuses, stock options, stock appreciation rights,
      stock
      purchase plans or other forms of equity-based compensation, (4) any other plan
      or agreement involving direct or indirect compensation (including any deferred
      compensation) other than workers’ compensation, unemployment compensation and
      other government programs, (5) any employment, severance, separation, change
      of
      control or other similar contract, arrangement or policy providing for insurance
      coverage,
      salary
      continuation,
      non-statutory workers’ compensation, disability benefits, supplemental
      unemployment benefits, vacation benefits, retirement benefits, pension,
      supplemental pension, savings, retirement savings,
      fringe
      benefits, deferred compensation, profit-sharing, bonuses, other forms of
      incentive compensation or post-retirement insurance, compensation or benefits,
      (6) any other
      employee benefit plan, arrangement, program, agreement, policy or practice,
      formal or informal, funded or unfunded, insured or self-insured, that covers
      any
      current or former employee of Pharmathene or any Pharmathene
      Subsidiary,
      or (7)
      any multiemployer plan (within the meaning of Section 3(37) of ERISA)
      (hereinafter “Multiemployer
      Plan”).
      Each
      plan or agreement required to be set forth on Schedule
      5.16,
      other
      than a Multiemployer Plan, pursuant to the foregoing is referred to herein
      as a
“Pharmathene
      Benefit Plan.”

     

    (b) Pharmathene
      has delivered or made available to SIGA the following documents with respect
      to
      each Pharmathene Benefit Plan: (1) correct and complete copies of all documents
      embodying such Pharmathene Benefit Plan, including

     

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    (without
      limitation) all amendments thereto and all related trust documents, (2) a
      written description of any Pharmathene Benefit Plan that is not set forth in
      a
      written document, (3) the most recent summary plan description, summary of
      material modifications and other similar descriptive materials distributed
      to
      plan participants and beneficiaries, (4) the most recent Internal Revenue
      Service (“IRS”)
      determination letter or similar forms of any applicable foreign jurisdiction,
      if
      any, (5) the three most recent annual reports (Form Series 5500 and all
      schedules and financial statements attached thereto), if any, and (6) all
      material written agreements and contracts currently in effect, including
      (without limitation) administrative service agreements, group annuity contracts
      and group insurance contracts.

     

    (c) Each
      Pharmathene Benefit Plan materially complies, and has been maintained and
      administered in all material respects in compliance with, its terms and with
      the
      requirements prescribed by any and all applicable law, including (without
      limitation) ERISA and the Code. All material contributions, reserves or premium
      payments required to be made or accrued as of the date hereof to the Pharmathene
      Benefit Plans have been timely made or accrued. Neither Pharmathene nor any
      Pharmathene Subsidiary has taken or failed to take any action with respect
      to
      any Pharmathene Benefit Plan which might create any material liability on the
      part of Pharmathene or any Pharmathene Subsidiary.

     

    (d) Neither
      Pharmathene nor any Pharmathene Subsidiary maintains, participates in or
      contributes to, nor have they ever maintained, participated in, or contributed
      to, any Multiemployer Plan, a plan described in Section 413 of the Code, or
      any
      plan subject to Title IV of ERISA or Section 302 of ERISA. Neither Pharmathene
      nor any Pharmathene Subsidiary has any outstanding or contingent obligations
      or
      liabilities (including, without limitation, any withdrawal liability) with
      respect to a Multiemployer Plan providing pension or other benefits, a plan
      described in Section 413 of the Code, or any plan subject to Title IV of ERISA
      or Section 302 of ERISA.

     

    (e) Neither
      Pharmathene nor any Pharmathene Subsidiary is subject to any material liability
      or penalty under Sections 4975 through 4980B of the Code or Title I of ERISA.
      With respect to each Benefit Plan which is a “group
      health plan”
as
      defined in Section 5000(b)(1) of the Code and Section 607(l) of ERISA,
      Pharmathene and each Pharmathene Subsidiary has complied in all material
      respects with the applicable health care continuation requirements in Section
      4980B of the Code and in ERISA. Pharmathene, and each Pharmathene Subsidiary,
      and each Pharmathene Benefit Plan which is a group health plan has, as of the
      date hereof, complied in all material respects with the Family and Medical
      Leave
      Act of 1993, the Health Insurance Portability and Accountability Act of 1996,
      the Women’s Health and Cancer Rights Act of 1998, the Newborns’ and Mothers’
Health Protection Act of 1996, and any similar provisions of state law
      applicable to employees of Pharmathene and each Pharmathene Subsidiary. No
      “prohibited
      transaction,”
within
      the meaning of Section 4975(c) of the Code or Sections 406 or 407 of ERISA
      and
      not otherwise exempt under Section 408 of ERISA, has occurred with respect
      to
      any Pharmathene Benefit Plan.

     

    (f) Except
      as
      set forth on Schedule
      5.16,
      there
      is no contract, plan or arrangement covering any employee or former employee
      of
      Pharmathene or any Pharmathene
      Subsidiary that, individually or collectively, would give rise to the payment
      as

     

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    a
      result
      of the transactions contemplated by this Agreement of any amount that would
      not
      be deductible by the Pharmathene or such Pharmathene Subsidiary by reason of
      Section 280G or 162(m) of the Code.

     

    (g) No
      material action, suit or claim (excluding claims for benefits incurred in the
      ordinary course) has been brought or is pending or, to the knowledge of
      Pharmathene, threatened against or with respect to any Pharmathene Benefit
      Plan,
      or the assets or any fiduciary thereof (in that person's capacity as a fiduciary
      of such Pharmathene Benefit Plan) and to the knowledge of Pharmathene, there
      are
      no facts likely to give rise to any such action, suit or claim. There are no
      audits, inquiries or proceedings pending or, to the knowledge of Pharmathene,
      threatened by the IRS or the Department of Labor or corresponding authority
      in
      Canada with respect to any Pharmathene Benefit Plan, and no Pharmathene Benefit
      Plan has been the subject of any application for relief under the Internal
      Revenue Service Employee Plans Compliance Resolution Program or the Closing
      Agreement Program, nor has any Pharmathene Benefit Plan been the subject of
      any
      application for relief under the United States Department of Labor Voluntary
      Fiduciary Correction Program or Delinquent Filer Voluntary Compliance
      Program.

     

    (h) All
      Pharmathene Benefit Plans that are intended to be qualified and exempt from
      United States federal income taxes under Section 401(a) and Section 501(a),
      respectively, of the Code, have been the subject of favorable determination
      letters or in the case of prototype plans, opinion letters, from the IRS which
      consider the effect of the series of laws commonly known as GUST, and no such
      determination letter has been revoked nor has revocation been
      threatened.

     

    (i) Each
      “fiduciary”
(within
      the meaning of Section 3(21)(A) of ERISA) as to each Pharmathene Benefit Plan
      has complied in all material respects with the requirements of ERISA and all
      other applicable law in respect of each such Pharmathene Benefit
      Plan.

     

    (j) Except
      as
      set forth in Schedule
      5.16,
      all
      required employer and employee contributions and premiums under the Pharmathene
      Benefit Plans to the date hereof have been paid or duly accrued, the respective
      fund or funds established under the Pharmathene Benefit Plans are, in all
      material respects, funded in accordance with all applicable law and such plans,
      and no material past service funding liabilities exist thereunder.

     

    (k) Other
      than any pension benefits payable under the Benefit Plans, neither Pharmathene
      nor any Pharmathene Subsidiary is under any obligation to provide benefits
      or
      coverage under a Pharmathene Benefit Plan to retirees of Pharmathene or any
      Pharmathene Subsidiary or other former employees of Pharmathene or any
      Pharmathene Subsidiary (or the beneficiaries of such retirees or former
      employees), including, but not limited to, retiree health care coverage (except
      to the extent mandated by the Consolidated Omnibus Budget Reconciliation Act
      of
      1985).

     

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    (l)
      Neither Pharmathene nor any Pharmathene Subsidiary maintains any voluntary
      employees’ beneficiary association within the meaning of Sections 501(c)(9) and
      505 of the Code (a VEBA) with respect to any Pharmathene Benefit
      Plan.

     

    (m) No
      commitments have been made by Pharmathene or any Pharmathene Subsidiary to
      amend
      any Pharmathene Benefit Plan, to provide increased benefits thereunder or to
      establish any new benefit plan, except as required by applicable laws or as
      disclosed in Schedule
      5.16.
      None of
      the Pharmathene Benefit Plans require or permit retroactive increases or
      assessments in premiums or payments. Except as set forth in Schedule
      5.16,
      all
      Pharmathene Benefit Plans can be amended or terminated without any restrictions
      and Pharmathene or a Pharmathene Subsidiary has the unrestricted power to amend
      or terminate any of the Pharmathene Benefit Plans.

     

    5.17 Labor
      Relations.

     

    There
      are
      no disputes pending or to the knowledge of Pharmathene, threatened between
      Pharmathene or any Pharmathene Subsidiary on the one hand and any of their
      respective employees on the other, and there are no organizational efforts
      currently being made or to the knowledge of Pharmathene threatened involving
      any
      of such employees. Pharmathene has complied with all laws relating to the
      employment of labor, including without limitation, any provisions thereof
      relating to wages, hours, collective bargaining and the payment of social
      security and similar taxes, and is not liable for any material arrearage of
      wages or any taxes or penalties for failure to comply with any of the
      foregoing.

     

    5.18 Transactions
      with Affiliated Persons.

     

    Except
      (i) for employment relationships between Pharmathene
      or any of the Pharmathene Subsidiaries
      and
      employees of Pharmathene or any of the Pharmathene Subsidiaries otherwise
      disclosed pursuant to this Agreement, (ii) for remuneration by Pharmathene
      or
      any of the Pharmathene Subsidiaries for services rendered as a director, officer
      or employee of Pharmathene or any of the Pharmathene Subsidiaries otherwise
      disclosed pursuant to this Agreement, or (iii) as set forth in Schedule
      5.18,
      (A)
      neither Pharmathene nor any of the Pharmathene Subsidiaries has, and has not
      since its inception, in the ordinary course of business or otherwise, directly
      or indirectly, purchased, leased or otherwise acquired any property or obtained
      any services from, or sold, leased or otherwise disposed of any property or
      furnished any services to any affiliate of Pharmathene or any of the Pharmathene
      Subsidiaries; (B) neither Pharmathene nor any of the Pharmathene Subsidiaries
      owes any amount to any affiliate of Pharmathene or any of the Pharmathene
      Subsidiaries; (C) no affiliate of Pharmathene or any of the Pharmathene
      Subsidiaries owes any amount to any of Pharmathene or any of the Pharmathene
      Subsidiaries; and (D) no part of the property or assets of any affiliate of
      Pharmathene or any of the Pharmathene Subsidiaries is used by any of Pharmathene
      or any of the Pharmathene Subsidiaries in the conduct or operation of its
      businesses. No affiliate of Pharmathene or any of the Pharmathene Subsidiaries
      owns any business which is a significant competitor of Pharmathene or any of
      the
      Pharmathene Subsidiaries.

     

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    5.19 Insurance.

     

    As
      of the
      date of this Agreement, Pharmathene and the Pharmathene Subsidiaries maintain
      insurance policies, and bonding arrangements, covering all of their respective
      assets and properties, and in each case the various occurrences which may arise
      in connection with the operation of their respective businesses. Schedule
      5.19
      attached
      hereto sets forth all such policies and bonding arrangements. Such policies
      and
      bonding arrangements are in full force and effect, all premiums and other
      amounts due thereon have been paid, and Pharmathene, and the Pharmathene
      Subsidiaries have complied with the provisions of such policies and bonding
      arrangements. There are no notices of any pending or threatened terminations
      or
      premium increases with respect to any such policies or bonding arrangements,
      and
      such policies and bonding arrangements will not be modified as a result of
      or
      terminate or lapse by reason of, the transactions contemplated by this
      Agreement.

     

    5.20 Licenses;
      Franchises; Rights.

     

    Each
      of
      Pharmathene and the Pharmathene Subsidiaries has (or has made timely application
      for) all franchises, licenses, permits and other governmental and
      non-governmental approvals necessary to enable it to carry on its business
      as
      currently conducted, and to the knowledge of Pharmathene, the employees and
      agents of Pharmathene and the Pharmathene Subsidiaries also have all such
      franchises, licenses, permits, governmental and other approvals required of
      them
      in carrying out their duties on behalf of Pharmathene and the Pharmathene
      Subsidiaries, except for such franchises, licenses, permits and other approvals
      the failure to hold which, individually or in the aggregate, would not have
      a
      Material Adverse Effect. All such franchises, licenses, permits, and
      governmental and other approvals are in full force and effect, there has been
      no
      default or breach thereunder, and there is no pending or threatened proceeding
      under which any may be revoked, terminated or suspended, except insofar as
      would
      not, individually or in the aggregate, have a Material Adverse Effect. The
      execution and delivery of this Agreement, and the consummation of the Merger,
      will not adversely affect or otherwise impair the ability of the Surviving
      Corporation fully to enjoy the benefits of any such franchises, licenses,
      permits or governmental and other approvals. Schedule
      5.20
      attached
      hereto identifies each material permit, license and other approval required
      by
      any national, state, commonwealth, or territorial government to be maintained
      by
      Pharmathene or any Pharmathene Subsidiary in order to conduct its current
      operations. Neither Pharmathene nor any Pharmathene Subsidiary has violated,
      or
      is alleged to have violated, any law, rule, regulation, judgment, stipulation,
      injunction, decree, determination, award or other order of any government,
      or
      governmental agency or instrumentality, domestic or foreign, binding upon
      Pharmathene or any Pharmathene Subsidiary which violation, individually or
      in
      aggregate, would have a Material Adverse Effect.

     

    5.21
      Environmental
      Matters.

     

    (a) Definitions. For
      the
      purposes of this Agreement, the following terms shall have the meanings set
      forth below.

     

    (i) “Environment”
shall
      mean air, land, surface soil, subsurface soil, sediment, surface water,
      groundwater, wetlands and all flora and fauna present therein or
      thereon.

     

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

     

    (ii) “Environmental
      Conditions”
shall
      mean any pollution or contamination or threatened pollution or contamination
      of,
      or the Release or threatened Release of Hazardous Materials into, the
      Environment.

     

    (iii) “Environmental
      Laws”
means
      all federal, regional, state, county or local laws, statutes, ordinances,
      decisional law, rules, regulations, codes, orders, decrees, directives and
      judgments relating to public health or safety, pollution, damage to or
      protection of the Environment, Environmental Conditions, Releases or threatened
      Releases of Hazardous Materials into the Environment or the use, manufacture,
      processing, distribution, treatment, storage, generation, disposal, transport
      or
      handling of Hazardous Materials, including but not limited to, the Federal
      Water
      Pollution Control Act, 33 U.S.C. §§ 1231-1387; the Resource Conservation and
      Recovery Act, 42 U.S.C. §§ 6901-6991 (“RCRA”);
      the
      Clean Air Act, 42 U.S.C. §§7401-7642; the Comprehensive Environmental Response
      Compensation and Liability Act, 42 U.S.C. §§ 9601-9675 (“CERCLA”);
      the
      Toxic Substances Control Act, 15 U.S.C. §§ 2601-2629; the Federal Occupational
      Safety and Health Act, 29 U.S.C. § 657 et seq.
      (“OSHA”);
      comparable state laws; and any and all rules and regulations promulgated
      thereunder.

     

    (iv) “Hazardous
      Materials”
shall
      mean any substances, materials or wastes, whether liquid, gaseous or solid,
      or
      any pollutant or contaminant, that is infectious, toxic, hazardous, explosive,
      corrosive, flammable or radioactive, including without limitation, petroleum,
      polychlorinated biphenyls, asbestos and asbestos containing materials and urea
      formaldehyde, or that is regulated under, defined, listed or included in any
      Environmental Laws, including without limitation, CERCLA, RCRA and
      OSHA.

     

    (v) “Release”
shall
      mean any intentional or unintentional release, discharge, burial, spill,
      leaking, pumping, pouring. emitting, emptying, injection, disposal or dumping
      into the Environment.

     

    (b) Except
      as
      set forth in Schedule
      5.21:

     

    (i) The
      respective businesses of Pharmathene and the Pharmathene Subsidiaries, and
      the
      Pharmathene Real Properties, are, and at all times have been, in compliance
      with
      all applicable Environmental Laws, except for such non-compliance which,
      individually or in the aggregate, would not have a Material Adverse
      Effect.

     

    (ii) Pharmathene
      possess all permits, authorizations, licenses, approvals and consents required
      under Environmental Laws (“Environmental
      Permits”)
      in
      order to conduct its business as it is now being conducted. Pharmathene is
      in
      compliance with all requirements, terms and provisions of such Environmental
      Permits, except for such non-compliance which, individually or in the aggregate,
      would not have a Material Adverse Effect.

     

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    (iii) Pharmathene
      and each Pharmathene Subsidiary has filed on a timely basis (and updated as
      required) all reports, disclosures, notifications, applications, pollution
      prevention, stormwater prevention or discharge prevention or response plans
      or
      other emergency or contingency plans required to be filed under Environmental
      Laws with respect to its business and the Pharmathene Real
      Properties.

     

    (iv) Neither
      Pharmathene nor, to the knowledge of Pharmathene, any Pharmathene Subsidiary
      has
      received any notice that Pharmathene, any Pharmathene Subsidiary or any of
      the
      Pharmathene Real Properties: (1) is in violation of the requirements of any
      Environmental Permit or Environmental Laws; (2) is the subject of any suit,
      claim, proceeding, demand, order, investigation or request or demand for
      information arising under any Environmental Permit or Environmental Laws; or
      (3)
      has actual or potential liability under any Environmental Laws, including
      without limitation, CERCLA, RCRA or any comparable state or local Environmental
      Laws.

     

    (v) To
      the
      knowledge of Pharmathene, there are no Environmental Conditions or other facts,
      circumstances or activities arising out of or relating to the business of
      Pharmathene or any Pharmathene Subsidiary or the use, operation or occupancy
      by
      Pharmathene or any Pharmathene Subsidiary of any of the Pharmathene Real
      Properties that result or reasonably could be expected to result in (1) any
      obligation of Pharmathene or any Pharmathene Subsidiary to file any report
      or
      notice, to conduct any investigation, sampling or monitoring or to effect any
      environmental cleanup or remediation, whether on-site or offsite; or (2)
      liability, either to governmental agencies or third parties, for damages
      (whether to person, property or natural resources), cleanup costs or remedial
      costs of any kind or nature whatsoever.

     

    (vi) Neither
      Pharmathene nor, to the knowledge of Pharmathene, any Pharmathene Subsidiary
      has
      transported for storage, treatment or disposal, by contract, agreement or
      otherwise, or arranged for the transportation, storage, treatment or disposal,
      of any Hazardous Material at or to any location including, without limitation,
      any location used for the treatment, storage or disposal of Hazardous
      Materials.

     

    5.22 Food
      And Drug Administration Matters.

     

    (a) For
      purposes of this Agreement: (i)”FDA”
means
      the United States Food and Drug Administration and corresponding regulatory
      agencies in other countries and in states of the United States, (ii)
“FDA
      Clearance and Approval”
means
      any pre-market notification or pre-market approval application, consent,
      certificate, registration, permit, license or other authorization, and the
      filing of any notification, application, report or information, required by
      the
      FDA or any other government entity pursuant to any FDA Law, (iii) “FDA
      Company Contractor”
means
      any person with which Pharmathene or SIGA, as the case may be, formerly or
      presently had or has any agreement or arrangement (whether oral or written)
      under which that person has or had physical possession of, or was or is
      obligated to develop, test, process, investigate, manufacture or produce, any
      FDA Regulated Product on behalf of Pharmathene, (iv)”FDA
      Law”
means
      any statute, regulation, judicial or administrative interpretation,

     

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

     

    guideline,
      point-to-consider, recommendation or standard international guidance relating
      to
      any FDA Regulated Product, including, without limitation, the Federal Food,
      Drug, and Cosmetic Act, 21 U.S.C. sec. 301 et seq., the FDA Modernization Act
      of
      1997, Stand Alone Provisions, Pub. L. No. 105-115, 111 Stat. 2295 (1997), and
      equivalent statutes, regulations and guidances adopted by countries,
      international bodies and other jurisdictions, in addition to the United States,
      where Pharmathene has facilities, does business, or directly or through others
      sells or offers for sale any FDA Regulated Product, and (v) “FDA
      Regulated Product”
means
      any product or component including, without limitation, any medical device,
      that
      is studied, used, held or offered for sale for human research or investigation
      or clinical use.

     

    (b) Pharmathene
      has not obtained any clearances or approvals from the FDA to conduct its current
      businesses, to manufacture, hold or sell FDA Regulated Products, and to use
      and
      occupy the Pharmathene Real Properties.

     

    (c) Pharmathene
      has no obligations to submit reports and filings to the FDA.

     

    (d) Except
      as
      set forth in Schedule
      5.22,
      there
      is no civil, criminal or administrative action, suit, demand, claim, complaint,
      hearing, notice of violation, investigation, notice, demand letter, proceeding
      or request for information pending or any liability (whether actual or
      contingent) to comply with any FDA Laws. There is no act, omission, event or
      circumstance of which Pharmathene has knowledge that may give rise to any such
      action, suit, demand, claim, complaint, hearing, notice of violation,
      investigations, notice, demand letter, proceeding or request, or any such
      liability:

     

    (i) against,
      involving or of Pharmathene, or

     

    (ii) against,
      involving or of any other person (including, without limitation, any FDA Company
      Contractor) that could be imputed or attributed to Pharmathene.

     

    (f) There
      has
      not been any violation of any FDA Laws by Pharmathene in their prior product
      developmental efforts, or any other government entity (or any failure to make
      any such submission or report) that could reasonably be expected to require
      investigation, corrective action or enforcement action.

     

    5.23 Brokers
      and Finders.

     

    Except
      as
      set forth in Schedule
      5.23,
      neither
      Pharmathene, nor any Pharmathene Subsidiary, nor any director, officer, agent
      or
      employee thereof has employed any broker or finder or has incurred or will
      incur
      any broker’s, finder’s or similar fees, commissions or expenses, in each case in
      connection with the transactions contemplated by this Agreement.

     

    5.24 Absence
      of Certain Business Practices.

     

    Neither
      Pharmathene nor any of the Pharmathene Subsidiaries, nor any of their respective
      directors or officers, nor, to the knowledge of Pharmathene, any of the
      employees or agents of

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

    Pharmathene
      or any of the Pharmathene Subsidiaries, has directly or indirectly (a) made
      any
      contribution or gift which contribution or gift is in violation of any
      applicable Law, (b) made any bribe, rebate, payoff, influence payment, kickback
      or other payment to any Person, private or public, regardless of form, whether
      in money, property or services (i) to obtain favorable treatment in securing
      business, (ii) to pay for favorable treatment for business secured, (iii) to
      obtain special concessions or for special concessions already obtained for
      or in
      respect of Pharmathene or any of the Pharmathene Subsidiaries, or any affiliate
      of  Pharmathene or any of the Pharmathene Subsidiaries, or (iv) in
      violation of any Law or legal requirement, or (c) established or maintained
      any
      fund or asset of Pharmathene or any of the Pharmathene Subsidiaries, that has
      not been recorded in the books and records of Pharmathene or the appropriate
      Pharmathene Subsidiary. For purposes of this Agreement, the term “Person”
shall
      mean an individual, partnership, venture, unincorporated association,
      organization, syndicate, corporation, limited liability company, or other
      entity, trust, trustee, executor, administrator or other legal or personal
      representative or any government or any agency or political subdivision thereto,
      and the term “Law”
shall
      mean any law in any jurisdiction (including common law), statute, code,
      ordinance, rule, regulation, permit, order, decree or other requirement or
      guideline.

     

    5.25 Restrictions
      on Business Activities.

     

    There
      are
      no judgments, injunctions, orders or decrees binding upon any of Pharmathene
      or
      any of the Pharmathene Subsidiaries, or, to the knowledge of Pharmathene,
      threatened, that has or could either individually or in the aggregate reasonably
      be expected to have the effect of prohibiting or impairing the conduct of the
      business by Pharmathene or any of the Pharmathene Subsidiaries, as currently
      conducted or any business practice of Pharmathene or any of the Pharmathene
      Subsidiaries, including the acquisition of property, the sale of products,
      the
      provision of services, the hiring of employees, and the solicitation of
      customers.

     

    5.26 Section
      203 of GCL Not Applicable. 

     

    The
      Board
      of Directors of Pharmathene has taken all actions so that the restrictions
      contained in Section 203 of the GCL applicable to a “business combination” (as
      defined in Section 203) will not apply to the execution, delivery or performance
      of this Agreement or to the consummation of the Merger or the other transactions
      contemplated by this Agreement.

     

    5.27 Books
      and Records.

     

    The
      books
      and records of Pharmathene
      and
      each
      of the Pharmathene
      Subsidiaries
      with
      respect to Pharmathene and any
      of
      the Pharmathene Subsidiaries,
      their
      operations, employees and properties have been maintained in the usual, regular
      and ordinary manner, all entries with respect thereto have been accurately
      made,
      and all transactions involving Pharmathene and any of the Pharmathene
      Subsidiaries, have been accurately accounted for.

     

    5.28 Disclosure.

     

    None
      of
      the representations or warranties of Pharmathene contained herein and none
      of
      the information contained in the Pharmathene Disclosure Schedule is false or
      misleading in any material respect or omits to state a fact herein or therein
      necessary to make the statements herein

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    
 

    or
      therein, in light of the circumstance in which they were made, not misleading
      in
      any material respect.

     

    ARTICLE
      VI

     

    REPRESENTATIONS
      AND WARRANTIES OF SIGA AND MERGER SUB

     

    Each
      of
      SIGA and Merger Sub hereby represents and warrants to Pharmathene as follows,
      except as set forth in the written disclosure schedules delivered by SIGA to
      Pharmathene (the “SIGA
      Disclosure Schedules”).
      The
      SIGA Disclosure Schedules shall be arranged in sections and subsections
      corresponding to the numbered and lettered sections and subsections contained
      in
      this Article VI. The disclosures in any section or subsection of the SIGA
      Disclosure Schedules shall qualify other sections and subsections in this
      Article VI to the extent it is reasonably clear from a reading of the disclosure
      that such disclosure is applicable to such other sections and subsections.
      The
      inclusion of any information in the SIGA Disclosure Schedules (or any update
      thereto) shall not be deemed to be an admission or acknowledgment, in and of
      itself, that such information is required by the terms hereof to be disclosed,
      is material, has resulted in or would result in a Material Adverse Effect,
      or is
      outside the ordinary course of business. For purposes of this Agreement, the
      phrase “to
      the knowledge of SIGA”
or
      any
      phrase of similar import shall mean the actual or constructive knowledge of
      any
      person holding the office or position, or fulfilling the function of a director
      or officer of SIGA or Merger Sub.

     

    6.1 Incorporation.

     

    SIGA
      is
      duly organized, validly existing and in good standing under the laws of the
      State of Delaware and has full corporate power and authority to own or hold
      under lease the assets and properties which it owns or holds under lease, to
      conduct its business as currently conducted, to perform all of its obligations
      under the agreements to which it is a party, including, without limitation,
      this
      Agreement, and upon the receipt of authorization of the stockholders of SIGA,
      in
      accordance with the GCL, to consummate the Merger. SIGA is in good standing
      in
      each other jurisdiction wherein the failure so to qualify, individually or
      in
      the aggregate, would have a Material Adverse Effect. The copies of the
      certificate of incorporation and by-laws of SIGA which have been delivered
      to
      Pharmathene by SIGA are complete and correct.

     

    6.2 Authorization.

     

    The
      execution and delivery of this Agreement SIGA and Merger Sub, the performance
      by
      SIGA and Merger Sub of their respective covenants and agreements hereunder
      and
      thereunder and upon the receipt of authorization of the stockholders of SIGA,
      in
      accordance with the GCL, the consummation by SIGA and Merger Sub of the
      transactions contemplated hereby and thereby have been duly authorized by all
      necessary corporate action. When executed and delivered by SIGA and Merger
      Sub,
      this Agreement shall constitute the valid and legally binding obligations of
      SIGA and Merger Sub, respectively, enforceable against SIGA and Merger Sub
      in
      accordance with their respective terms, except as may be limited by bankruptcy,
      insolvency or other laws affecting generally the enforceability of creditors’
rights and by limitations on the availability of equitable
      remedies.

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

          
      6.3 Conflicts.

     

    Neither
      the execution and delivery of this Agreement, nor upon the receipt of
      authorization of the stockholders of SIGA, in accordance with the GCL, the
      consummation of the transactions contemplated herein, including without
      limitation, the PIPE (as hereinafter defined), will violate any provision of
      the
      certificate of incorporation or by-laws of SIGA or Merger Sub or, subject to
      compliance with the regulatory requirements hereinafter specified in this
      Section 6.3, any law, rule, regulation, writ, judgment, injunction, decree,
      determination, award or other order of any court, government or governmental
      agency or instrumentality, domestic or foreign, binding upon SIGA or Merger
      Sub
      or any of their subsidiaries or conflict with or result in any breach of any
      of
      the terms of or the creation or imposition of any mortgage, deed of trust,
      pledge, lien, security interest or other charge or encumbrance of any nature
      pursuant to, or create any cause for termination under, the terms of any
      material contract or agreement to which SIGA, Merger Sub or any of their
      respective subsidiaries is a party or by which SIGA, Merger Sub, or any of
      their
      respective subsidiaries or any of their respective properties or assets is
      bound. Other than the approval of the consummation of the transactions
      contemplated by this Agreement in accordance with the GCL by the stockholders
      of
      SIGA and except as set forth on Schedule
      6.3,
      no
      consents, approvals or authorizations, or filings or registrations with any
      governmental agency or authority or any other person or entity are required
      in
      connection with the execution and delivery of this Agreement by SIGA or Merger
      Sub or the consummation by SIGA or Merger Sub of the transactions contemplated
      hereby, including without limitation, the PIPE (as hereinafter
      defined).

     

    6.4 Capitalization. 

     

    (a) The
      authorized capital stock of SIGA consists of (i) 50,000,000 shares of SIGA
      Common Stock, of which 26,500,648 shares are issued and outstanding, and (ii)
      10,000,000 shares of Preferred Stock, of which 10,000,000 are designated as
      Series A Preferred Stock (hereinafter referred to as the “SIGA
      Preferred Stock”
and
      together with the SIGA Common Stock the “SIGA
      Capital Stock”),
      of
      which 68,038 shares are issued and outstanding. There is no other class of
      SIGA
      authorized, issued or outstanding. All of the outstanding shares of SIGA Common
      Stock and SIGA Preferred Stock are, and all outstanding shares of SIGA Common
      Stock issuable upon exercise of SIGA Options (as hereinafter defined) and SIGA
      Warrants (as hereinafter defined) will be, duly authorized, validly issued
      and
      fully paid and non-assessable, issued without violation of the preemptive rights
      of any person. Except as set forth on Schedule
      6.4,
      there
      are no subscriptions, warrants, options, calls, commitments by or agreements
      to
      which SIGA is bound relating to the issuance, conversion, or purchase of any
      shares of SIGA Common Stock, or any other capital stock of SIGA, except for
      the
      options (the “SIGA
      Options”)
      granted by SIGA pursuant to the SIGA Stock Option Plan covering an aggregate
      of
      8,238,727 shares of SIGA Common Stock. The warrants described on Schedule
      6.4
      are
      hereinafter referred to as the “SIGA
      Warrants.”
The
      aggregate number of shares of SIGA Common Stock issuable upon the exercise
      of
      SIGA Options or SIGA Warrants, for an exercise price greater than $2.00 per
      share (hereinafter referred to as the “Partially
      Excluded Derivative Shares”),
      is
      7,264,439. SIGA is not a party to any agreement or arrangement relating to
      the
      voting or control of any of its capital stock, or obligating SIGA, directly
      or
      indirectly, to sell any asset which is material to the businesses, financial
      condition, results of operations or prospects of SIGA

     

     

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

    and
      the
      SIGA Subsidiaries (as hereinafter defined), taken as a whole (hereinafter
      referred to as “SIGA’s
      business or condition”).
      Except as set forth in Schedule
      6.4,
      SIGA
      has not agreed to register any securities under the Securities Act, under any
      arrangements that would require any such registration as a result of this
      agreement or the transactions contemplated hereby or otherwise. All outstanding
      shares of SIGA Capital Stock, all outstanding SIGA Options, and all outstanding
      SIGA Warrants have been issued or granted in compliance with all applicable
      securities laws.

     

    (b) Except
      as
      set forth on Schedule
      6.4,
      there
      are no anti-dilution or price adjustment provisions contained in any security
      issued by SIGA (or in any agreement providing rights to SIGA’s security holders)
      and except as set forth on Schedule
      6.4,
      the
      sale and issuance of the Aggregate Merger Consideration or securities to be
      issued in connection with the PIPE will not obligate SIGA to issue shares of
      SIGA Common Stock or any other securities to any person (other than as
      contemplated by this Agreement or the PIPE) and except as set forth on
Schedule
      6.4,
      will
      not result in a right of any holder of SIGA securities to adjust the exercise,
      conversion, exchange or reset price under such securities.

     

    (c) SIGA
      is
      not a reporting issuer under securities legislation in Canada.

     

    (d) The
      authorized capital stock of Merger Sub consists of 1,000 shares of common stock,
      $.01 par value per share (“Merger
      Sub Common Stock”).
      All
      of the issued and outstanding shares of Merger Sub Common Stock are owned by
      SIGA. Merger Sub does not have issued or outstanding any options, warrants,
      subscriptions, calls, rights, convertible securities or other agreements or
      commitments obligating Merger Sub to issue, transfer or sell any shares of
      Merger Sub Common Stock to any party, other than SIGA. 

     

    6.5 Subsidiaries.

     

    Schedule
      6.5
      annexed
      hereto sets forth the name of each corporation, partnership, joint venture,
      business trust or other legal entity in which SIGA, directly or indirectly,
      beneficially or legally owns or holds any capital stock or other proprietary
      interest (herein referred to, individually, as a “SIGA
      Subsidiary”
and,
      collectively, as the “SIGA
      Subsidiaries”),
      the
      jurisdiction of its incorporation or formation, and SIGA’s direct or indirect
      ownership thereof. Each Subsidiary is a corporation duly organized, validly
      existing and in good standing under the laws of the jurisdiction of its
      incorporation, and has full corporate power and authority to own or hold under
      lease the assets and properties which it owns or holds under lease and to
      perform all its obligations under the agreements to which it is a party and
      to
      conduct such Subsidiary’s business. No SIGA Subsidiary is a resident of Canada
      for purposes of the Income Tax Act (Canada) and none of SIGA or any SIGA
      Subsidiary files any Tax Returns with any governmental entity of Canada or
      any
      political subdivision thereof. Each SIGA Subsidiary is in good standing in
      each
      other jurisdiction wherein the failure so to qualify would, individually or
      in
      the aggregate, have a Material Adverse Effect. All of the outstanding shares of
      the capital stock of each SIGA Subsidiary are owned by SIGA and are duly
      authorized and validly issued, fully paid and non-assessable, issued without
      violation of the preemptive rights of any person, and are owned free and clear
      of any mortgages, deeds of trust, pledges, liens, security interests
      or

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

    any
      charges or encumbrances of any nature. No shares of capital stock or other
      proprietary interest of any SIGA Subsidiary is subject to any option, call,
      commitment or other agreement of any nature, and there are no subscriptions,
      warrants, options, calls, commitments by agreements to which SIGA or any SIGA
      Subsidiary is bound relating to the issuance or purchase of any shares of
      capital stock of any SIGA Subsidiary. Neither SIGA nor any SIGA Subsidiary
      is
      party to any agreement or arrangement relating to the voting or control of
      any
      capital stock of any SIGA Subsidiary, or obligating SIGA or any SIGA Subsidiary
      to sell any assets of any SIGA Subsidiary which is material to SIGA’s business
      or condition. The copies of the certificates of incorporation and by-laws,
      or
      other instruments of formation, of each such SIGA Subsidiary, which have been
      delivered or made available to Pharmathene by SIGA are complete and
      correct.

     

    6.6 Disputes
      and Litigation.

     

    Except
      as
      set forth in SIGA’s Form 10-K filed with the SEC with respect to the fiscal year
      ended December 31, 2005 (hereinafter referred to as the “Form
      10-K”),
      SIGA’s Form 10-Q filed with the SEC with respect to the three months ended on
      March 31, 2006 (hereinafter referred to as the “Form
      10-Q”),
      in
      any Form 8-K filed by SIGA with the SEC between the date of the Form 10-K and
      the date hereof (each hereinafter referred to as a “Form
      8-K”)
      or any
      amendment to the Form 10-K, the Form 10-Q a Form 8-K filed prior to the
      execution of this Agreement (hereinafter referred to as “Publicly
      Disclosed”),
      there
      is no action, suit, proceeding, or claim, pending or to the Knowledge of SIGA,
      threatened, and no investigation by any court or government or governmental
      agency or instrumentality, domestic or foreign, pending or to the Knowledge
      of
      SIGA, threatened, against SIGA or any of the SIGA Subsidiaries, before any
      court, government or governmental agency or instrumentality, domestic or
      foreign, nor is there any outstanding order, writ, judgment, stipulation,
      injunction, decree, determination, award, or other order of any court or
      government or governmental agency or instrumentality, domestic or foreign,
      against SIGA or any of the SIGA Subsidiaries.

     

    6.7 Financial
      Statements and SEC Filings.

     

    (a) The
      consolidated financial statements (hereinafter referred to collectively as
      the
“SIGA
      Audited Financial Statements”)
      of
      SIGA and its consolidated subsidiaries contained in each Form 10-K or Form
      10-KSB filed, with respect to the fiscal years ended December 31, 2004 and
      2005,
      by SIGA in response to “Item 8. Consolidated Financial Statements and
      Supplementary Data”, are true and correct and have been prepared in conformity
      with generally accepted accounting principles consistently applied throughout
      the periods to which such financial statements relate. The SIGA Audited
      Financial Statements fairly present, in all material respects in conformity
      with
      such principles as so applied, the consolidated financial position and results
      of operations and cash flows of SIGA and the SIGA Subsidiaries, at the dates
      shown and for the periods therein specified. The balance sheets constituting
      a
      part of the SIGA Audited Financial Statements fairly present in all material
      respects all consolidated liabilities of SIGA and the SIGA Subsidiaries, on
      a
      consolidated basis, of the types normally reflected in balance sheets as and
      at
      the respective dates thereof. All adjustments necessary to fairly present,
      in
      all material respects, the consolidated financial position and results of
      operations and cash flows of SIGA and the SIGA
      Subsidiaries and the changes in their cash flows, on a consolidated basis for
      such periods have been included in the SIGA Audited Financial
      Statements.

     

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

     

    (b) The
      consolidated financial statements (hereinafter referred to as the “SIGA
      Interim Financial Statements,”
and,
      together with the SIGA Audited Financial Statements, herein referred to as
      the
“SIGA
      Historical Financial Statements”)
      of
      SIGA and its consolidated subsidiaries contained in each Form 10-Q filed by
      SIGA
      in response to “Item 1. Financial Statements” are true and correct and have been
      prepared in conformity with generally accepted accounting principles
      consistently applied through the periods to which such financial statements
      related, except as permitted by Form 10-Q. The SIGA Interim Financial Statements
      fairly present in all material respects in conformity with such principles
      so
      applied, the consolidated financial position and results of operations and
      cash
      flows of SIGA and the SIGA Subsidiaries, on a consolidated basis, at the dates
      shown and for the periods therein specified. The balance sheets constituting
      a
      part of the SIGA Interim Financial Statements fairly present, in all material
      respects, all liabilities of SIGA and the SIGA Subsidiaries, on a consolidated
      basis of the types normally reflected in balance sheets as and at the respective
      date thereof. All adjustments necessary to fairly present, in all material
      respects, the consolidated financial position and results of operations and
      cash
      flows of SIGA and the SIGA Subsidiaries and the changes in their cash flows,
      on
      a consolidated basis, for such periods have been included in the SIGA Interim
      Financial Statements.

     

    (c) Each
      of
      SIGA and each SIGA Subsidiary: maintains a system of internal accounting
      controls sufficient to provide reasonable assurance that (i) transactions are
      executed in accordance with management’s general or specific authorizations;
      (ii) transactions are recorded timely as necessary to permit preparation of
      financial statements in conformity with generally accepted accounting principles
      and to maintain asset accountability; (iii) access to assets is permitted only
      in accordance with management’s general or specific authorization; and (iv) the
      recorded accountability for assets is compared with the existing assets at
      reasonable intervals and appropriate action is taken with respect to any
      differences. Since December 31, 2004, there have been no changes in the internal
      accounting controls or in other factors that could affect SIGA’s internal
      accounting controls.

     

    (d) SIGA
      has
      filed all forms, reports and documents required to be filed with the SEC since
      January 1, 2000 except to the extent that the failure to file such would have
      a
      Material Adverse Effect on SIGA. All such required forms, reports and documents
      (including those that SIGA may file subsequent to the date hereof) are referred
      to herein as the “SIGA
      SEC Reports.”
As
      of
      their respective dates, the SIGA SEC Reports (i) were prepared in accordance
      with the requirements of the Securities Act or the Exchange Act, as the case
      may
      be, and the rules and regulations of the SEC thereunder applicable to such
      SIGA
      SEC Reports, and (ii) did not at the time they were filed (or if amended or
      superseded by a filing prior to the date of this Agreement, then on the date
      of
      such filing) contain any untrue statement of a material fact or omit to state
      a
      material fact required to be stated therein or necessary in order to make the
      statements therein, in the light of the circumstances under which they were
      made, not misleading. Without limiting the generality of the foregoing, at
      the
      time each SIGA SEC Report filed after July 30, 2002 containing financial
      statements was filed with the SEC, such SIGA SEC Report complied in all material
      respects
      with the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley
      Act”),
      as
      and to the extent applicable thereto, and the rules and regulations of the
      SEC
      promulgated thereunder and applicable to such SIGA SEC Reports. Each of the
      principal executive officer of SIGA and the principal financial officer of
      SIGA
      (as defined under the Sarbanes-

     

     

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

     

     

    Oxley
      Act), or each former principal executive officer of SIGA and each former
      principal financial officer of SIGA, as applicable, has made the certifications
      required by Sections 302 and 906 of the Sarbanes-Oxley Act and the rules and
      regulations of the SEC promulgated thereunder with respect to the SIGA SEC
      Reports pursuant to the Exchange Act, when applicable. None of the SIGA’s
      Subsidiaries is or has been required to file any forms, reports or other
      documents with the SEC.

     

    6.8
      Absence
      of Undisclosed Liabilities.

     

    Except
      as
      Publicly Disclosed or otherwise disclosed in this Agreement or disclosed in
      the
      SIGA Historical Financial Statements, neither SIGA, nor any of the SIGA
      Subsidiaries has any liabilities, whether accrued, absolute, contingent, or
      otherwise, whether due or to become due and whether the amount thereof is
      readily ascertainable or not, other than liabilities which, individually or
      in
      the aggregate, would not have a Material Adverse Effect, or any unrealized
      or
      anticipated losses from any unfavorable commitments or sales of products, other
      than those which, individually or in the aggregate, would not have a Material
      Adverse Effect. 

     

    6.9
      Absence
      of Certain Changes.

     

    Except
      as
      Publicly Disclosed or as described on Schedule
      6.9,
      subsequent to December 31, 2005, neither SIGA nor any SIGA Subsidiary
      has:

     

    (a) amended
      or otherwise modified its constituting documents or by-laws (or similar
      organizational documents);

     

    (b) altered
      any term of any of its outstanding securities or made any change in its
      outstanding shares of capital stock or other ownership interests or its
      capitalization, whether by reason of a reclassification, recapitalization,
      stock
      split or combination, exchange or readjustment of shares, stock dividend or
      otherwise;

     

    (c) with
      respect to, any shares of its capital stock or any other of its securities,
      granted, encumbered, issued or sold, or authorized for grant or encumbrance,
      issuance or sale, or granted, encumbered, issued or sold any options, warrants,
      purchase agreements, put agreements, call agreements, participation agreements,
      subscription rights, conversion rights, exchange rights or other securities,
      contracts, arrangements, understanding or commitments fixed or contingent that
      could directly or indirectly require SIGA or any SIGA Subsidiary to issue,
      sell,
      pledge, dispose of or otherwise cause to become outstanding, any of its
      authorized but unissued shares of capital stock or ownership interests, as
      appropriate, or any securities convertible into, exchangeable for or carrying
      a
      right or option to purchase shares of capital stock, or to create, authorize,
      issue, sell or otherwise cause to become outstanding any new class of capital
      stock or ownership interests, as appropriate or entered into any agreement,
      commitment or understanding calling for any of the above;

     

    (d) declared,
      set aside or made any payment, dividend or other distribution
      upon any capital stock or, directly or indirectly, purchased, redeemed or
      otherwise acquired or disposed of any shares of capital stock or other
      securities of or other ownership interests in SIGA or any SIGA
      Subsidiary;

     

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

     

    (e) incurred
      any liability or obligation under agreements or otherwise, except current
      liabilities entered into or incurred in the ordinary course of business
      consistent with past practice; issued any notes or other corporate debt
      securities or paid or discharged any outstanding indebtedness, except in the
      ordinary course of business consistent with past practice; or waived any of
      its
      respective rights;

     

    (f) mortgaged,
      pledged, subjected to any Lien or granted any security interest in any of its
      assets or properties; entered into any lease of real property or buildings;
      or,
      except in the ordinary course of business consistent with past practice, entered
      into any lease of machinery or equipment, or sold, transferred, leased to others
      or otherwise disposed of any tangible or intangible asset or
      property;

     

    (g) effected
      any increase in salary, wages or other compensation of any kind, whether current
      or deferred, to any employee or agent, other than routine increases in the
      ordinary course of business consistent with past practice or as was required
      from time to time by governmental legislation affecting wages (provided,
      however, that in no event was any such increase in compensation made with
      respect to any employee or agent earning in excess of $100,000 per annum);
      made
      any bonus, pension, option, deferred compensation, or retirement payment,
      severance, profit sharing, or like payment to any employee or agent, except
      as
      required by the terms of plans or arrangements existing prior to such date
      (provided, however, that in no event was any such payment made with respect
      to
      any employee or agent earning in excess of $100,000 per annum); or entered
      into
      any salary, wage, severance, or other compensation agreement with a term of
      one
      year or longer with any employee or agent or made any contribution to any trust
      or plan for the benefit of any employee or agent, except as required by the
      terms of plans or arrangements existing prior to such date; or lost the
      employment services of any employee whose annual salary exceeded
      $100,000;

     

    (h) adopted
      or, except as required by law, amended, any employee benefit plan other than
      as
      necessary in connection with the transactions contemplated hereby;

     

    (i) entered
      into any transaction other than in the ordinary course of business consistent
      with past practice, except in connection with the execution and performance
      of
      this Agreement and the transactions contemplated hereby;

     

    (j) terminated
      or modified any SIGA Agreement, or received any written notice of termination of
      any SIGA Agreement, except for terminations of SIGA Agreements upon their
      expiration during such period in accordance with their terms;

     

    (k) incurred
      or assumed any indebtedness for borrowed money or guaranteed any obligation
      or
      the net worth of any entity or person;

     

    (l) discharged
      or satisfied any Lien other than those then required to be
      discharged or satisfied during such period in accordance with their original
      terms; 

     

    (m) paid
      any
      material obligation or liability (absolute, accrued, contingent or otherwise),
      whether due or to become due, except for any current liabilities,

     

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

    and
      the
      current portion of any long term liabilities, shown on the SIGA Historical
      Financial Statements or incurred since December 31, 2005 in the ordinary course
      of business consistent with past practice;

     

    (n) cancelled,
      waived or compromised any material debt or claim; 

     

    (o) suffered
      any damage, destruction, or loss to any of its assets or properties (whether
      or
      not covered by insurance) except for damage, destruction or loss occurring
      in
      the ordinary course of business which, individually or in the aggregate, would
      not have a Material Adverse Effect; 

     

    (p) made
      any
      loan or advance to any entity or person other than travel and other similar
      routine advances to employees in the ordinary course of business consistent
      with
      past practice; 

     

    (q) made
      any
      capital expenditures or capital additions or betterments in amounts which exceed
      $50,000 in the aggregate;

     

    (r) purchased
      or acquired any capital stock or other securities of any other corporation
      or
      any ownership interest in any other business enterprise;

     

    (s) changed
      its method of accounting or its accounting principles or practices, including
      any policies or practices with respect to the establishment of reserves for
      work-in-process and accounts receivable, utilized in the preparation of the
      SIGA
      Historical Financial Statements, other than as required by GAAP;

     

    (t) instituted
      or settled any litigation or any legal, administrative or arbitration action
      or
      proceeding before any court, government or governmental agency or
      instrumentality, domestic or foreign, relating to it or any of its properties
      or
      assets;

     

    (u) made
      any
      new elections, changed any current elections or settled or compromised any
      liability with respect to its Taxes; or

     

    (v) entered
      into any agreement or commitment to do any of the foregoing; or

     

    (w) suffered
      any Material Adverse Effect; 

     

    and,
      since December 31, 2005, there has been no condition, development or contingency
      which, so far as reasonably may be foreseen, may, individually or in the
      aggregate, have a Material Adverse Effect.

     

    6.10 Intellectual
      Property.

    (a)
Set
      forth on
      Schedule 6.10 is a true, accurate and complete list of all Intellectual Property
      Rights owned, licensed or used by SIGA and that are material to the business
      of
      SIGA as presently conducted or as contemplated to be conducted (hereinafter
      referred to as the “SIGA Intellectual Property Rights”), specifying whether
      such

     

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

     

     Intellectual
      Property Rights are exclusive or non-exclusive to SIGA and including identifying
      information of all federal, state and foreign registrations of such Intellectual
      Property Rights or applications for registration thereof (but excluding software
      licenses that are generally commercially available).

     

    (b) SIGA
      owns, is licensed to use, or otherwise has the full legal right to use all
      of
      the SIGA Intellectual Property Rights, free and clear of any Lien. To the
      knowledge of SIGA, all of such SIGA Intellectual Property Rights are sufficient
      for the conduct of SIGA’s business as presently conducted and to the knowledge
      of SIGA, as contemplated to be conducted, and constitute all of the Intellectual
      Property Rights owned, licensed or used by SIGA. Except for the licenses
      disclosed in Schedule
      6.10
      (hereinafter referred to as the “SIGA
      Licenses”),
      (i)
      SIGA is not bound by or a party to any rights or options (whether or not
      currently exercisable), licenses or agreements of any kind (other than software
      licenses that are generally commercially available) with respect to the SIGA
      Intellectual Property Rights and (ii) to SIGA’s knowledge, there are no other
      outstanding rights or options (whether or not currently exercisable), licenses
      or agreements of any kind relating to SIGA Intellectual Property Rights. Except
      under the SIGA Licenses identified in Schedule
      6.10,
      SIGA is
      not obligated to pay any royalties or other compensation or expenses (other
      than
      fees for software licenses that are generally commercially available), to any
      third party in respect of its ownership, use or license of any of the SIGA
      Intellectual Property Rights. There has been no breach or violation by SIGA,
      and
      to the knowledge of SIGA there is no breach or violation by any other party
      to,
      any SIGA License that is reasonably likely to give rise to any termination
      or
      any loss of rights thereunder.

     

    (c) To
      the
      knowledge of SIGA, neither SIGA’s business, as presently conducted or as
      contemplated to be conducted, nor the current and contemplated products or
      services of SIGA infringe, constitute the misappropriation of, or conflict
      with,
      any Intellectual Property Rights of any third party. SIGA is not aware of any
      claim, and has not received any notice or other communication (in writing or
      otherwise) of any claim from, any person asserting that SIGA’s business, as
      presently conducted or as contemplated to be conducted, or any of the current
      or
      contemplated products or services of SIGA infringe or may infringe, constitute
      the misappropriation of, or conflict with, any Intellectual Property Rights
      of
      another person. SIGA is not aware of any existing or threatened infringement,
      misappropriation, or competing claim by any third party on the right to use
      or
      own any of, the SIGA Intellectual Property Rights.

     

    (d) SIGA
      has
      taken commercially reasonable measures and precautions to establish and preserve
      the confidentiality, secrecy and ownership of all SIGA Intellectual Property
      Rights with respect to its products and services. Without limiting the
      generality of the foregoing, employees who have had access to confidential
      or
      proprietary information of SIGA have executed and delivered to SIGA
      confidentiality agreements in a form customary in the industry in which SIGA
      operates. Copies of such agreements have been delivered to Pharmathene, and
      all
      of such agreements are in full force and effect. SIGA is
      not
      aware of any violation of the confidentiality of any non-public SIGA
      Intellectual Property Rights. SIGA is not making unlawful use of any
      confidential information or trade secrets of any third party. To the knowledge
      of SIGA, the activities of SIGA’s employees, consultants, or independent
      contractors on behalf of SIGA’s business, as presently conducted

     

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

    and
      contemplated to be conducted, do not violate any agreements or arrangements
      which such employees have with former employers or any other third person.
      To
      the knowledge of SIGA, no current or former employee, officer, director,
      stockholder, consultant or independent contractor has any right, claim or
      interest in or with respect to any of the SIGA Intellectual Property
      Rights.

     

    (e) Except
      as
      set forth in Schedule
      6.10,
      to the
      knowledge of SIGA, no third party has infringed, misappropriated or otherwise
      conflicted with any of the SIGA Intellectual Property Rights. To the knowledge
      of SIGA, there are no third party challenges to the SIGA Intellectual Property
      Rights including interferences, reexaminations, oppositions and
      appeals.

     

    (f) Except
      as
      set forth in Schedule
      6.10,
      (i)
      there is no action, suit, order, claim, or to SIGA’s knowledge, governmental
      investigation pending, or, to SIGA’s knowledge, threatened in writing against
      SIGA or affecting SIGA, relating to the SIGA Intellectual Property and
      reasonably likely so as to cause a Material Adverse Effect (or to the knowledge
      of SIGA, pending or threatened in writing against any of the officers, directors
      or employees of SIGA with respect to SIGA’s business or proposed business
      activities) at law or in equity, or before of by any governmental department,
      commission, board, bureau, agency or instrumentality (including, without
      limitation, any actions, suit, proceedings or investigations with respect to
      the
      transactions contemplated by this Agreement); (ii) nor has there been any such
      actions, suits, orders, claims, or to the knowledge of SIGA, governmental
      investigations or claims pending against SIGA at any time; (iii) to the
      knowledge of SIGA, there is no valid basis for any of the foregoing; (v) SIGA
      is
      not subject to any judgment, order or decree of any court or other governmental
      agency; and (vi) there is no action, suit, proceeding, or investigation by
      SIGA
      currently pending or which SIGA presently intends to initiate with respect
      to
      the transactions contemplated by the Agreement.

     

    6.11 Taxes.

     

    Except
      as
      set forth in Schedule
      6.11,
      SIGA
      and each SIGA Subsidiary has timely and accurately filed, or caused to be timely
      and accurately filed, all Tax Returns required to be filed by it, and has paid,
      collected or withheld, or caused to be paid, collected or withheld, all amounts
      of Taxes required to be paid, collected or withheld, other than such Taxes
      for
      which adequate reserves have been established and which are being contested
      in
      good faith. There are no claims or assessments pending against SIGA or any
      SIGA
      Subsidiary for any alleged deficiency in any Tax, there are no pending or,
      to
      the knowledge of SIGA, threatened audits or investigations for or relating
      to
      any liability in respect of any Taxes, and SIGA has not been notified in writing
      of any proposed Tax claims or assessments against SIGA or any SIGA Subsidiary
      (other than in each case, claims or assessments for which adequate reserves
      have
      been established and which are being contested in good faith). Neither SIGA
      nor
      any SIGA Subsidiary has executed any waivers or extensions of any applicable
      statute of limitations to assess any amount of Taxes. There are no outstanding
      requests by SIGA or any SIGA Subsidiary for any extension of time within
      which to file any Tax Return or within which to pay any amounts of Taxes shown
      to be due on any Tax Return. To the knowledge of SIGA, there are no liens for
      Taxes on the assets of SIGA or any SIGA Subsidiary except for statutory liens
      for current Taxes not yet due and payable. There are no outstanding powers
      of
      attorney enabling any party to represent SIGA or

     

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

     

     

    any
      SIGA
      Subsidiary with respect to Taxes. Other than with respect to SIGA or any SIGA
      Subsidiary, neither SIGA nor any SIGA Subsidiary is liable for Taxes of any
      other Person, or is currently under any contractual obligation to indemnify
      any
      person with respect to any amounts of Taxes (except for customary agreements
      to
      indemnify lenders or security holders in respect of Taxes), or is a party to
      any
      tax sharing agreement or any other agreement providing for payments by SIGA
      or
      any SIGA Subsidiary with respect to any amounts of Taxes. Neither SIGA nor
      any
      SIGA Subsidiary has engaged in any transaction which requires its participation
      to be disclosed under Treas. Reg. Sec. 1.6011-4.

     

    6.12 Title.

     

    SIGA
      and
      the SIGA Subsidiaries have good and marketable title to all of their respective
      assets and properties, in each case free and clear of all Liens except for
      those
      Liens described on Schedule
      6.12
      (hereinafter referred to as the “SIGA
      Permitted Liens”).
      SIGA
      and the SIGA Subsidiaries lease or own all properties and assets necessary
      for
      the operation of their respective businesses as presently conducted, and the
      assets and properties of SIGA and the SIGA Subsidiaries include all of the
      assets, of every kind and nature, whether tangible or intangible, and wherever
      located, which are utilized by SIGA or the SIGA Subsidiaries in the conduct
      of
      their respective businesses. Neither SIGA nor the SIGA Subsidiaries have
      received notice of any violation of, or default under, any law, ordinance,
      order, regulation, or governmental or contractual requirement relating to the
      assets and properties of SIGA or the SIGA Subsidiaries which remains uncured
      or
      has not been dismissed, other than with respect to any violation which,
      individually or in the aggregate, would not have a Material Adverse Effect.
      All
      leases and licenses pursuant to which SIGA or the SIGA Subsidiaries lease or
      license personal and intangible property from others, are in good standing,
      valid and effective in accordance with their respective terms, and there is
      not,
      under any of such leases or licenses, any existing default or event of default
      (or event which with notice or lapse of time, or both, would constitute a
      default, or would constitute a basis for a claim of force majeure or other
      claim
      of excusable delay or non-performance) which would result in a Material Adverse
      Effect. All the tangible personal property owned or leased by SIGA or the SIGA
      Subsidiaries is in good operating condition and repair, subject only to ordinary
      wear and tear, and conforms in all respects to all applicable laws, ordinances,
      orders, regulations or governmental or contractual requirements relating to
      their operation, except for any such non-conformity which, individually or
      in
      the aggregate, would not have a Material Adverse Effect.

     

    6.13 Real
      Estate and Leases.

     

    Set
      forth
      in Schedule
      6.13
      attached
      hereto is a list of every parcel of real estate owned by SIGA or a SIGA
      Subsidiary and a list of each lease agreement under which SIGA or any of the
      SIGA Subsidiaries is lessee of, or holds or operates, any real estate owned
      by
      any third party (collectively hereinafter referred to as the “SIGA
      Real Properties”).
      SIGA
      or a SIGA Subsidiary has good and marketable title to the properties owned
      by
      SIGA or a SIGA Subsidiary set forth on Schedule
      6.13
      and all
      fixtures thereon in fee simple absolute, subject to no Liens other
      than SIGA Permitted Liens. There is no option or right held by any third party
      to purchase any such properties or any part thereof, or any of the fixtures
      and
      equipment thereon. All buildings, driveways and other improvements on such
      properties, respectively, are within its boundary lines, and no improvements
      on
      adjoining properties extend across the boundary lines

     

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

     

    onto
      such
      properties. Each lease agreement described in Schedule
      6.13
      is in
      full force and effect and constitutes a legal, valid and binding obligation
      of
      the respective parties thereto. Neither SIGA nor any SIGA Subsidiary is in
      a
      default under any such lease agreement, nor to the knowledge of SIGA is any
      other party to any such lease agreement in default thereunder, and no event
      has
      occurred, or is alleged to have occurred, which constitutes, or with lapse
      of
      time or giving of notice or both would constitute, a default by any party to
      any
      such lease agreement or a basis for a claim of force majeure or other claim
      of
      excusable delay or non-performance thereunder, other than with respect to any
      default, event or claim which, individually or in the aggregate, would not
      have
      any Material Adverse Effect.

     

    6.14 Contractual
      and Other Obligations.

     

    (a) As
      used
      in this Agreement, the term the “SIGA
      Agreements”
shall
      mean all mortgages, indentures, notes, agreements, contracts, leases, licenses,
      franchises, obligations, instruments or other commitments, arrangements or
      understandings of any kind, whether written or oral, to which SIGA or any of
      the
      SIGA Subsidiaries is a party or by which SIGA or any of the SIGA Subsidiaries
      or
      any of their respective properties may be bound or affected. Set forth or
      provided for on Schedule
      6.14
      attached
      hereto is a list, of each SIGA Agreement which is material to SIGA’s business or
      condition, including but not limited to: (i) any mortgage, indenture, note,
      installment obligation or other instrument, agreement or arrangement for or
      relating to any borrowing of money by SIGA or any SIGA Subsidiary; (ii) any
      guaranty, direct or indirect, by SIGA or any SIGA Subsidiary of any obligation
      for borrowings or otherwise, excluding endorsements made for collection in
      the
      ordinary course of business; (iii) any SIGA Agreement made other than in the
      ordinary course of its business or providing for the grant of any preferential
      rights to purchase or lease any assets of SIGA or any SIGA Subsidiary, except
      for such agreements which, individually and in the aggregate, are not material
      to SIGA’s business or condition; (iv) any obligation to make payments,
      contingent or otherwise, arising out of the prior acquisition of the business,
      assets or stock of other companies; (v) any collective bargaining agreement
      with
      any trade or labor union; (vi) any SIGA Agreement to which any officer or
      director of SIGA or any stockholder (herein referred to collectively, as the
      “SIGA
      Insiders”)
      of
      SIGA beneficially owning (within the meaning of Section 13(d) of the Exchange
      Act) more than 5% of the outstanding shares of SIGA Common Stock, is a party;
      (vii) any SIGA Agreement containing noncompetition or other limitations
      restricting the conduct of the business of SIGA or any Subsidiary; (viii) any
      license agreements to which SIGA or any SIGA Subsidiary is a party relating
      to
      any Intellectual Property; (ix) any partnership, shareholder agreement, joint
      venture or similar agreement; and (x) any agreements with independent
      contractors; (xi) any agreements other than licenses related to any Intellectual
      Property; and (xii) any agreements with employees. 

     

    (b) No
      event
      has occurred, or, is alleged to have occurred, which constitutes or with lapse
      of time or giving of notice or both, would constitute a default or a basis
      for a
      claim of force majeure or other claim of excusable delay or non-performance
      by
SIGA
      or
      any SIGA Subsidiary under any SIGA Agreements, except for any such default
      or
      claim which, individually or in the aggregate, would not have a Material Adverse
      Effect. To the best of the knowledge of SIGA, no party with whom SIGA or any
      SIGA Subsidiary has any SIGA Agreement is in default in the performance of
      any
      covenant or condition

     

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

     

     

    thereunder
      or has failed in performance thereunder by reason of a claim of force majeure
      or
      other claim of excusable delay or non-performance thereunder, except for any
      such default or claim which, individually or in the aggregate, would not have
      a
      Material Adverse Effect. 

     

    6.15 Compensation.

     

    Except
      as
      Publicly Disclosed or disclosed in Schedule
      6.15
      attached
      hereto, neither SIGA nor any SIGA Subsidiary has any agreement with any employee
      with regard to compensation, whether individually or collectively, except
      agreements terminable by SIGA or any SIGA Subsidiary at will without penalty,
      or
      oral agreements terminable by SIGA or a SIGA Subsidiary on not more than 30
      days
      notice without penalty, and set forth in Schedule
      6.15
      is a
      list of all employees of SIGA and each SIGA Subsidiary entitled to receive
      annual compensation in excess of $100,000 and their respective positions and
      salaries. No union or other collective bargaining unit has been certified or
      recognized by SIGA or any SIGA Subsidiary as representing any of their
      respective employees. Except as set forth on Schedule
      6.15,
      neither
      SIGA nor Pharmathene will incur any liability with respect to any payment due
      or
      damage suffered by any employee of SIGA or any SIGA Subsidiary, including,
      but
      not limited to, any claims for severance, termination benefits or similar
      claims, by virtue of the operation of the Merger and the transactions
      contemplated hereby.

     

    6.16 Employee
      Benefit Plans.

     

    (a) Except
      as
      Publicly Disclosed or set forth on Schedule
      6.16,
      neither
      SIGA nor any SIGA Subsidiary maintains, sponsors, contributes to, is required
      to
      contribute to, is a party to, or otherwise has or is reasonably expected to
      have
      any liability (contingent or otherwise) with respect to (1) any “employee
      welfare benefit plan,”
as
      defined in Section 3(1) of ERISA, (2) any “employee
      pension benefit plan,”
as
      defined in Section 3(2) of ERISA, (3) any plan or
      agreement providing for bonuses, stock options, stock appreciation rights,
      stock
      purchase plans or other forms of equity-based compensation, (4) any other plan
      or agreement involving direct or indirect compensation (including any deferred
      compensation) other than workers’ compensation, unemployment compensation and
      other government programs, (5) any employment, severance, separation, change
      of
      control or other similar contract, arrangement or policy providing for insurance
      coverage,
      salary
      continuation,
      non-statutory workers’ compensation, disability benefits, supplemental
      unemployment benefits, vacation benefits, retirement benefits, pension,
      supplemental pension, savings, retirement savings,
      fringe
      benefits, deferred compensation, profit-sharing, bonuses, other forms of
      incentive compensation or post-retirement insurance, compensation or benefits,
      (6) any other
      employee benefit plan, arrangement, program, agreement, policy or practice,
      formal or informal, funded or unfunded, insured or self-insured, that covers
      any
      current or former employee of SIGA or any SIGA Subsidiary,
      or (7)
      any Multiemployer Plan. Each plan or agreement required to be set forth on
      Schedule
      6.16,
      other
      than a Multiemployer
      Plan, pursuant to the foregoing is referred to herein as a “SIGA Benefit
      Plan.”

     

    (b) SIGA
      has
      delivered or made available to Pharmathene the following documents with respect
      to each SIGA Benefit Plan: (1) correct and complete copies of all documents
      embodying such SIGA Benefit Plan, including (without limitation) 

     

     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

     

     

    all
      amendments thereto and all related trust documents, (2) a written description
      of
      any SIGA Benefit Plan that is not set forth in a written document, (3) the
      most
      recent summary plan description, summary of material modifications and other
      similar descriptive materials distributed to plan participants and
      beneficiaries, (4) the most recent IRS determination letter or similar forms
      of
      any applicable foreign jurisdiction, if any, (5) the three most recent annual
      reports (Form Series 5500 and all schedules and financial statements attached
      thereto), if any, and (6) all material written agreements and contracts
      currently in effect, including (without limitation) administrative service
      agreements, group annuity contracts and group insurance contracts.

     

    (c) Each
      SIGA
      Benefit Plan materially complies and has been maintained and administered in
      all
      material respects in compliance with, its terms and with the requirements
      prescribed by any and all applicable law, including (without limitation) ERISA
      and the Code. All material contributions, reserves or premium payments required
      to be made or accrued as of the date hereof to the SIGA Benefit Plans have
      been
      timely made or accrued. Neither SIGA nor any SIGA Subsidiary has taken or failed
      to take any action with respect to any SIGA Benefit Plan which might create
      any
      material liability on the part of SIGA or any SIGA Subsidiary.

     

    (d) Neither
      SIGA nor any SIGA Subsidiary maintains, participates in or contributes to,
      nor
      have they ever maintained, participated in, or contributed to, any Multiemployer
      Plan, a plan described in Section 413 of the Code, or any plan subject to Title
      IV of ERISA or Section 302 of ERISA. Neither SIGA nor any SIGA Subsidiary has
      any outstanding or contingent obligations or liabilities (including, without
      limitation, any withdrawal liability) with respect to a Multiemployer Plan
      providing pension or other benefits, a plan described in Section 413 of the
      Code, or any plan subject to Title IV of ERISA or Section 302 of
      ERISA.

     

    (e) Neither
      SIGA nor any SIGA Subsidiary is subject to any material liability or penalty
      under Sections 4975 through 4980B of the Code or Title I of ERISA. With respect
      to each SIGA Benefit Plan which is a “group
      health plan”
as
      defined in Section 5000(b)(1) of the Code and Section 607(l) of ERISA, SIGA
      and
      each SIGA Subsidiary has complied in all material respects with the applicable
      health care continuation requirements in Section 4980B of the Code and in ERISA.
      SIGA, and each SIGA Subsidiary, and each SIGA Benefit Plan which is a group
      health plan has, as of the date hereof, complied in all material respects with
      the Family and Medical Leave Act of 1993, the Health Insurance Portability
      and
      Accountability Act of 1996, the Women’s Health and Cancer Rights Act of 1998,
      the Newborns’ and Mothers’ Health Protection Act of 1996, and any similar
      provisions of state law applicable to employees of SIGA and each SIGA
      Subsidiary. No “prohibited
      transaction,”
within
      the meaning of Section 4975(c) of the Code
      or
      Sections 406 or 407 of ERISA and not otherwise exempt under Section 408 of
      ERISA, has occurred with respect to any SIGA Benefit Plan.

     

    (f) Except
      as
      set forth in Schedule
      6.16,
      there
      is no contract, plan or arrangement covering any employee or former employee
      of
      SIGA or any SIGA Subsidiary that, individually or collectively, would give
      rise
      to the payment as a result of the

     

     

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    

     

    transactions
      contemplated by this Agreement of any amount that would not be deductible by
      SIGA or such SIGA Subsidiary by reason of Section 280G or 162(m) of the
      Code.

     

    (g) No
      material action, suit or claim (excluding claims for benefits incurred in the
      ordinary course) has been brought or is pending or, to the knowledge of SIGA,
      threatened against or with respect to any SIGA Benefit Plan, or the assets
      or
      any fiduciary thereof (in that person's capacity as a fiduciary of such SIGA
      Benefit Plan) and to the knowledge of SIGA, there are no facts likely to give
      rise to any such action, suit or claim. There are no audits, inquiries or
      proceedings pending or, to the knowledge of SIGA, threatened by the IRS or
      the
      Department of Labor or corresponding authority in Canada with respect to any
      SIGA Benefit Plan, and no SIGA Benefit Plan has been the subject of any
      application for relief under the Internal Revenue Service Employee Plans
      Compliance Resolution Program or the Closing Agreement Program, nor has any
      SIGA
      Benefit Plan been the subject of any application for relief under the United
      States Department of Labor Voluntary Fiduciary Correction Program or Delinquent
      Filer Voluntary Compliance Program.

     

    (h) All
      SIGA
      Benefit Plans that are intended to be qualified and exempt from United States
      federal income taxes under Section 401(a) and Section 501(a), respectively,
      of
      the Code, have been the subject of favorable determination letters or, in the
      case of prototype plans, opinion letters, from the IRS which consider the effect
      of the series of laws commonly known as GUST, and no such determination letter
      has been revoked nor has revocation been threatened.

     

    (i) Each
      “fiduciary”
(within
      the meaning of Section 3(21)(A) of ERISA) as to each SIGA Benefit Plan has
      complied in all material respects with the requirements of ERISA and all other
      applicable law in respect of each such SIGA Benefit Plan.

     

    (j) All
      required employer and employee contributions and premiums under the SIGA Benefit
      Plans to the date hereof have been paid or duly accrued, the respective fund
      or
      funds established under the SIGA Benefit Plans are, in all material respects,
      funded in accordance with all applicable law and such plans, and no material
      past service funding liabilities exist thereunder.

     

    (k) Other
      than any pension benefits payable under the SIGA Benefit Plans, neither SIGA
      nor
      any SIGA Subsidiary is under any obligation to provide benefits or coverage
      under a SIGA Benefit Plan to retirees of SIGA or any SIGA Subsidiary or other
      former employees of SIGA or the SIGA Subsidiaries (or the beneficiaries of
      such
      retirees or former employees), including, but not limited to, retiree health
      care coverage (except to the extent mandated by the Consolidated Omnibus Budget
      Reconciliation Act of 1985).

    (l)
      Neither SIGA nor any SIGA Subsidiary maintains any voluntary employees’
beneficiary association within the meaning of Sections 501(c)(9) and 505 of
      the
      Code (a VEBA) with respect to any SIGA Benefit Plan.

     

     

    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

     

     

    (m) No
      commitments have been made by SIGA or any SIGA Subsidiary to amend any SIGA
      Benefit Plan, to provide increased benefits thereunder or to establish any
      new
      benefit plan, except as required by applicable law or as disclosed on
Schedule
      6.16.
      None of
      the SIGA Benefit Plans require or permit retroactive increases or assessments
      in
      premiums or payments. All SIGA Benefit Plans can be amended or terminated
      without any restrictions and SIGA or a SIGA Subsidiary has the unrestricted
      power to amend or terminate any of the SIGA Benefit Plans.

     

    6.17 Labor
      Relations.

     

    Except
      as
      Publicly Disclosed, there are no disputes pending or to the knowledge of SIGA,
      threatened between SIGA or any SIGA Subsidiary on the one hand and any of their
      respective employees on the other and there are no organizational efforts
      currently being made or to the knowledge of SIGA threatened involving any of
      such employees. SIGA has complied with all laws relating to the employment
      of
      labor, including without limitation, any provisions thereof relating to wages,
      hours, collective bargaining and the payment of social security and similar
      taxes, and is not liable for any material arrearage of wages or any taxes or
      penalties for failure to comply with any of the foregoing.

     

    6.18 Transactions
      with Affiliated Persons.

     

    Except
      (i) as Publicly Disclosed, (ii) for employment relationships between SIGA or
      any
      of the SIGA Subsidiaries and employees of SIGA or any of the SIGA Subsidiaries
      otherwise disclosed pursuant to this Agreement, (iii) for remuneration by SIGA
      or any of the SIGA Subsidiaries for services rendered as a director, officer
      or
      employee of SIGA or any of the SIGA Subsidiaries otherwise disclosed pursuant
      to
      this Agreement, or (iv) as set forth in Schedule
      6.18,
      (A)
      neither SIGA nor any of the SIGA Subsidiaries has, and has not since its
      inception, in the ordinary course of business or otherwise, directly or
      indirectly, purchased, leased or otherwise acquired any property or obtained
      any
      services from, or sold, leased or otherwise disposed of any property or
      furnished any services to any affiliate of SIGA or any of the SIGA Subsidiaries;
      (B) neither SIGA nor any of the SIGA Subsidiaries owes any amount to any
      affiliate of SIGA or any of the SIGA Subsidiaries; (C) no affiliate of SIGA
      or
      any of the SIGA Subsidiaries owes any amount to any of SIGA or any of the SIGA
      Subsidiaries; and (D) no part of the property or assets of any affiliate of
      SIGA
      or any of the SIGA Subsidiaries is used by any of SIGA or any of the SIGA
      Subsidiaries in the conduct or operation of its businesses. No affiliate of
      SIGA
      or any of the SIGA Subsidiaries owns any business which is a significant
      competitor of SIGA or any of the SIGA Subsidiaries.

     

    6.19 Insurance.

     

    As
      of the
      date of this Agreement, SIGA and the SIGA Subsidiaries maintain insurance
      policies, and bonding arrangements, covering all of their respective assets
      and
      properties, and in each case the various occurrences which may arise in
      connection with the operation of their respective
      businesses. Schedule
      6.19
      attached
      hereto sets forth all such policies and bonding arrangements. Such policies
      and
      bonding arrangements are in full force and effect, all premiums and other
      amounts due thereon have been paid, and SIGA, and the SIGA Subsidiaries have
      complied with the provisions of such policies and bonding arrangements. There
      are no notices of

     

     

    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

    

     

     

    any
      pending or threatened terminations or premium increases with respect to any
      such
      policies or bonding arrangements, and such policies and bonding arrangements
      will not be modified as a result of or terminate or lapse by reason of, the
      transactions contemplated by this Agreement.

     

    6.20 Licenses;
      Franchises; Rights.

     

    Each
      of
      SIGA and the SIGA Subsidiaries has (or has made timely application for) all
      franchises, licenses, permits and other governmental and non-governmental
      approvals necessary to enable it to carry on its business as currently
      conducted, and to the knowledge of SIGA, the employees and agents of SIGA and
      the SIGA Subsidiaries also have all such franchises, licenses, permits,
      governmental and other approvals required of them in carrying out their duties
      on behalf of SIGA and the SIGA Subsidiaries, except for such franchises,
      licenses, permits and other approvals the failure to hold which, individually
      or
      in the aggregate, would not have a Material Adverse Effect. All such franchises,
      licenses, permits, and governmental and other approvals are in full force and
      effect, there has been no default or breach thereunder, and there is no pending
      or threatened proceeding under which any may be revoked, terminated or
      suspended, except insofar as would not, individually or in the aggregate, have
      a
      Material Adverse Effect. The execution and delivery of this Agreement, and
      the
      consummation of the Merger, will not adversely affect or otherwise impair the
      ability of SIGA fully to enjoy the benefits of any such franchises, licenses,
      permits or governmental and other approvals. Schedule
      6.20
      attached
      hereto identifies each material permit, license and other approval required
      by
      any national, state, commonwealth, or territorial government to be maintained
      by
      SIGA or any Subsidiary in order to conduct its current operations. Neither
      SIGA
      nor any SIGA Subsidiary has violated, or is alleged to have violated, any law,
      rule, regulation, judgment, stipulation, injunction, decree, determination,
      award or other order of any government, or governmental agency or
      instrumentality, domestic or foreign, binding upon SIGA or any SIGA Subsidiary
      which violation, individually or in aggregate, would have a Material Adverse
      Effect.

     

    6.21 Environmental
      Matters.

     

    (a) Except
      as
      set forth in Schedule
      6.21:

     

    (i) The
      respective businesses of SIGA and the SIGA Subsidiaries, and the SIGA Real
      Properties, are, and at all times have been, in compliance with all applicable
      Environmental Laws, except for such non-compliance which, individually or in
      the
      aggregate, would not have a Material Adverse Effect.

     

    (ii) SIGA
      possess all Environmental Permits in order to conduct its business as it is
      now
      being conducted. SIGA is in compliance with all requirements, terms and
      provisions of such Environmental Permits, except for such non-compliance which,
      individually or in the aggregate, would not have a Material Adverse
      Effect.

     

     

    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    

     

     

    (iii) SIGA
      and
      each SIGA Subsidiary has filed on a timely basis (and updated as required)
      all
      reports, disclosures, notifications, applications, pollution prevention,
      stormwater prevention or discharge prevention or response plans or other
      emergency or contingency plans required to be filed under Environmental Laws
      with respect to its business and the SIGA Real Properties.

     

    (iv) Neither
      SIGA nor, to the knowledge of SIGA, any SIGA subsidiary has received any notice
      that SIGA, any SIGA Subsidiary or any of the SIGA Real Properties: (1) is in
      violation of the requirements of any Environmental Permit or Environmental
      Laws;
      (2) is the subject of any suit, claim, proceeding, demand, order, investigation
      or request or demand for information arising under any Environmental Permit
      or
      Environmental Laws; or (3) has actual or potential liability under any
      Environmental Laws, including without limitation, CERCLA, RCRA or any comparable
      state or local Environmental Laws.

     

    (v) To
      the
      knowledge of SIGA, there are no Environmental Conditions or other facts,
      circumstances or activities arising out of or relating to the business of SIGA
      or any SIGA Subsidiary or the use, operation or occupancy by SIGA or any SIGA
      Subsidiary of any of the SIGA Real Properties that result or reasonably could
      be
      expected to result in (1) any obligation of SIGA or any SIGA Subsidiary to
      file
      any report or notice, to conduct any investigation, sampling or monitoring
      or to
      effect any environmental cleanup or remediation, whether on-site or offsite;
      or
      (2) liability, either to governmental agencies or third parties, for damages
      (whether to person, property or natural resources), cleanup costs or remedial
      costs of any kind or nature whatsoever.

     

    (vi) Neither
      SIGA nor, to the knowledge of SIGA, any SIGA Subsidiary has transported for
      storage, treatment or disposal, by contract, agreement or otherwise, or arranged
      for the transportation, storage, treatment or disposal, of any Hazardous
      Material at or to any location including, without limitation, any location
      used
      for the treatment, storage or disposal of Hazardous Materials.

     

    6.22 Food
      And Drug Administration Matters.

     

    (a) SIGA
      has
      not obtained any clearances or approvals from the FDA to conduct its current
      businesses, to manufacture, hold or sell FDA Regulated Products, and to use
      and
      occupy the SIGA Real Properties.

     

    (b) SIGA
      has
      no obligations to submit reports and filings to the FDA.

     

    (c) There
      is
      no civil, criminal or administrative action, suit, demand, claim, complaint,
      hearing, notice of violation, investigation, notice, demand letter, proceeding
      or request for information pending or any liability (whether actual or
      contingent) to comply with any FDA Laws. There is no act, omission, event or
      circumstance of which SIGA has knowledge that may give rise to any such action,
      suit, demand, claim, complaint, hearing, notice of violation, investigations,
      notice, demand letter, proceeding or request, or any such
      liability:

     

    (i) against,
      involving or of SIGA, or

     

     

    
      
        
        

      

      
        48

        
          

        

      

      
        
        

      

    

     

     

    (ii) against,
      involving or of any other person (including, without limitation, any FDA Company
      Contractor) that could be imputed or attributed to SIGA.

     

    (d) There
      has
      not been any violation of any FDA Laws by SIGA in their prior product
      developmental efforts, or any other government entity (or any failure to make
      any such submission or report) that could reasonably be expected to require
      investigation, corrective action or enforcement action.

     

    6.23 Brokers
      and Finders.

     

    Neither
      SIGA, nor any SIGA Subsidiary, nor any director, officer, agent or employee
      thereof has employed any broker or finder or has incurred or will incur any
      broker’s, finder’s or similar fees, commissions or expenses, in each case in
      connection with the transactions contemplated by this Agreement.

     

    6.24 Voting
      Agreement.

     

    Attached
      hereto as Exhibit
      C
      is a
      Voting Agreement (hereinafter referred to as the “Voting
      Agreement”)
      executed by the holders of at least 29 percent of the shares of SIGA Common
      Stock as of the date of this Agreement pursuant to which such holders of SIGA
      Common Stock have agreed to vote their shares in favor of the transactions
      contemplated by this Agreement when the Merger is presented to the holders
      of
      SIGA Common Stock for a vote. The Voting Agreement constitutes the valid and
      legally binding obligation of the parties thereto, enforceable in accordance
      with its terms.

     

    6.25 Fairness
      Opinion.

     

    SIGA’s
      board of directors has received the written opinion of Sutter Securities
      Incorporated, financial advisor to SIGA, dated the date of this Agreement,
      to
      the effect that the Merger is fair to SIGA and its stockholders from a financial
      point of view.

     

    6.26 Section
      203 of GCL Not Applicable.

     

    The
      Board
      of Directors of SIGA has taken all actions so that the restrictions contained
      in
      Section 203 of the GCL applicable to a “business combination” (as defined in
      Section 203) will not apply to the execution, delivery or performance of this
      Agreement or to the consummation of the Merger, the other transactions
      contemplated by this Agreement and the Voting Agreement.

     

    6.27 Valid
      Issuance.

     

    The
      SIGA
      Common Stock to be issued upon the consummation of the Merger, when issued
      in
      accordance with the provisions of this Agreement, shall be validly issued,
      fully
      paid and nonassessable.

     

     

    
      
        
        

      

      
        49

        
          

        

      

      
        
        

      

    

     

     

    6.28 Absence
      of Certain Business Practices.

     

    Neither
      SIGA nor any of the SIGA Subsidiaries, nor any of their respective directors
      or
      officers, nor, to the knowledge of SIGA, any of the employees or agents of
      SIGA
      or any of the SIGA Subsidiaries, has directly or indirectly (a) made any
      contribution or gift which contribution or gift is in violation of any
      applicable Law, (b) made any bribe, rebate, payoff, influence payment, kickback
      or other payment to any Person, private or public, regardless of form, whether
      in money, property or services (i) to obtain favorable treatment in securing
      business, (ii) to pay for favorable treatment for business secured, (iii) to
      obtain special concessions or for special concessions already obtained for
      or in
      respect of SIGA or any of the SIGA Subsidiaries, or any affiliate of  SIGA
      or any of the SIGA Subsidiaries, or (iv) in violation of any Law or legal
      requirement, or (c) established or maintained any fund or asset of SIGA or
      any
      of the SIGA Subsidiaries, that has not been recorded in the books and records
      of
      SIGA or the appropriate SIGA Subsidiary.

     

    6.29 Restrictions
      on Business Activities.

     

    There
      are
      no judgments, injunctions, orders or decrees binding upon any of SIGA or any
      of
      the SIGA Subsidiaries, or, to the knowledge of SIGA, threatened, that has or
      could either individually or in the aggregate reasonably be expected to have
      the
      effect of prohibiting or impairing the conduct of the business by SIGA or any
      of
      the SIGA Subsidiaries, as currently conducted or any business practice of SIGA
      or any of the SIGA Subsidiaries, including the acquisition of property, the
      sale
      of products, the provision of services, the hiring of employees, and the
      solicitation of customers.

     

    6.30 Nasdaq.

     

    Shares
      of
      SIGA Common Stock are listed for trading on the Nasdaq Stock Market (hereinafter
      referred to as the “Nasdaq”).
      SIGA
      is in compliance with all rules, regulations and listing requirements of Nasdaq.
      Except as set forth on Schedule
      6.30
      or as
      Publicly Disclosed, SIGA has not received any notices or other communication
      with respect to any violations or potential violations of any rules, regulations
      and listing requirements of Nasdaq.

     

    6.31 Books
      and Records.

     

    The
      books
      and records of SIGA and each of the SIGA Subsidiaries with respect to SIGA
      and
      any of the SIGA Subsidiaries, their operations, employees and properties have
      been maintained in the usual, regular and ordinary manner, all entries with
      respect thereto have been accurately made, and all transactions involving SIGA
      and any of the SIGA Subsidiaries, have been accurately accounted
      for

     

    6.32 Validity
      of Shares.

     

    The
      Aggregate Merger Consideration, when issued, sold and delivered in accordance
      with the terms of this Agreement, shall be duly and validly, issued fully-paid
      and nonassessable and neither SIGA nor the holder thereof shall be subject
      to
      any preemptive, anti-dilution or similar right with respect thereto that has
      not
      been properly waived or complied with.

     

     

    
      
        
        

      

      
        50

        
          

        

      

      
        
        

      

    

     

     

     

    ARTICLE
      VII

     

    CERTAIN
      COVENANTS 

     

    7.1 SIGA
      Stockholders’
      Meeting; Preparation of Proxy Statement.

     

    (a) SIGA
      shall take all action necessary, in accordance with applicable law and its
      certificate of incorporation and by-laws, to convene as promptly as practicable
      an annual or special meeting of the holders of shares of SIGA Capital Stock
      (the
“SIGA
      Stockholders Meeting”),
      to
      vote upon this Agreement, the issuance of SIGA Common Stock in accordance with
      this Agreement and the transactions contemplated hereby, including, without
      limitation, an amendment to its certificate of incorporation so as to increase
      the authorized number of shares of SIGA Common Stock to 300,000,000 shares
      and
      to change the name of SIGA to “Pharmathene Inc.” upon the Closing, to amend its
      Stock Option Plan to increase the number of shares authorized thereunder to
      25,250,000, to obtain proper authorization under the GCL and the requirements
      of
      Nasdaq to consummate the PIPE (as hereinafter defined) and as otherwise required
      thereunder in connection with the Merger and the transactions contemplated
      hereunder (collectively referred to herein as the “Merger
      Transactions”),
      and
      to reconstitute its board of directors, as set forth under Section 7.2 hereof,
      and shall include in the proxy statement the recommendation (subject to the
      fiduciary duty of the Board of Directors under applicable law) of its Board
      of
      Directors that the holders of SIGA Capital Stock vote in favor of the Merger
      Transactions. SIGA shall use its commercially reasonable efforts to solicit
      from
      such stockholders proxies in favor of such matters and shall take all other
      action necessary to secure a favorable vote. For the avoidance of doubt, the
      obligation of SIGA to take the actions described in this Section 7.1(a) shall
      not be affected by any change in the recommendation of the Board of Directors
      with respect to the Merger.

     

    (b) SIGA
      will
      (i) as soon as practicable following the date of this Agreement, prepare in
      correct and appropriate form and file with the SEC a preliminary proxy statement
      (hereinafter referred to as the “Proxy
      Statement”)
      and
      (ii) use its commercially reasonable efforts to respond to any comments of
      the
      SEC or its staff and to cause the Proxy Statement to be cleared by the SEC.
      Pharmathene shall supply SIGA on a timely basis in connection with the
      preparation of the Proxy Statement all financial and other information necessary
      to be included therein with respect to Pharmathene. SIGA will notify Pharmathene
      of the receipt of any comments from the SEC or its staff and of any request
      by
      the SEC or its staff for amendments or supplements to the Proxy Statement or
      for
      additional information and will supply Pharmathene with copies of all
      correspondence between SIGA or any of its representatives, on the one hand,
      and
      the SEC or its staff, on the other hand, with respect to the Proxy Statement.
      SIGA shall give Pharmathene and its counsel the opportunity to review the Proxy
      Statement prior to being filed with the SEC and shall give Pharmathene and
      its
      counsel the opportunity to review all amendments and supplements to the Proxy
      Statement and all responses to requests for additional information and replies
      to comments prior to their being filed with, or sent to, the SEC. Each of SIGA
      and Pharmathene agrees to use its commercially reasonable efforts, after
      consultation with the other parties hereto, to respond promptly to all such
      comments of and requests by the SEC. 

     

     

    
      
        
        

      

      
        51

        
          

        

      

      
        
        

      

    

     

    As
      promptly as practicable after the Proxy Statement has been cleared by the SEC,
      SIGA shall mail the Proxy Statement to the stockholders of SIGA.

     

    (c) Each
      party agrees to notify the other of, and to correct, any information contained
      in the Proxy Statement furnished by such party to the other for inclusion
      therein, which information shall be, at the time of furnishing, or become,
      prior
      to the meeting of SIGA stockholders, false or misleading in any material
      respect. If at any time prior to the meeting of SIGA stockholders or any
      adjournment thereof, there shall occur any event that should be set forth in
      an
      amendment to Proxy Statement, SIGA shall prepare and mail to its stockholders
      such an amendment or supplement.

     

    (d) During
      the period from the date of this Agreement to the date of Closing, SIGA shall
      file all reports, schedules and definitive proxy statements (including the
      Proxy
      Statement) (the “SIGA
      Filings”)
      required to be filed by SIGA.

     

    7.2 SIGA
      Board of Directors.

     

    Prior
      to
      the Effective Time, SIGA shall take such action as may be necessary, so that
      the
      SIGA Board of Directors will be reconstituted immediately following the
      Effective Time and pursuant to SIGA’s certificate of incorporation and by-laws,
      to be set at seven (7) persons and to be comprised of the following persons:
      James H. Cavanaugh, Elizabeth Czerepak, Joel McCleary, Steven St. Peter, David
      P. Wright, Matthew Drapkin, and Paul Savas with David P. Wright serving as
      Chairman; or such other persons designated by the parties prior to
      Closing.

     

    7.3 SIGA
      Officers.

     

    SIGA
      shall take such action as may be necessary so that David Wright shall be
      appointed to the office of Chief Executive Officer of SIGA, effective as of
      the
      Effective Time in accordance with and subject to the provisions of the by-laws
      of SIGA.

     

    7.4 Preparation
      of Information Statement.

     

    SIGA
      shall cooperate with Pharmathene in Pharmathene’s preparation of, the
      information required by Regulation D under the Securities Act (hereinafter
      referred to as “Regulation
      D”)
      to be
      delivered to the holders of the Pharmathene Capital Stock (hereinafter referred
      to as the “Information
      Statement”).
      Each
      of SIGA and Pharmathene shall provide promptly to the other such information
      concerning its business and financial statements and affairs as, in the
      reasonable judgment of the providing party or its counsel, may be required
      or
      appropriate for inclusion in the Information Statement, or in any amendments
      or
      supplements thereto, and to cause its counsel and auditors to cooperate with
      the
      other party’s counsel and auditors in the preparation of the Information
      Statement. SIGA shall not include in the Information Statement any information
      with respect to Pharmathene or its subsidiaries unless the form and content
      of
      such information shall have been approved by Pharmathene prior to such
      inclusion.

     

    7.5 Governmental
      and Judicial Filings.

     

    As
      soon
      as practicable after the date hereof, Pharmathene, SIGA and Merger Sub will
      cooperate in the preparation and filing of all materials necessary or desirable
      to obtain the

     

    
      
        
        

      

      
        52

        
          

        

      

      
        
        

      

    

    approval
      of the transactions contemplated hereby or the disclaimer of jurisdiction with
      respect thereto by any regulatory body or other governmental or judicial
      authority that has jurisdiction over the transactions contemplated
      hereby.

     

    7.6 Access
      to Information.

     

    (a) Between
      the date of this Agreement and the earlier of the Effective Time or the
      termination of this Agreement in accordance with its terms, upon reasonable
      notice and subject to such limitations as are imposed by applicable law (if
      any), each party shall afford the other party and its accountants, counsel
      and
      other representatives reasonable access during normal business hours to (i)
      all
      of such party’s properties, books, contracts, commitments and records, and (ii)
      all other information concerning the business, properties and personnel of
      such
      party as the other party may reasonably request; subject, in each case, to
      duties of confidentiality and subject to any applicable law relating to the
      privacy of individually identifiable employee information.

     

    (b) No
      information or knowledge obtained in any investigation pursuant to this Section
      7.5 shall affect or be deemed to modify any representation or warranty contained
      herein or the conditions to the obligations of the parties to consummate the
      Merger.

     

    7.7 Ordinary
      Course of Pharmathene.

     

    From
      the
      date hereof until the Closing, other than as contemplated by this Agreement
      or
      as set forth in Schedule
      7.7,
      Pharmathene and each of the Pharmathene Subsidiaries will (i) maintain its
      corporate existence in good standing, and (ii) in all respects conduct its
      business in the usual and ordinary course and consistent with past practice,
      without a material change in current operational policies.

     

    7.8 Conduct
      of Pharmathene Business.

     

    From
      the
      date hereof until the Closing, other than as contemplated by this Agreement
      or
      as set forth in Schedule
      7.8,
      neither
      Pharmathene nor any of the Pharmathene Subsidiaries will do any of the following
      without the prior written consent of Pharmathene:

     

    (a) amend
      or
      otherwise modify its constituting documents or by-laws (or similar
      organizational documents);

     

    (b) alter
      any
      term of any of its outstanding securities or make any change in its outstanding
      shares of capital stock or other ownership interests or its capitalization,
      whether by reason of a reclassification, recapitalization, stock split or
      combination, exchange or readjustment of shares, stock dividend or
      otherwise;

     

    (c) with
      respect to, any shares of its capital stock or any other of its securities,
      grant, encumber issue or sell, or authorize for grant, encumbrance issuance
      or
      sale, or grant, encumber, issue or sell any options, warrants, purchase
      agreements, put agreements, call agreements, participation agreements,
      subscription rights, conversion rights, exchange rights or other securities,
      contracts, arrangements, understanding or commitments,

     

     

    
      
        
        

      

      
        53

        
          

        

      

      
        
        

      

    

     

     

    fixed
      or
      contingent, that could directly or indirectly, require Pharmathene or any
      Pharmathene Subsidiary to issue, sell, pledge, dispose of or otherwise cause
      to
      become outstanding, any of its authorized but unissued shares of capital stock
      or ownership interests, as appropriate, or any securities convertible into,
      exchangeable for or carrying a right or option to purchase shares of capital
      stock, or to create, authorize, issue, sell or otherwise cause to become
      outstanding any new class of capital stock or ownership interests, as
      appropriate (other than the issuance of options pursuant to Pharmathene’s
      existing stock option plan or the conversion or exchange of securities existing
      on the date hereof) or enter into any agreement commitment or understanding
      calling for any of the above;

     

    (d) declare,
      set aside or make any payment, dividend or other distribution upon any capital
      stock or, directly or indirectly, purchase, redeem or otherwise acquire or
      dispose of any shares of capital stock or other securities of or other ownership
      interests in Pharmathene or any Pharmathene Subsidiary;

     

    (e) incur
      any
      liability or obligation under agreements or otherwise, except current
      liabilities entered into or incurred in the ordinary course of business
      consistent with past practice; issue any notes or other corporate debt
      securities or pay or discharge any outstanding indebtedness, except in the
      ordinary course of business consistent with past practice; or waive any of
      its
      respective rights;

     

    (f) mortgage,
      pledge, subject to any Lien or grant any security interest in any of its assets
      or properties; enter into any lease of real property or buildings; or, except
      in
      the ordinary course of business consistent with past practice, enter into any
      lease of machinery or equipment, or sell, transfer, lease to others or otherwise
      dispose of any tangible or intangible asset or property;

     

    (g) effect
      any increase in salary, wages or other compensation of any kind, whether current
      or deferred, to any employee or agent, other than routine increases in the
      ordinary course of business consistent with past practice or as is required
      from
      time to time by governmental legislation affecting wages; make any bonus,
      pension, option, deferred compensation, or retirement payment, severance, profit
      sharing, or like payment to any employee or agent, except as required by the
      terms of plans or arrangements existing prior to the date hereof; or enter
      into
      any salary, wage, severance, or other compensation agreement with a term of
      one
      year or longer with any employee or agent or make any contribution to any trust
      or plan for the benefit of any employee or agent, except as required by the
      terms of plans or arrangements existing prior to the date hereof;

     

    (h) adopt
      or,
      except as required by law, amend, any employee benefit plan other than as
      necessary in connection with the transactions contemplated hereby;

     

    (i) enter
      into any transaction other than in the ordinary course of business consistent
      with past practice, except in connection with the execution and performance
      of
      this Agreement and the transactions contemplated hereby;

     

     

    
      
        
        

      

      
        54

        
          

        

      

      
        
        

      

    

     

     

    (j) terminate
      or modify any Pharmathene Agreement, except for terminations of Pharmathene
      Agreements upon their expiration after the date hereof in accordance with their
      terms;

     

    (k) incur
      or
      assume any indebtedness for borrowed money or guarantee any obligation or the
      net worth of any entity or person;

     

    (l) discharge
      or satisfy any Lien other than those then required to be discharged or satisfied
      after the date hereof in accordance with their original terms;

     

    (m) pay
      any
      material obligation or liability (absolute, accrued, contingent or otherwise),
      whether due or to become due, except for any current liabilities, and the
      current portion of any long term liabilities, shown on the Pharmathene
      Historical Financial Statements or incurred since the date hereof in the
      ordinary course of business consistent with past practice;

     

    (n) cancel,
      waive or compromise any material debt or claim;

     

    (o) make
      any
      loan or advance to any entity or person other than travel and other similar
      routine advances to employees in the ordinary course of business consistent
      with
      past practice;

     

    (p) purchase
      or acquire any capital stock or other securities of any other corporation or
      any
      ownership interest in any other business enterprise;

     

    (q) make
      capital expenditures or capital additions or betterments in an amount which
      exceed $50,000 in the aggregate;

     

    (r) change
      its method of accounting or its accounting principles or practices, including
      any policies or practices with respect to the establishment of reserves for
      work-in-process and accounts receivable, utilized in the preparation of the
      Pharmathene Historical Financial Statements, other than as required by
      GAAP;

     

    (s) institute
      or settle any litigation or any legal, administrative or arbitration action
      or
      proceeding before any court, government or governmental agency or
      instrumentality, domestic or foreign, relating to it or any of its properties
      or
      assets;

     

    (t) make
      any
      new elections, change any current elections or settle or compromise any
      liabilities with respect to its Taxes; or

     

    (u) enter
      into any agreement or commitment to do any of the foregoing.

     

    7.9 Ordinary
      Course of SIGA.

     

    From
      the
      date hereof until the Closing, other than as contemplated by this Agreement
      or
      as set forth in Schedule
      7.9,
      SIGA
      and each of the SIGA Subsidiaries will (i) maintain its corporate existence
      in
      good standing, and (ii) in all respects conduct its business in the usual
      and

     

    
      
        
        

      

      
        55

        
          

        

      

      
        
        

      

    

    ordinary
      course and consistent with past practice, without a material change in current
      operational policies.

     

    7.10 Conduct
      of SIGA Business.

     

    From
      the
      date hereof until the Closing, other than as contemplated by this Agreement
      or
      as set forth in Schedule
      7.10,
      neither
      SIGA nor any of the SIGA Subsidiaries will do any of the following without
      the
      prior written consent of Pharmathene:

     

    (a) amend
      or
      otherwise modify its constituting documents or by-laws (or similar
      organizational documents);

     

    (b) alter
      any
      term of any of its outstanding securities or make any change in its outstanding
      shares of capital stock or other ownership interests or its capitalization,
      whether by reason of a reclassification, recapitalization, stock split or
      combination, exchange or readjustment of shares, stock dividend or
      otherwise;

     

    (c) with
      respect to, any shares of its capital stock or any other of its securities,
      grant, encumber issue or sell, or authorize for grant, encumbrance issuance
      or
      sale, or grant, encumber, issue or sell any options, warrants, purchase
      agreements, put agreements, call agreements, participation agreements,
      subscription rights, conversion rights, exchange rights or other securities,
      contracts, arrangements, understanding or commitments, fixed or contingent
      that
      could, directly or indirectly, require SIGA or any SIGA Subsidiary to issue,
      sell, pledge, dispose of or otherwise cause to become outstanding, any of its
      authorized but unissued shares of capital stock or ownership interests, as
      appropriate, or any securities convertible into, exchangeable for or carrying
      a
      right or option to purchase shares of capital stock, or to create, authorize,
      issue, sell or otherwise cause to become outstanding any new class of capital
      stock or ownership interests, as appropriate (other than the issuance of options
      pursuant to SIGA’s existing stock option plan or the conversion or exchange of
      securities existing on the date hereof) or enter into any agreement, commitment
      or understanding calling for any of the above;

     

    (d) declare,
      set aside or make any payment, dividend or other distribution upon any capital
      stock or, directly or indirectly, purchase, redeem or otherwise acquire or
      dispose of any shares of capital stock or other securities of or other ownership
      interests in SIGA or any SIGA Subsidiary;

     

    (e) incur
      any
      liability or obligation under agreements or otherwise, except current
      liabilities entered into or incurred in the ordinary course of business
      consistent with past practice; issue any notes or other corporate debt
      securities or pay or discharge any outstanding indebtedness, except in the
      ordinary course of business consistent with past practice; or waive any of
      its
      respective rights;

     

    (f) mortgage,
      pledge, subject to any Lien or grant any security interest in any of its assets
      or properties; enter into any lease of real property or buildings; or, except
      in
      the ordinary course of business consistent with past practice, enter into any
      lease of machinery or equipment, or sell, transfer, lease to others or otherwise
      dispose of any tangible or intangible asset or property;

     

     

    
      
        
        

      

      
        56

        
          

        

      

      
        
        

      

    

     

     

    (g) effect
      any increase in salary, wages or other compensation of any kind, whether current
      or deferred, to any employee or agent, other than routine increases in the
      ordinary course of business consistent with past practice or as is required
      from
      time to time by governmental legislation affecting wages; make any bonus,
      pension, option, deferred compensation, or retirement payment, severance, profit
      sharing, or like payment to any employee or agent, except as required by the
      terms of plans or arrangements existing prior to the date hereof; or enter
      into
      any salary, wage, severance, or other compensation agreement with a term of
      one
      year or longer with any employee or agent or make any contribution to any trust
      or plan for the benefit of any employee or agent, except as required by the
      terms of plans or arrangements existing prior to the date hereof; 

     

    (h) adopt
      or,
      except as required by law, amend, any employee benefit plan other than as
      necessary in connection with the transactions contemplated hereby;

     

    (i) enter
      into any transaction other than in the ordinary course of business consistent
      with past practice, except in connection with the execution and performance
      of
      this Agreement and the transactions contemplated hereby;

     

    (j) terminate
      or modify any SIGA Agreement, except for terminations of SIGA Agreements upon
      their expiration after the date hereof in accordance with their
      terms;

     

    (k) incur
      or
      assume any indebtedness for borrowed money or guarantee any obligation or the
      net worth of any entity or person;

     

    (l) discharge
      or satisfy any Lien other than those then required to be discharged or satisfied
      after the date hereof in accordance with their original terms; 

     

    (m) pay
      any
      material obligation or liability (absolute, accrued, contingent or otherwise),
      whether due or to become due, except for any current liabilities, and the
      current portion of any long term liabilities, shown on the SIGA Historical
      Financial Statements or incurred since the date hereof in the ordinary course
      of
      business consistent with past practice;

     

    (n) cancel,
      waive or compromise any material debt or claim; 

     

    (o) make
      any
      loan or advance to any entity or person other than travel and other similar
      routine advances to employees in the ordinary course of business consistent
      with
      past practice; 

     

    (p) purchase
      or acquire any capital stock or other securities of any other corporation or
      any
      ownership interest in any other business enterprise;

     

    (q) make
      capital expenditures or capital additions or betterments in an amount which
      exceed $50,000 in the aggregate;

     

    (r) change
      its method of accounting or its accounting principles or practices, including
      any policies or practices with respect to the establishment of reserves
      for

     

     

    
      
        
        

      

      
        57

        
          

        

      

      
        
        

      

    

     

     

    work-in-process
      and accounts receivable, utilized in the preparation of the SIGA Historical
      Financial Statements, other than as required by GAAP;

     

    (s) institute
      or settle any litigation or any legal, administrative or arbitration action
      or
      proceeding before any court, government or governmental agency or
      instrumentality, domestic or foreign, relating to it or any of its properties
      or
      assets;

     

    (t) make
      any
      new elections, change any current elections or settle or compromise any
      liabilities with respect to its Taxes; or

     

    (u) enter
      into any agreement or commitment to do any of the foregoing.

     

    7.11 Notification
      of Certain Matters.

     

    (a) Between
      the date hereof and the Effective Time, each party will give prompt notice
      in
      writing to the other parties, of: (i) the occurrence, or failure to occur,
      of
      any event, which occurrence or failure would be likely to cause any of its
      representations or warranties contained in this Agreement to be untrue or
      inaccurate in any material respect from the date hereof to the Effective Time,
      (ii) any notice or other communication from any person alleging that the consent
      of such person is or may be required in connection with the transactions
      contemplated by this Agreement, (iii) any notice or other communication from
      any
      governmental or regulatory agency or authority in connection with the
      transactions contemplated by this Agreement, (iv) any actions, suits, claims,
      investigations or proceedings commenced or, to the best of its knowledge,
      threatened against the notifying party or any subsidiary or relating to or
      involving or otherwise affecting the notifying party or which relate to the
      consummation of the transactions contemplated by this Agreement, and (v) any
      material failure of the notifying party or any officer, director, employee
      or
      agent thereof to comply with or satisfy any covenant, condition or agreement
      to
      be complied with or satisfied by it hereunder.

     

    (b) The
      giving of any such notice under this Section 7.11 shall in no way change or
      modify the representations and warranties or the conditions to either parties’
obligations contained herein or otherwise affect the remedies available to
      either party hereunder.

     

    7.12 SEC
      Filings.

     

    SIGA
      will
      consult with Pharmathene and prepare and file any other filings required under
      the Exchange Act, the Securities Act or any other federal or state securities
      laws relating to the Merger and the transactions contemplated by this Agreement
      to the extent and only to the extent of the content of any disclosure regarding
      the Merger or the transactions contemplated by this Agreement, including without
      limitation a current report on Form 8-K announcing the execution of this
      Agreement (collectively, the “Other
      Filings”),
      and
      SIGA will permit Pharmathene and its counsel with reasonable advance notice
      in
      order to review and comment on any such Other Filings prior to their filing
      with
      the SEC. SIGA will notify Pharmathene promptly upon the receipt of any comments
      from the SEC or its staff and of any request by the SEC or its staff or any
      other governmental officials for amendments or supplements to any Other Filing
      or for

     

    
      
        
        

      

      
        58

        
          

        

      

      
        
        

      

    

    additional
      information and will supply Pharmathene with copies of all correspondence
      between SIGA or any of its representatives, on the one hand, and the SEC, or
      its
      staff or other government officials, on the other hand, with respect to the
      Merger or any Other Filing. The Other Filings will comply in all material
      respects with all applicable requirements of law and the rules and regulations
      promulgated thereunder. Whenever any event occurs which is required to be set
      forth in an amendment or supplement to any Other Filing, SIGA will promptly
      inform Pharmathene of such occurrence and cooperate in filing with the SEC
      or
      its staff or any other government officials. 

     

    7.13 Forbearance
      and Fiduciary Duties. 

     

    (a) From
      and
      after the date hereof until the Closing or termination of this Agreement in
      accordance with Article XII, SIGA shall
      not,
      and
it
      shall
      not permit any
      of
      its
      officers, directors, employees, agents or representatives to,
      directly or indirectly, initiate, solicit or encourage proposals,
      requests,
      inquiries or contacts,
      or
      participate in negotiations or discussions, including without limitation, the
      delivery of non-public information of SIGA to any third party, for the purpose
      or with the intention of leading to any proposal,
      concerning any disposition, directly or indirectly, of any material
      assets
      of
      SIGA,
      without
      limitation, extending to any take-over
      bid, merger,
      consolidation or other business combination involving SIGA or any acquisition
      of an equity interest in SIGA representing any material amount of the equity
      of
      SIGA or any similar
      transaction, except for the transactions contemplated
      by this
      Agreement (hereafter referred to, collectively, as an “Acquisition
      Proposal”).
      Furthermore, SIGA may not enter into any agreements or letters of intent
      relating to an Acquisition Proposal, except in accordance with this Section
      7.13.

     

    (b) SIGA
      shall promptly (and in any event within 24 hours) notify Pharmathene in writing
      of the receipt of any unsolicited Acquisition Proposal or any request for
      non-public information relating to SIGA, its assets or business or for access
      to
      the properties, books or records of SIGA by any person or entity that informs
      SIGA that it is considering making, or has made, an Acquisition Proposal. Such
      notice to Pharmathene shall indicate the relevant details of such Acquisition
      Proposal, inquiry, request or contact and such other information Pharmathene
      may
      reasonably request, including a copy of such Acquisition Proposal. SIGA shall
      keep Pharmathene informed on a reasonably prompt basis (and, in any event,
      within 24 hours of any significant development) of the status and details
      (including amendments and proposed amendments) of any such Acquisition Proposal
      or other inquiry or request.

     

    (c) If
      at any
      time between the date hereof and the Closing, SIGA receives an unsolicited
      Acquisition Proposal (other than as a result of a breach of this Section 7.13)
      that the Board of Directors of SIGA determines in good faith by resolution
      duly
      adopted, after consultation with outside legal counsel and a financial advisor
      reasonably acceptable to the parties (provided that the parties hereto agree
      that Sutter Securities Incorporated shall be reasonably acceptable), constitutes
      or would reasonably be expected to lead to a Superior Proposal (as defined
      below) then, SIGA may (i) provide such person or entity with access to
      information regarding SIGA, its assets or its business, subject to the execution
      of a confidentiality agreement with term no less favorable to SIGA than those
      contained in the Confidentiality Agreement as hereinafter defined and
      (ii) participate in any

     

     

    
      
        
        

      

      
        59

        
          

        

      

      
        
        

      

    

    negotiation
      or discussion for the purpose or with the intention of leading to an agreement
      with the party offering such Superior Proposal.
      SIGA
      shall provide to Pharmathene, as soon as practicable following the execution
      thereof (and in any case within 24 hours), a copy of any such confidentiality
      agreement executed by SIGA and copies of all written material provided by SIGA
      to such party. For purposes of this Agreement, “Superior
      Proposal”
means
      any bona fide written proposal made by a third party (i) involving the purchase
      or acquisition, directly or indirectly, of all the shares of SIGA Common Stock
      or all or substantially all of the assets of SIGA and (ii) which is otherwise
      on
      terms which the SIGA Board of Directors determines in good faith, by resolution
      duly adopted, (A) would result in a transaction that, if consummated, is more
      favorable to holders of SIGA Common Stock, from a financial point of view,
      than
      the transactions contemplated by this Agreement after consultation with a
      financial advisor reasonably acceptable to the parties (provided that the
      parties hereto agree that Sutter Securities Incorporated shall be reasonably
      acceptable), taking into account all the terms and conditions of such proposal
      and this Agreement (including any proposal by Pharmathene to amend the terms
      of
      this Agreement) that the SIGA Board of Directors deems relevant and (B) is
      reasonably capable of being completed on the terms proposed, taking into account
      all financial, regulatory, legal and other aspects of such
      proposal.

     

    (d) Neither
      the Board of Directors of SIGA nor any committee thereof may (i) withdraw or
      modify, or propose to withdraw or modify, in a manner adverse to Pharmathene
      or
      Merger Sub, the approval or recommendation by the Board of Directors of SIGA
      or
      any such committee of this Agreement or the Merger, (ii) approve or recommend
      or
      propose to approve or recommend any Acquisition Proposal or (iii) except as
      set
      forth in Section 12.1(b), enter into any agreement with respect to any
      Acquisition Proposal. Notwithstanding the foregoing, at any time prior to the
      approval of the Merger Transactions by the requisite SIGA stockholders, (x)
      if
      the Board of Directors of SIGA has not received a Superior Proposal, but the
      Board of Directors of SIGA, in the exercise of its fiduciary duties, determines
      in good faith by resolution duly adopted, after consultation with its outside
      counsel, that an action set forth in clause (i) or (ii) above (a “SIGA
      Adverse Recommendation Change”)
      is
      necessary in order to comply with its fiduciary duties to the stockholders
      of
      SIGA under the GCL, the Board of Directors of SIGA may make a SIGA Adverse
      Recommendation Change after providing Pharmathene with at least 24 hours prior
      notice of its determination and a reasonably detailed description of the reasons
      therefor, and (y) if SIGA has received a Superior Proposal, the Board of
      Directors of SIGA may make a SIGA Adverse Recommendation Change after (A) it
      has
      determined, in good faith by resolution duly adopted after consultation with
      outside counsel, that it is necessary for the SIGA Board of Directors to
      withdraw, amend or modify its approval or recommendation of this Agreement
      or
      the Merger in order to comply with its fiduciary duties to the stockholders
      of
      SIGA under applicable Law, (B) SIGA has provided written notice of the
      determination described in clause (A) above to Pharmathene, which notice has
      attached to it a copy of the definitive agreement or agreements containing
      all
      of the terms and conditions of such Superior Proposal, (C) at least five (5)
      business days following receipt by Pharmathene of the notice referred to in
      clause (B) above, and after taking into account any revised proposal made by
      Pharmathene following receipt of the notice referred to in clause (B) above,
      such Superior Proposal remains a Superior Proposal and the SIGA Board of
      Directors has again made the determination referred to in clause (A) above
      (it
      being understood and agreed that

     

     

     

    
      
        
        

      

      
        60

        
          

        

      

      
        
        

      

    

    any
      change to the financial or other material terms of such Superior Proposal shall
      require a new notice to Pharmathene under clause (B) above and a new five (5)
      business day period under this clause (C)), and (D) SIGA has not breached this
      Section 7.13 in any material respect.

     

    7.14 Additional
      Agreements.

     

    Subject
      to the terms and conditions of this Agreement, each of the parties hereto shall
      cooperate with one another and use its commercially reasonable efforts to
      complete in a timely manner the transactions contemplated by this Agreement,
      including (i) complying with any and all applicable rules and regulations,
      and
      to send all notices to, make all declarations, filings and registrations with,
      and obtain all consents, authorizations, approvals and waivers from third
      parties and governmental and regulatory bodies required to consummate the
      transactions contemplated hereby or comply with any and all applicable rules
      and
      regulations governing such transactions, and (ii) furnishing the other parties
      with all information necessary or advisable for the matters referred to in
      Section 7.5 hereof and any other statements or applications made by or on behalf
      of any party to any governmental or regulatory body in connection with the
      transactions contemplated by this Agreement.

     

    7.15 PIPE.

     

    SIGA
      shall, prior to the Closing Date, enter into one or more agreements related
      to
      the sale of at least $25,000,000 worth of SIGA Common Stock to investors through
      private transactions (individually and collectively hereinafter referred to
      as a
“PIPE”)
      on
      terms reasonably acceptable to a committee to consist of each of Paul Savas,
      Matthew Drapkin, Steven St. Peter and Elizabeth Czerepak. Notwithstanding the
      foregoing, if the terms of any proposed PIPE are consistent with the term sheet
      attached hereto as Exhibit
      D,
      the
      terms shall be deemed to be satisfactory to the committee and the approval
      of
      such four individuals shall not be required. Any shares of (a) SIGA Common
      Stock
      or (b) SIGA Common Stock issuable upon the conversion of SIGA Warrants, issued
      pursuant to a PIPE shall, for purposes of Section 2.2, be deemed not to be
      issued and outstanding.

     

    7.16 Name
      and Nasdaq Symbol Change.

     

    The
      parties hereto shall take all commercially reasonable action that is necessary
      to change (i) SIGA’s name to “Pharmathene, Inc.” and (ii) SIGA’s Nasdaq symbol
      to PTHN or such other symbol Pharmathene may select, effective immediately
      after
      the Effective Time.

     

    7.17 Tax
      Treatment.

     

    Notwithstanding
      anything herein to the contrary, each of SIGA, Merger Sub and Pharmathene shall
      use its commercially reasonable efforts to cause the Merger to qualify, and
      will
      not (both before and after the Effective Time) take any actions, or fail to
      take
      any action, which could reasonably be expected to prevent the Merger from
      qualifying as a reorganization under the provisions of Section 368(a) of the
      Code. SIGA shall, and shall cause the Surviving Corporation to, report, to
      the
      extent required by the Code or the regulations thereunder, the Merger for income
      tax purposes as a reorganization within the meaning of Section 368(a) of the
      Code.

     

    
      
        
        

      

      
        61

        
          

        

      

      
        
        

      

    

           
      7.18 Registration Rights
      Agreement.

     

    At
      or
      prior to the Closing, SIGA shall execute and deliver the Registration Rights
      Agreement (as hereinafter defined) to the other parties thereto.

     

    7.19 Stockholders
      Agreement.

     

    At
      or
      prior to the Closing, SIGA shall execute and deliver the Stockholders Agreement
      (as hereinafter defined) to the other parties thereto which, among other things,
      provides for the right of certain holders of SIGA Common Stock, under certain
      conditions, to designate members for nomination to the Board of Directors of
      SIGA, after the Closing.

     

    7.20 SIGA
      Board Approval. 

     

    The
      Board
      of Directors of SIGA, or a committee thereof consisting of non-employee
      directors (as such term is defined for purposes of Rule 16b-3(d) under the
      Exchange Act), shall adopt such resolutions in advance of the Effective Time
      as
      may be requested by Pharmathene and in a form reasonably acceptable to
      Pharmathene approving the receipt by stockholders and/or optionholders of
      Pharmathene and/or the beneficial owners of the Aggregate Merger Consideration,
      any shares of SIGA Common Stock and other securities issued in the PIPE, and
      options to purchase SIGA Common Stock upon assumption and conversion of
      Pharmathene Stock Options in order to exempt such transactions under Section
      16
      of the Exchange Act.

     

    ARTICLE
      VIII

     

    PUBLICITY

     

    8.1 Publicity.

     

    Any
      and
      all public announcements (whether written or oral), and notices by the parties
      hereto to other parties (other than to governmental authorities, except pursuant
      to contractual arrangements therewith), concerning the Merger and the other
      transactions contemplated
      by this
      Agreement shall be subject to the prior written approval of Pharmathene and
      SIGA
      (which consent shall not be unreasonably withheld); provided that nothing herein
      shall prohibit any party hereto or any of their affiliates from making any
      announcement or disclosure required to be made by it or them under applicable
      law, including, without limitation, the federal securities laws, if it or its
      affiliates determines in good faith that it is appropriate to do so and, if
      practicable, gives prior notice to the other parties hereto of such
      determination.

     

     

     

    
      
        
        

      

      
        62

        
          

        

      

      
        
        

      

    

     

     

    ARTICLE
      IX

     

    CONDITIONS
      TO OBLIGATIONS OF EACH PARTY

     

    The
      obligations of each of SIGA, Merger Sub and Pharmathene to consummate the Merger
      are subject to the following conditions precedent, any or all of which may
      be
      waived by such party at its sole discretion:

     

    9.1 Merger
      Approval.

     

    This
      Agreement, and the transactions contemplated hereby, including without
      limitation, the PIPE, shall have been duly approved and adopted by the requisite
      vote of the respective stockholders of Merger Sub, SIGA and Pharmathene in
      accordance with the GCL and the requirements of Nasdaq.

     

    9.2 Amendments
      to SIGA’s Certificate of Incorporation.

     

    The
      amendments to SIGA’s certificate of incorporation which are contemplated by
      Section 7.1 and Section 7.16, shall have been approved by the requisite vote
      of
      SIGA stockholders entitled to vote thereon.

     

    9.3 No
      Prohibition on Consummation.

     

    No
      order,
      stay, judgment, injunction or decree shall have been issued and be in effect
      by
      any court restraining or prohibiting the consummation of the transactions
      contemplated hereby. No statute, rule or regulation shall have been promulgated
      or enacted by any foreign or United States federal or state government,
      governmental authority or governmental agency, which would prevent or make
      illegal the consummation of the transactions contemplated hereby, including
      the
      Merger.

     

    9.4 Financing.

     

    SIGA
      shall have consummated the PIPE. Notwithstanding anything herein to the
      contrary, this condition may be satisfied contemporaneously with the Effective
      Time.

     

    9.5 Litigation.

     

    No
      action, suit or proceeding against any party hereto relating to the consummation
      of any of the transactions contemplated by this Agreement or any governmental
      action seeking to delay or enjoin any such transactions shall be pending or
      threatened and no investigation by any governmental or regulatory body shall
      have been commenced (and be pending), seeking to restrain or prohibit (or
      questioning the validity or legality of) the consummation of the transactions
      contemplated by this Agreement, including the Merger, or seeking material
      damages in connection therewith which either party, in good faith and with
      the
      advice of counsel, believes makes it undesirable to proceed with the
      consummation of the transactions contemplated hereby.

     

     

    
      
        
        

      

      
        63

        
          

        

      

      
        
        

      

    

     

     

    9.6 Stockholders
      Agreement.

     

    The
      Third
      Amended and Restated Stockholders’ Agreement dated as of March 10, 2005, by and
      among Pharmathene, the Founders (as defined therein) and the Investors (as
      defined therein) shall have been terminated in accordance with its
      terms.

     

    9.7 Pharmathene
      Stockholders.

     

    There
      shall be no more than 35 holders of Pharmathene Capital Stock entitled to
      receive SIGA Common Stock in accordance with this Agreement which are not
“accredited investors” as such term is defined in Regulation D. Each holder of
      Pharmathene Capital Stock shall have received such information pertaining to
      SIGA, Pharmathene and the transactions contemplated by this Agreement, as may
      be
      necessary to satisfy all information delivery requirements of Regulation D,
      in
      all material respects, applicable to the issuance of SIGA Common Stock to the
      holders of Pharmathene Common Stock in accordance with this Agreement.
      Pharmathene shall not have engaged in any general solicitation which would
      preclude SIGA’s reliance upon Regulation D for purposes of the issuance of SIGA
      Common Stock in accordance with this Agreement.

     

    ARTICLE
      X

     

    CONDITIONS
      TO OBLIGATIONS OF PHARMATHENE

     

    The
      obligation of Pharmathene to consummate the Merger is subject to the following
      additional conditions precedent, any or all of which may be waived by
      Pharmathene in its sole discretion:

     

    10.1 Opinion
      of Counsel for SIGA and Merger Sub.

     

    Pharmathene
      shall have received an opinion of counsel of Kramer Levin Naftalis & Frankel
      LLP, counsel for SIGA and Merger Sub, in a form reasonably acceptable to
      Pharmathene.

     

    10.2 Representations;
      Warranties; Covenants.

     

    The
      representations and warranties of SIGA and Merger Sub contained in Article
      VI
      hereof shall be true and correct in all material respects at and as of the
      Closing Date with the same effect as though all such representations and
      warranties were made at and as of the Closing Date (except for representations
      and warranties which are as of a specific date or which relate to a specific
      period other than or not including the Closing Date, as the case may be, and
      except for changes therein contemplated or permitted by this Agreement and
      provided, however, that if any such representation or warranty is already
      qualified by materiality, for purposes of determining whether this condition
      has
      been satisfied, such representation or warranty must be true and correct in
      all
      respects); and SIGA and Merger Sub shall have complied with their respective
      covenants contained in this Agreement in all material respects; and SIGA and
      Merger Sub shall each have delivered to Pharmathene a certificate to that
      effect, dated the Closing Date, signed by their respective Presidents or Chief
      Executive Officers.

     

    
      
        
        

      

      
        64

        
          

        

      

      
        
        

      

    

          
      10.3 No MaterialAdverse
      Change.

     

    There
      shall have been no event or occurrence since the date of this Agreement that
      has
      or could have a Material Adverse Effect on SIGA or Merger Sub.

     

    10.4 Secretary’s
      Certificate.

     

    Pharmathene
      shall have received a certificate of the Secretary or an Assistant Secretary
      of
      each of SIGA and Merger Sub, in form and substance reasonably satisfactory
      to
      Pharmathene, with respect (i) their respective certificates of incorporation;
      (ii) their by-laws, and (iii) the authorization by their respective boards
      of
      directors and stockholders of the execution and delivery of this Agreement
      and
      the consummation of the transactions contemplated herein.

     

    10.5 Third
      Party Consents.

     

    All
      consents, authorizations, approvals, waivers and waivers of conflict identified
      on Schedule
      6.3
      shall
      have been made or obtained. The foregoing includes, but is not limited to (i)
      the waiver of any rights of first refusal which might be needed in connection
      with the retention of the placement agent identified in the PIPE term sheet;
      and
      (ii) the waiver by each party to the Securities Purchase Agreement dated
      November 1, 2005 among SIGA and the investors identified therein of each of
      their respective rights of first refusal as they relate to the PIPE and their
      Blackout Period Restrictions as they relate to the PIPE.

     

    10.6 Other
      Certificates.

     

    Pharmathene
      shall have received such additional certificates, instruments and other
      documents, in form and substance satisfactory to Pharmathene, as Pharmathene
      shall have reasonably requested in connection with compliance with the
      conditions set forth in this Article X.

     

    10.7 Lock-Up
      Agreement.

     

    TransTech
      Pharma, Inc., MacAndrews & Forbes Inc., Howard Gittis, Donald G. Drapkin,
      James J. Antal, Thomas E. Constance, Mehmet C. Oz, Eric A. Rose, Paul G Savas,
      Matthew Drapkin and Dennis E. Hruby shall each have entered into lock-up
      agreements, substantially in the form which is attached hereto as Exhibit
      E.
      

     

    10.8 Resignations.

     

    Each
      director of SIGA other than Paul Savas and Matthew Drapkin shall have tendered
      their resignation from The Board to be effective immediately following the
      Effective Time.

     

    10.9 Directors.

     

    Each
      of
      James H. Cavanaugh, Elizabeth Czerepak, Joel McCleary, Steven St. Peter and
      David P. Wright or such other persons (not to exceed a total of five) designated
      by Pharmathene, shall have been elected to serve as directors of SIGA effective
      immediately following the Effective Time.

     

     

    
      
        
        

      

      
        65

        
          

        

      

      
        
        

      

    

     

     

    10.10 Stock
      Option Plan Amendment.

     

    The
      SIGA
      Stock Option Plan shall have been amended to increase available securities
      thereunder to 25,250,000.

     

    10.11 Registration
      Rights Agreement.

     

    SIGA
      shall have executed and delivered a registration rights agreement in the form
      attached hereto as Exhibit
      F
      (hereinafter referred to as the “Registration
      Rights Agreement”).

     

    10.12 Amendment
      to SIGA Charter.

     

    The
      number of shares of SIGA Common Stock authorized for issuance under its
      certificate of incorporation shall have been increased to
      300,000,000.

     

    10.13 Termination
      of Agreements.

     

    Any
      and
      all agreements relating to the nomination or election of directors of SIGA,
      other than the Stockholders Agreement, shall have been terminated.

     

    10.14 Waiver
      of Anti-Dilution Rights.

     

    Every
      holder of Included Derivative Securities shall have waived the right to an
      adjustment to the exercise price of such derivative securities and the number
      of
      shares issuable upon exercise thereof as a result of or deriving from the
      issuance of the True-up Warrants.

     

    ARTICLE
      XI

     

    CONDITIONS
      TO OBLIGATIONS OF SIGA AND MERGER SUB

     

    The
      obligations of each of SIGA and Merger Sub to consummate the Merger is subject
      to the following conditions precedent, any or all of which may be waived by
      SIGA
      in its sole discretion:

     

    11.1 Opinion
      of Counsel for Pharmathene.

     

    SIGA
      shall have received an opinion of counsel of McCarter & English LLP, counsel
      for Pharmathene, in a form reasonably acceptable to SIGA.

     

    11.2 Representations:
      Warranties; Covenants.

     

    The
      representations and warranties of Pharmathene contained in Article V hereof
      shall be true and correct in all material respects at and as of the Closing
      Date
      with the same effect as though all such representations and warranties were
      made
      at and as of the Closing Date (except for representations and warranties which
      are as of a specific date or which relate to a specific period other than or
      not
      including the Closing Date, as the case may be, and except for changes therein
      contemplated or permitted by this Agreement, and provided, however, that if
      any
      such representation or warranty is already qualified by materiality, for
      purposes of determining

     

    
      
        
        

      

      
        66

        
          

        

      

      
        
        

      

    

    whether
      this condition has been satisfied, such representation or warranty must be
      true
      and correct in all respects); and Pharmathene shall have complied with all
      of
      its covenants contained in this Agreement in all material respects; and
      Pharmathene shall have delivered to SIGA a certificate to that effect, dated
      the
      Closing Date, signed by its Chief Executive Officer.

     

    11.3 No
      Material Adverse Change.

     

    There
      shall have been no event or occurrence since the date of this Agreement that
      has
      or could have a Material Adverse Effect on Pharmathene.

     

    11.4 Secretary’s
      Certificate.

     

    SIGA
      shall have received a certificate of the Secretary or an Assistant Secretary
      of
      Pharmathene in form and substance satisfactory to SIGA, with respect to (i)
      its
      certificate of incorporation, (ii) its by-laws and (iii) the authorization
      by
      the board of directors and the stockholders of Pharmathene of the execution
      and
      delivery of this Agreement and the consummation of the transactions contemplated
      herein.

     

    11.5 Third
      Party Consents.

     

    All
      consents, authorizations, approvals and waivers identified on Schedule
      5.3
      shall
      have been made or obtained.

     

    11.6 Other
      Certificates.

     

    SIGA
      shall have received such additional certificates, instruments and other
      documents, in form and substance satisfactory to SIGA and counsel for SIGA,
      as
      it shall have reasonably requested in connection with the transactions
      contemplated hereunder.

     

    11.7 Lock-Up
      Agreement.

     

    MPM
      Bioventures III, L.P., MPM Bioventures III-QP, L.P., MPM Bioventures III
      Parallel Fund, L.P., MPM Bioventures III GMBH & Co. Beteiligungs KG, MPM
      Asset Management Investors 2004 BVIII LLC, Ontario Teachers’ Pension Plan Board,
      Bear Stearns Health Innoventures, L.P., Bear Stearns Health Innoventures
      Offshore, L.P., BSHI Members, L.L.C., Bear Stearns, Health Innoventures
      Employees Fund, L.P., BX, L.P., Healthcare Ventures VII, L.P., BX Associates
      Limited, Canadian Medical Discoveries Fund Inc., Nexia Biotechnologies Inc.,
      MDS
      Life Sciences Technology Fund Limited Partnership, Joseph Klein III, David
      P.
      Wright, Eric Richman, Francesca Cook, Solomon Langermann, Valerie Riddle, Ronald
      Kaiser, Elizabeth Czerepak, Joel McCleary and Steven St. Peter shall each have
      entered into lock-up agreements, substantially in the form which is attached
      hereto as Exhibit
      E.

     

    11.8 Stockholders
      Agreement. 

     

    MPM
      Bioventures III, L.P., MPM Bioventures III-QP, L.P., MPM Bioventures III
      Parallel Fund, L.P., MPM Bioventures III GMBH & Co. Beteiligungs KG, MPM
      Asset Management Investors 2004 BVIII LLC, Ontario Teachers’ Pension Plan Board,
      Bear Stearns Health Innoventures, L.P., Bear Stearns Health Innoventures
      Offshore, L.P., BSHI Members,

     

    
      
        
        

      

      
        67

        
          

        

      

      
        
        

      

    

    L.L.C.,
      Bear Stearns, Health Innoventures Employees Fund, L.P., BX, L.P., Healthcare
      Ventures VII, L.P., BX Associates Limited, Canadian Medical Discoveries Fund
      Inc., Nexia Biotechnologies Inc., MDS Life Sciences Technology Fund Limited
      Partnership and Joseph Klein III shall each have entered into a stockholders
      Agreements in the form attached hereto as Exhibit
      G
      (hereinafter referred to as the “Stockholders
      Agreement”).

     

    11.9 Investor
      Questionnaires.

     

    Pharmathene
      shall have delivered to SIGA, Investor Questionnaires in a form reasonably
      acceptable to SIGA, completed by each holder of Pharmathene Capital
      Stock.

     

    ARTICLE
      XII

     

    TERMINATION

     

    12.1 Termination.

     

    (a) This
      Agreement may be terminated and the Merger abandoned at any time prior to the
      Effective Time, by the consent of all parties hereto, or (i) by Pharmathene
      if
      SIGA or Merger Sub shall have breached in any material respect any of its
      respective representations, warranties, covenants or agreements contained in
      this Agreement, which breach has resulted or is reasonably likely to result
      in
      any condition set forth in Section 10 not being satisfied (and such breach
      has
      not been cured or such condition has not be satisfied within ten (10) days
      after
      the receipt of notice thereof or such breach or inaccuracy is not reasonably
      capable of being cured or such condition is not reasonably capable of being
      satisfied within such period); (ii) by SIGA if Pharmathene shall have breached
      in any material respect any of Pharmathene’s representations, warranties,
      covenants or agreements contained in this Agreement, which breach has resulted
      or is reasonably likely to result in any condition set forth in Section 11
      not
      being satisfied (and such breach has not been cured or such condition has not
      be
      satisfied within ten (10) days after the receipt of notice thereof or such
      breach or inaccuracy is not reasonably capable of being cured or such condition
      is not reasonably capable of being satisfied within such period; (iii) by either
      Pharmathene or SIGA if a permanent injunction is entered, enforced or deemed
      applicable to this Agreement, or the Certificate of Merger, which prohibits
      the
      consummation of the transactions contemplated hereby and thereby and all appeals
      of such injunction shall have been taken and shall have been unsuccessful;
      (iv)
      by either Pharmathene or SIGA if any governmental entity, the consent of which
      is a condition to the obligation of such party to consummate the transactions
      contemplated hereby, shall have determined not to grant its consent and all
      appeal of such determination shall have been taken and shall have been
      unsuccessful; or (v) by either Pharmathene or SIGA if the Closing shall not
      have
      occurred on or prior to September 30, 2006 (the “Termination
      Date”);
      provided, however, that the right to terminate this Agreement pursuant to this
      Section 12.1 subclause (v) shall not be available to any party whose action
      or
      failure to fulfill any obligation under this Agreement has been the principal
      cause of, or resulted in, the failure of the Merger to be consummated by such
      date. In the event that this Agreement is terminated in accordance with this
      Section 12.1, each party will be responsible for all expenses incurred by it
      in
      connection with the negotiation and preparation of this Agreement.

     

     

    
      
        
        

      

      
        68

        
          

        

      

      
        
        

      

    

     

     

    (b) This
      Agreement may be terminated by SIGA upon the execution of a Superior Agreement
      (as defined below) by SIGA. SIGA shall not execute a Superior Agreement unless
      (i) the SIGA Board of Directors has received a Superior Proposal, (ii) in light
      of such Superior Proposal, the SIGA Board of Directors has determined, in good
      faith by resolution duly adopted after consultation with outside counsel, that
      it is necessary for the SIGA Board of Directors to withdraw, amend or modify
      its
      approval or recommendation of this Agreement or the Merger in order to comply
      with its fiduciary duties to the stockholders of SIGA under applicable Law,
      (iii) SIGA has provided written notice of the determination described in clause
      (ii) above to Pharmathene, which notice has attached to it a copy of the
      definitive agreement or agreements containing all of the terms and conditions
      of
      such Superior Proposal (the “Superior
      Agreement”),
      (iv)
      at least five (5) business days following receipt by Pharmathene of the notice
      referred to in clause (iii) above, and after taking into account any revised
      proposal made by Pharmathene following receipt of the notice referred to in
      clause (iii) above, such Superior Proposal remains a Superior Proposal and
      the
      SIGA Board of Directors has again made the determination referred to in clause
      (ii) above (it being understood and agreed that any change to the financial
      or
      other material terms of such Superior Proposal shall require a new notice to
      Pharmathene under clause (iii) above and a new five (5) business day period
      under this clause (iv)), and (v) SIGA has not breached Section 7.13 in any
      material respect.

     

    12.2 Termination
      Fee.

     

    (a) If
      this
      Agreement is terminated pursuant to Section 12.1(b), SIGA shall pay Pharmathene
      upon demand a termination fee equal to three percent of the value of SIGA,
      as
      determined in accordance with the terms of this Agreement. 

     

    (b) All
      termination fees shall be paid by SIGA by wire transfer of immediately available
      funds to such account as shall have been designated by Pharmathene.

     

    12.3
      License
      Agreement

     

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

     

    12.4 Effect
      of Termination.

     

    In
      the
      event of termination of this Agreement pursuant to Article XII hereof, all
      rights of all parties hereto shall cease and terminate, except for such rights
      as any party may otherwise have for breach of contract, including, without
      limitation, rights for breach of any

     

    
      
        
        

      

      
        69

        
          

        

      

      
        
        

      

    

    representations,
      warranties or covenants contained herein, and, provided that the provisions
      of
      this Article XII and Article XIII shall survive any such
      termination.

     

    ARTICLE
      XIII

     

    MISCELLANEOUS

     

    13.1 Notices.

     

    All
      notices, requests or instruction hereunder shall be in writing and delivered
      personally or sent by registered or certified mail, postage prepaid or by
      telecopy (or like transmission), as follows:

     

    (1) if
      to
      Pharmathene:

     

    175
      Admiral Cochrane Drive 

    Suite
      101

    Annapolis,
      MD 21701

    Attention:
      Chief Executive Officer

    Fax:
      (410) 571-8927

     

    with
      a
      copy to:

     

    Jeffrey
      A. Baumel, Esq.

    McCarter
      & English LLP

    245
      Park
      Avenue, 27th
      Floor

    New
      York,
      New York 10167

    Fax:
      (973) 624-7070

    

    (2) if
      to
      SIGA or Merger Sub:

    

    420
      Lexington Avenue

    Suite
      408

    New
      York,
      NY 10170

    Attention:
      Chief Financial Officer

    Fax:
      (212) 697-3130

     

    with
      a
      copy to:

     

    James
      A.
      Grayer, Esq.

    Kramer
      Levin Naftalis & Frankel LLP

    1177
      Avenue of the Americas

    New
      York,
      NY 10036

    Fax:
      (212) 715-8050

    

    Any
      of
      the above addresses may be changed at any time by notice given as provided
      above; provided, however, that any such notice of change of address shall be
      effective only upon receipt. All notices and other communications given to
      any
      party hereto in accordance with the provisions hereof shall be deemed to have
      been given on the date of receipt, provided that any

     

    
      
        
        

      

      
        70

        
          

        

      

      
        
        

      

    

    notice
      or
      other communication that is received other than during regular business hours
      of
      the recipient shall be deemed to have been given at the opening of business
      on
      the next business day of the recipient.

     

    13.2 Entire
      Agreement.

     

    This
      Agreement and the documents referred to herein contain the entire agreement
      between the parties hereto with respect to the transactions contemplated hereby,
      and supersede all prior understandings, arrangements and agreements with respect
      to the subject matter hereof. No modification hereof shall be effective unless
      in writing and signed by the party against which it is sought to be enforced.
      Notwithstanding the foregoing the Confidentiality Agreement dated December
      1,
      2003 between SIGA and Pharmathene, a copy of which is attached hereto as
Exhibit
      I,
      (hereinafter referred to as the “Confidentiality
      Agreement”)
      shall
      remain in full force in accordance with its terms.

     

    13.3 Further
      Action.

     

    Each
      of
      the parties hereto shall use such party’s best efforts to take such actions as
      may be necessary or reasonably requested by the other parties hereto to carry
      out and consummate the transactions contemplated by this Agreement.

     

    13.4 Expenses.

     

    Each
      of
      the parties hereto shall bear such party’s own expenses in connection with this
      Agreement.

     

    13.5 Governing
      Law.

     

    This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Delaware applicable in the case of agreements made and to be performed
      entirely within such State.

     

    13.6 Captions.

     

    The
      captions appearing herein are for the convenience of the parties only and shall
      not be construed to affect the meaning of the provisions of this
      Agreement.

     

    13.7 Accounting
      Terms.

     

    All
      accounting terms used herein which are not expressly defined in this Agreement
      shall have the respective meanings given to them in accordance with generally
      accepted accounting principles on the date hereof.

     

    13.8 Assignment.

     

    This
      Agreement and all of the provisions hereof shall be binding upon and inure
      to
      the benefit of the parties hereto and their respective successors and permitted
      assigns, but neither this Agreement nor any of the rights, interests, or
      obligations hereunder may be assigned by any of

     

    
      
        
        

      

      
        71

        
          

        

      

      
        
        

      

    

    the
      parties hereto without the prior written consent of the other parties and any
      such attempted assignment without consent shall be void.

     

    13.9 No
      Third Party Beneficiary.

     

    This
      Agreement is not intended, and shall not be construed, to confer upon any person
      other than the parties hereto any rights or remedies hereunder.

     

    13.10 Partial
      Invalidity.

     

    Any
      term
      or provision of this Agreement that is invalid or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such invalidity or unenforceability without rendering invalid or unenforceable
      the remaining terms and provisions of this Agreement, or any such terms in
      any
      other jurisdiction. If any provision of this Agreement is so broad as to be
      unenforceable, such provision shall be interpreted to be only so broad as is
      enforceable.

     

    13.11 Counterparts.

     

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

     

    13.12 Directors
      and Officers Insurance.

     

    (a) From
      and
      after the Effective Time, SIGA shall, to the fullest extent permitted by law,
      for a period of six years from the Effective Time, honor all of SIGA’s and
      Pharmathene’s respective obligations to indemnify and hold harmless each present
      and former director and officer of either party (hereinafter collectively
      referred to as the “Indemnified
      Parties”),
      against any costs or expenses (including attorneys’ fees), judgments, fines,
      losses, claims, damages, liabilities or amounts paid in settlement incurred
      in
      connection with any claim, action, suit, proceeding or investigation, whether
      civil, criminal, administrative or investigative, arising out of or pertaining
      to matters existing or occurring at or prior to the Effective Time, whether
      asserted or claimed prior to, at or after the Effective Time, to the same extent
      that such obligations to indemnify and hold harmless exist on the date
      hereof.

     

    (b) The
      Company shall, for a period of time not less than six (6) years following the
      Closing, maintain Directors and Officers insurance policies which are comparable
      to those in effect immediately prior to Closing. Such policies shall, at the
      absolute minimum, cover those directors and officers of SIGA and former
      directors and officers of SIGA who were covered immediately prior to Closing
      to
      the same extent as they were covered immediately prior to Closing.

     

    (c) The
      provisions of this Section 13.3 are intended to be in addition to the rights
      otherwise available to the current officers and directors of the Company by
      law,
      charter, statute, by-law or agreement, and shall operate for the benefit of,
      and
      shall be enforceable by, each of the Indemnified Parties, their heirs and their
      representatives.

     

     

    
      
        
        

      

      
        72

        
          

        

      

      
        
        

      

    

     

    13.13 Nasdaq.

     

    For
      a
      period of six months following the Effective Time, SIGA shall use its
      commercially reasonable efforts to satisfy the listing requirements of the
      Nasdaq Capital Market relating to the listing of SIGA Common Stock thereon;
      provided that any such action shall effect pre-Effective Time and post-Effective
      Time holders of SIGA equity securities mutatis
      mutandis.

     

     

    {Signature
      Page to Follow}

     

     

     

     

    
      
        
        

      

      
        73

        
          

        

      

      
        
        

      

    

     

    
 

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

     

    

     

    SIGA
      TECHNOLOGIES, INC.

     

    

     

    By:
       /s/
      Thomas N. Konatich  

    Name:
      Thomas N. Konatich

    Title:  
      Chief Financial Officer and

                               
      Acting Chief Executive Officer

    

    

    SIGA
      ACQUISITION CORP.

    

    

    By:
       /s/
      Thomas N. Konatich  

    Name:
      Thomas N. Konatich

    Title:  
      President

     

    

    PHARMATHENE,
      INC.

    

    

    By:
       /s/
      David P. Wright   

    Name:
      David P. Wright

    Title:  
      Chief Executive Officer

    

    
 

     

     

    74Exhibit 10.2 Voting Agreement

    
      

    

                                                                                              Exhibit
      10.2

     

    
 

    EXECUTION
      VERSION

     

    VOTING
      AGREEMENT

     

     

    THIS
      VOTING AGREEMENT
      (this
“Agreement”),
      dated
      this 8th day of June 2006 is entered into by and among SIGA Technologies, Inc.,
      a Delaware corporation ( “SIGA”),
      TransTech Pharma, Inc., MacAndrews & Forbes Inc., Howard Gittis, Donald G.
      Drapkin, James J. Antal, Thomas E. Constance, Mehmet C. Oz, Eric A. Rose and
      Paul G. Savas (each a “Stockholder”
and
      collectively the “Stockholders”)
      and
      Pharmathene Inc., a Delaware corporation (“Pharmathene”).
      Capitalized terms used herein and not otherwise defined shall have the
      respective meanings assigned to them in the Merger Agreement (as defined
      below).

    

    

    W
      I T N E S S E T H:

    

    WHEREAS,
      the
      Stockholders are collectively the legal and beneficial owners of 8,029,364
      shares of SIGA Common Stock which represents 29.74% of the outstanding shares
      of
      SIGA Common Stock;

    

    WHEREAS,
      SIGA is
      a party to an Agreement and Plan of Merger, which is being executed
      contemporaneously herewith, between SIGA, Merger Sub and Pharmathene, a true
      and
      complete copy of which has been provided to the Stockholders (the “Merger
      Agreement”);

    

    WHEREAS,
      each of
      the Stockholders have agreed to vote all of the SIGA Capital Stock owned by
      it,
      whether beneficially or otherwise, or over which it has voting power
      (collectively the “Stockholder
      Shares”)
      in
      favor of all resolutions to be considered by holders of SIGA Capital Stock
      in
      connection with the transactions contemplated by the Merger
      Agreement;

    

    NOW,
      THEREFORE
      in
      consideration of the foregoing premises and as inducement to and in
      consideration of Pharmathene entering into the Merger Agreement and certain
      other good and valuable consideration the receipt and sufficiency of which
      are
      hereby acknowledged, the parties agree as follows:

    

    Section
      1  Representations
      and Warranties.
      Each
      of
      the Stockholders hereby represents and warrants, for and in respect of itself
      and its Stockholder Shares only, that: 

     

    (a)  if
      it is
      not an individual, it is duly incorporated or organized and validly existing
      under the laws of its jurisdiction of incorporation or organization; it has
      the
      corporate or other power and capacity and has taken all necessary corporate
      or
      other action to authorize the execution, delivery and performance of this
      Agreement and its obligations hereunder and has received all requisite approvals
      to enter into this Agreement and to complete the transactions contemplated
      hereby and, upon the due execution and delivery of this Agreement by such
      Stockholder, this Agreement shall be a valid and binding agreement enforceable
      by Pharmathene against such Stockholder in accordance with its terms, subject
      to
      bankruptcy, insolvency,

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    reorganization,
      fraudulent transfer, moratorium and other laws relating to or affecting
      creditors' rights generally and to general principles of equity;

     

    (b)  if
      it is
      an individual, it has full power and authority to enter into and perform the
      obligations under this Agreement and to consummate the transactions contemplated
      hereby;

     

    (c)  the
      Stockholder is not a party to, bound or affected by or subject to, any charter,
      by-law or constituting document provision (in the case of a party that is not
      an
      individual), statute, regulation, judgment, order, decree or law which would
      be:
      violated, contravened, breached by, or under which default would occur as a
      result of, the execution, delivery and performance of this Agreement and such
      Stockholder is not a party to, bound or affected by or subject to any agreement
      for voting any SIGA Capital Stock which would be violated, contravened, breached
      by, or under which default would occur as a result of, the performance of this
      Agreement; and

     

    (d)  such
      Stockholder understands and agrees that if such Stockholder attempts to
      transfer, or provide any other person or entity with the authority to vote
      any
      of the Stockholder Shares other than in compliance with this Agreement, SIGA
      shall not, and such Stockholder hereby unconditionally and irrevocably instructs
      SIGA to not, (i) permit any such transfer on its books and records, (ii) issue
      a
      new certificate representing any of such Stockholder Shares, or (iii) record
      such vote unless and until such Stockholder shall have complied with the terms
      of this Agreement. 

     

    Section
      2  Covenants.

     

    (a)  Except
      as
      otherwise expressly provided herein, each Stockholder hereby covenants that
      until this Agreement is terminated, such Stockholder will:

     

    
      	(i)  	
              not,
                directly or indirectly, take or support any action of any kind which
                could
                reasonably be expected to reduce the likelihood of success of or
                delay the
                consummation of the Merger
                Agreement;

            

    

     

    
      	(ii)  	
              not,
                directly
                or indirectly, initiate, solicit or encourage proposals,
                requests,
                inquiries or contacts,
                or participate in negotiations or discussions, including without
                limitation, the delivery of non-public information of SIGA to any
                third
                party, for the purpose or with the intention of leading to any
                proposal,
                concerning any disposition, directly or indirectly, of any material
                assets
                of SIGA,
                without limitation, extending to any take-over
                bid, merger,
                consolidation or other business combination involving SIGA or any
                acquisition
                of an equity interest in SIGA representing any material amount of
                the
                equity of SIGA or any similar
                transaction (a
                “Competing
                Proposal”),
                except for the transactions contemplated by the Merger
                Agreement;
                and

            

    

     

    
      	(iii)  	
              not
                enter into, continue or otherwise participate in any discussions
                or
                negotiations regarding, or furnish to any person or any
                other

            

    

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

     

    
      
        entity
          any non-public information with respect to, or otherwise cooperate in any
          way
          with any party offering a Competing Proposal.

      

    

     

    (b)  Except
      as
      otherwise expressly provided herein or as otherwise agreed to by Pharmathene
      in
      writing on or prior to the date hereof, each Stockholder hereby covenants that
      until this Agreement is terminated, such Stockholder shall not directly or
      indirectly (v) grant any proxy, power of attorney or other authorization or
      consent with respect to any of its Stockholder Shares; (w) deposit any of its
      Stockholder Shares into a voting trust, or enter into a voting agreement or
      arrangement with respect to any of its Stockholder Shares; (x) take any other
      action that would in any way restrict, limit or interfere with the performance
      of such Stockholder’s obligations hereunder or the transactions contemplated
      hereby; (y) sell, assign, transfer, encumber, pledge, hedge, gift or enter
      into
      derivative transactions in respect of, or otherwise dispose of any of its
      Stockholder Shares or any rights therein (including without limitation any
      voting rights) (or consent to do any of the foregoing), or (z) enter into any
      contract, option or other combination, arrangement, undertaking or understanding
      with respect to the actions described in any of the foregoing clauses (the
      restrictions in clauses (v), (w),(x), (y) and (z) hereof being referred to
      as
      the “Restrictions”).
      Notwithstanding the forgoing, each Stockholder may transfer or permit the
      transfer of some or all of its Stockholder Shares to related persons of such
      Stockholder (including its members, partners, affiliates, trusts and/or family
      members) or to a charitable trust, provided that (a) such transfer does not
      adversely affect Pharmathene or SIGA, including without limitation from a tax
      perspective or by causing any delay or by reducing the number of the Stockholder
      Shares subject to this Agreement, and (b) the transferee executes and delivers
      an agreement in the same form as this Agreement to Pharmathene prior to the
      transfer; provided, however that the such Stockholder shall be responsible
      for
      any breach of default by its transferee.

     

    (c)  Each
      Stockholder agrees that it shall not issue any press release or make any other
      statement to the public with respect to the Merger Agreement or any other
      transaction contemplated by the Merger Agreement without the prior consent
      of
      Pharmathene except as maybe required by applicable law.

     

    Section
      3  Voting.

     

    Subject
      to the terms of this Agreement, each Stockholder hereby irrevocably and
      unconditionally agrees until this Agreement is terminated:

     

    (a)  to
      vote
      (or cause to be voted) all of its Stockholder Shares (and any other securities
      in respect of which such Stockholder has the right to vote) which are eligible
      to vote at any meeting of holders of SIGA Capital Stock and in any action by
      written consent in favor of the Merger Agreement and the transactions
      contemplated thereby including, without limitation, the PIPE, the amendment
      of
      the SIGA Stock Option Plan and the reconfiguration of the board of directors
      (each as contemplated by the Merger Agreement), (collectively the “Merger
      Transactions”)
      and
      against any Competing Proposal;

     

    (b)  to
      vote
      (or cause to be voted) all of its Stockholder Shares (and any other securities
      in respect of which such Stockholder has the right to vote) which are eligible
      to vote at any meeting of holders of SIGA Capital Stock and in any action by
      written consent, against any

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

     

    action
      that could reasonably be expected to impede, interfere with, delay, frustrate,
      prevent, prohibit or discourage the consummation of the transactions
      contemplated by the Merger Agreement including, without limitation, the Merger
      Transactions;

     

    (c)  not,
      without the prior written consent of Pharmathene, to requisition or join in
      any
      requisition of any meeting of holders of SIGA Capital Stock;

     

    (d)  to
      vote
      in favor of adoption of any proposal or action that is reasonably determined
      by
      SIGA to be necessary or appropriate to submit for stockholder approval in order
      to facilitate the consummation of the transactions contemplated by the Merger
      Agreement, including, without limitation the Merger Transactions and against
      approval of any proposal made in opposition to or competition with the
      consummation of the transactions contemplated by the Merger Agreement,
      including, without limitation the Merger Transactions.

     

    Section
      4  Proxy.
      Each of
      the Stockholders hereby grants to Pharmathene an irrevocable proxy, coupled
      with
      an interest, to vote all of their respective Stockholder Shares in accordance
      with this Agreement and to take such other action to the extent necessary to
      carry out the provisions of this Agreement.

     

    Section
      5  Directors
      and Officers; Voting as to Other Matters.
      Notwithstanding any provision of this Agreement to the contrary, nothing in
      this
      Agreement shall limit or restrict any Stockholder from acting in such
      Stockholder’s capacity as a director or officer of SIGA (it being understood
      that this Agreement shall apply to each Stockholder solely in such Stockholder’s
      capacity as a stockholder of SIGA) or voting or granting proxies in each
      Stockholder’s sole discretion on any matter other than those matters specified
      in this Agreement. For the avoidance of doubt, this Agreement shall not require
      any Stockholder to vote or grant any proxy to vote, or refrain from voting
      or
      granting any proxy to vote, on any matter other than those specified in this
      Agreement.

     

    Section
      6  Remedies.
      In case
      any one or more of the covenants and/or agreements set forth in this Agreement
      shall have been breached by any party hereto, the party or parties entitled
      to
      the benefit of such covenants or agreements may proceed to protect and enforce
      its or their rights, either by suit in equity and/or action at law, including,
      but not limited to, an action for damages as a result of any such breach and/or
      an action for specific performance of any such covenant or agreement contained
      in this Agreement. The rights, powers and remedies of the parties under this
      Agreement are cumulative and not exclusive of any other right, power or remedy
      which such parties may have under any other agreement or law. No single or
      partial assertion or exercise of any right, power or remedy of a party hereunder
      shall preclude any other or further assertion or exercise thereof.

     

    Section
      7  Successors
      and Assigns.
      Except
      as otherwise expressly provided herein, this Agreement shall bind and inure
      to
      the benefit of SIGA, Pharmathene and each of the Stockholders and the respective
      successors and permitted assigns. 

     

    Section
      8  Duration
      of Agreement.
      Except
      as specifically set forth herein, the rights and obligations of Pharmathene,
      SIGA and each of the Stockholders set forth herein shall survive until, and
      this
      Agreement shall terminate upon, either the consummation of the Merger
      or

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

     

    termination
      of the Merger Agreement.

     

    Section
      9  Entire
      Agreement.
      This
      Agreement, together with the other writings referred to herein or delivered
      pursuant hereto which form a part hereof, contains the entire agreement among
      the parties with respect to the subject matter hereof and supersedes all prior
      and contemporaneous arrangements or understandings with respect
      thereto.

     

    Section
      10  Notices.
      All
      notices, requests, consents and other communications hereunder to any party
      shall be deemed to be sufficient if contained in a written instrument delivered
      in person or duly sent by first class registered, certified or overnight mail,
      postage prepaid, or telecopied with a confirmation copy by regular mail,
      addressed or telecopied, as the case may be, to such party at the address or
      telecopier number, as the case may be, set forth below or such other address
      or
      telecopier number, as the case may be, as may hereafter be designated in writing
      by the addressee to the addressor listing all parties:

     

    
      	(i)  	
              if
                to SIGA, to:

            

    

     

        420
      Lexington
      Avenue

        Suite
      408

        New
      York, NY
      10170

        Attention:
      Chief Financial Officer

        Telecopier:
      (212) 697-3130

     

           
      with a copy to:

     

        Kramer
      Levin
      Naftalis & Frankel LLP

        1177
      Avenue
      of the Americas

        New
      York, NY
      10036

        Attention:
      James A. Grayer, Esq.

        Telecopier:
      (212) 715-8050

     

    
      	(ii)  	
              if
                to the Stockholders:

            

    

     

        MacAndrews
      & Forbes Holdings Inc.

        35
      East
      62nd
      Street

        New
      York, NY
      10021

        Attention:
      Michael C. Borofsky

        Telecopier:
      (212) 572-8435

     

    
      	(iii)  	
              if
                to Pharmathene:

            

    

     

        175
      Admiral
      Cochrane Drive

        Suite
      101

        Annapolis,
      MD
      21701

        Attention:
      Chief Executive Officer

        Telecopier:
      (410) 571-8927

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

           
      with a copy to:

     

        McCarter
      & English, LLP

        Four
      Gateway
      Center

        100
      Mulberry
      Street

        Newark,
      NJ
      07102

        Attention:
      Jeffrey Baumel

        Telecopier:
      (973) 624-7070

    

     

    All
      such
      notices, requests, consents and communications shall be deemed to have been
      received (a) in the case of personal delivery, on the date of such delivery,
      (b)
      in the case of mailing, on the third business day following the date of such
      mailing, (c) in the case of overnight mail, on the first business day following
      the date of such mailing, and (d) in the case of facsimile transmission, when
      confirmed by facsimile machine report. 

     

    Section
      11  Changes.
      The
      terms and provisions of this Agreement may be modified or amended, or any of
      the
      provisions hereof waived, temporarily or permanently, only pursuant to the
      written consent of Pharmathene, SIGA and each of the Stockholders.

     

    Section
      12  Counterparts.
      This
      Agreement may be executed in any number of counterparts, and each such
      counterpart shall be deemed to be an original instrument, but all such
      counterparts together shall constitute but one agreement.

     

    Section
      13  Headings.
      The
      headings of the various sections of this Agreement have been inserted for
      convenience of reference only and shall not be deemed to be a part of this
      Agreement.

     

    Section
      14  Nouns
      and Pronouns.
      Whenever the context may require, any pronouns used herein shall include the
      corresponding masculine, feminine or neuter forms, and the singular form of
      names and pronouns shall include the plural and vice-versa.

     

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

     

    Section
      16  Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Delaware, excluding choice of law rules thereof.

     

    

     

    * * * * *

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

     

    IN
      WITNESS WHEREOF
      the
      parties hereto have executed this Agreement on the date first above
      written.

     

    SIGA
      TECHNOLOGIES, INC.

     

    

    By: /s/
      Thomas N.
      Konatich                                                        

    Name:
      Thomas N. Konatich

    Title: 
       Chief Financial Officer and Acting

           
      Chief Executive Officer

     

    

    PHARMATHENE,
      INC.

     

    By: /s/
      David P.
      Wright                                                             

    Name:
      David P. Wright

    Title:  
      Chief Executive Officer

     

     

    STOCKHOLDERS

    

    

    TRANSTECH
      PHARMA, INC.

     

    By:
      /s/
      Stephen L.
      Holcombe                                                  

    Name:
      Stephen L. Holcombe

    Title:  
      Senior Vice President and Chief Financial Officer

    

    

    MACANDREWS
      & FORBES INC.

     

    By: /s/
      Donald G.
      Drapkin                                                        

    Name:
      Donald G. Drapkin

    Title:  
      Vice Chairman

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    
 

                                        /s/
      Howard
      Gittis                                        
    

    Howard
      Gittis

     

    

                                        /s/
      Donald G.
      Drapkin                               
   

    Donald
      G.
      Drapkin

     

    

                                        /s/
      James
      Antal                                            
    

    James
      Antal

     

    

                                         / s/
      Thomas E.
      Constance         
            
   

    Thomas
      E.
      Constance

    

     

                                        /s/ Mehmet
      C.
      Oz                         
           
    

    Mehmet
      C.
      Oz

     

    

                                        /s/
      Eric A.
      Rose                             
              

    Eric
      A.
      Rose

     

    

                                        /s/
      Paul G.
      Savas                        
          
    

    Paul
      G.
      Savas

     

     

     

    8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00105-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00105-of-00352.parquet"}]]